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Unilever buys Dollar Shave Club as cuts deeper into razor market

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AFP
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today Jul 20, 2016
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Anglo-Dutch food and consumer products giant Unilever said Wednesday it had bought the Dollar Shave Club, a US start-up that has shaken up the market with its subscription model.


Instagram - Dollar Shave Club - Photo: Archive



Unilever did not disclose the price paid for the California-based company, but both Bloomberg News and Fortune magazine reported it was around $1 billion (910 million euros), or about five times its projected revenue this year.

Founded in 2012, Dollar Shave Club has quickly "grown into a full male grooming business that has transformed the shaving category with its lifestyle brand empowering 3.2 million members", said Unilever in a statement.

The company offered US men an alternative to increasingly expensive blades sold in stores with its subscriptions over the internet that delivered a month's worth of twin-blade razors for as little as $1 plus shipping.

Multi-blade models can be had for under $10 including shipping and the company now offers a range of men's personal care products.

Dollar Shave Club will give Unilever a boost in the men's razor market.

Although active in more than 190 countries with a stable of household brands, including Lipton tea and Knorr soups, Unilever has few in the men's personal care segment.

In fact Dollar Shave Club, although available only in the United States, Australia and Canada, already has a higher share of the global men's shaving market than Unilever, according to data from Euromonitor International.

"We plan to leverage the global strength of Unilever to support Dollar Shave Club in achieving its full potential in terms of offering and reach," said Kees Kruythoff, president of Unilever North America.

Unilever will have a long way to go before challenging the global dominance of Proctor & Gamble and its Gillette brand in the men's razor segment, however.

According to Euromonitor International data, Proctor & Gamble held 56 percent of the nearly $15 billion global men's shaving market last year, compared to 0.9 percent for Dollar Shave Club and 0.5 percent for Unilever.

In the US, Dollar Shave Club was in fourth place last year with $128 million in sales, compared to over $1.6 billion for Gillette.

Unilever said that Michael Dubin, the founder and chief executive of the Dollar Shave Club, would stay in his post.

"DSC couldn't be happier to have the world's most innovative and progressive consumer-product company in our corner," Dubin was quoted as saying in the Unilever statement.

Dollar Shave Club's acquisition "seems to fit into Unilever's strategy to move into personal healthcare products," Joost van Beek, an analyst at Amsterdam-based Theodoor Gilissen private bank told AFP.

Although Proctor & Gamble owns a huge share of the men's grooming sector in the US, the move indicates that Unilever is aiming to penetrate the market "in which there are relatively few players and are easier to target," Van Beek added.

It is a good market, "because all men regularly have to buy razor blades," Van Beek said.

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