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Invest in shaving to ride the recovery

Nirgunan Tiruchelvam
Nirgunan Tiruchelvam • 4 min read
Invest in shaving to ride the recovery
Photo: Nacho Fernandez via Unsplash
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Over two billion people shave every morning. Not all of them are men. Most of them are unaware of their debt to a long dead salesman.

The safety razor was patented 121 years ago by King Camp Gillette. He was a travelling salesman, though he had a regal name.

Safety razors are a new thing, but shaving is old. People used to shave even in the Bronze Age.

Back then, shaving was cumbersome and unsafe. In the distant past, people used shark teeth and clam shells. In some cultures like Japan and Rome, the edges of swords were used.

At least one in five shaves could lead to minor injuries. One shave a year could cause a serious cut.

It remained expensive and inconvenient to shave daily in the early 20th century. Even the rich could not manage it. There was a high risk of shaving injuries.

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The straight razor was the main shaving instrument. You can still see it in barber shops in Tiong Bahru. Straight razors needed to be sharpened every day. It meant that the razor was as expensive as an iPhone is today. It was a prized item in a household that could afford it.

Gillette, the father of shaving, was a bottle salesman in America’s Midwest in the late 1800s. Gillette’s family was ruined by a fire that wiped out Chicago in 1871. The family survived but their property was destroyed. Over one-third of the houses in the city was burned. The suffering affected Gillette. It made him determined to better himself.

In the 1890s, Gillette had an idea. He noticed that bottle caps were thrown away although the bottles were used. He saw the potential of a product that was often discarded. People kept on buying bottle caps, even though they used the same bottle.

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Gillette wanted to apply this concept to shaving. Cheap razors could be disposed of regularly. People would keep buying the product.

Gillette then toiled with his partner, William Nickerson. They designed a razor and a disposable blade. The blade had to be thin to make it affordable. It also had to be sharp and nimble enough for a safe shave.

A company bearing his name was founded in 1901. The Gillette Safety Razor Company patented his invention, protecting him from imitations. The Gillette razors and blades sold like hot cakes.

WWI was a horrific tragedy. But, it was a godsend for safety razors. Gillette supplied the American troops with razors. Over one million razors were sold in 1918. The blade sales were about 14 times that amount. This meant that each blade lasted about a month. This is still the case for my own Gillette razor set.

Despite making his fortune in shaving, Gillette had an impressive moustache. His face adorned the razor set as a guarantee of quality.

Photo of Gillette by Falk, B. J. (Benjamin J.) via the United States Library of Congress

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Gillette’s genius was not in branding or designing a cheap blade. He created the razor and blade business. He subsidised the main product to make money from an associate product. Gillette shaved off the cost of the razor but jacked up the cost of blades. The razor cost US$5, which was half the average weekly wage in 1901. He made profits from the razor.

The business model took off. Many industries have applied it. Nescafe’s instant coffee machines are as cheap as the coffee capsules are pricey.

The Gillette Company flourished for a century. In 2005, Procter & Gamble (P&G) bought out Gillette for US$50 billion. Unilever, P&G’s rival, also could not resist shaving. It bought the Dollar Shave Club, a subscription shaving company, in 2016.

The last five years have been tough for shaving. Sales of razors and blades have sunk due to changing fashions. Young men are unshaven these days. Celebrities like David Beckham and Hugh Jackman sport designer beards. P&G’s grooming division sales dropped 23% in FY2014–2019. Covid worsened the dip. Beards grew in the lockdown, while razors went unsold.

The return to the office could boost razor sales. Razor sales are up by a fourth in 2022. This could boost Unilever and P&G, as well as their emerging market listed subsidiaries. Hindustan Lever supplies the world’s largest shaving markets. Investors should bet on facial hair. Investing in it may be as smooth and safe as a shave.

Nirgunan Tiruchelvam is head of consumer and internet at Aletheia Capital and author of Investing in the Covid Era. He does not hold any position in the stocks mentioned in this column

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