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P&G ventures into risky and uncharted territory with acquisitions, says analyst

By Guy Montague-Jones

- Last updated on GMT

Related tags: Procter & gamble, Investment

A Mintel analyst has warned that Procter & Gamble (P&G) must commit significant resources to build the premium male grooming market and turn its recent acquisitions into a success story.

Last week P&G acquired the luxury shaving brand Zihr, only a month after buying up its rival Art of Shaving.

Clear focus for P&G

Mintel beauty analyst Krista Faron told Cosmetics Design: “It is clear that P&G is making upscale men’s grooming a focus strategy.”

Furthermore, Faron said the move takes P&G out of the mass market and into the “uncharted territory” of luxury male grooming.

So what is the potential of the market? The answer to this question will determine whether P&G’s latest acquisitions turn out to be a success or a failure.

Faron said Mintel’s research suggests that luxury male grooming is still very much a niche market. It continues to be out of the ordinary for the average male to spend a lot on his shaving routine.

Build, not capture

The analyst therefore said that P&G is not capturing a market that is set on a pre-determined path to high growth. The consumer goods giant must invest in order to build the market itself.

Faron said P&G, having taken a lion’s share of the market, is certainly not dabbling and appears to be prepared to build and develop luxury male grooming. She said the strategy is risky but“if anyone can pull it off, P&G can.”

P&G’s purchase of Art of Shaving and Zihr also fits into a broader strategy. The company is clearly committed to male grooming following the acquisition of Gillette in 2005 and the subsequent investment made into the brand.

More broadly, P&G is also dedicated to the idea of gender specific cosmetics and personal care products, and in accordance with this Faron said the company had recently reorganized its beauty division along gender lines.

Related topics: Business & Financial, Financial focus

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