Monday, April 25, 2011

Dhoni holds down Gillette run-rate

I know, I know, Team Gillette doesn't play cricket. They try to sell blades. Their competition is not so much other blade brands as not shaving. Unfortunately, everytime the TV cameras zoom in on Dhoni or Sehwag, they show a grizzly, unshaven face. It's almost as though it's not manly to go about with a clean-shaven face. When the stars of the other Indian galaxy pose at their premieres, they're unshaven too - Abishek Bacchhan and Hrithik Roshan. The only prince of our political world, Rahul Gandhi, is most often seen with a two-day stubble.

Gillette has tried to fight 'Not Shaving' with a campaign saying women prefer men who shave regularly. Its a hard slog when their competition is the pantheon of young Indian gods. In the last quarter, Gillette spent Rs. 73 cr. on advertising, a staggering 28% of revenue for the quarter. In my book, anything over a 10% spend on advertising is already aggressive. I have nothing against aggressive, especially when the parent company has deep pockets, and a virtual monopoly in many markets. The cautionary sign, though, is that sales growth is not electric - at 20%, it does stand apart from growth at Nestle, for example. And yet, the Price-Earnings multiple for Gillette now stands at over 60. Much too pricey, by my reckoning.

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