26 September 2016

Scott Galloway on Honest Company and Unilever (video)

Scott Galloway on Honest Company and Unilever:

CPG giants Unilever and Procter & Gamble are taking different approaches to fighting competition from innovative startups in the category. Procter & Gamble has invested in its own Gillette Shave Club to rival Harry’s and other razor subscription services, while Unilever is going the acquisition route. It purchased Dollar Shave Club in July and reports surfaced that it was in talks to buy The Honest Co. – which offers subscription diapers and organic personal care products - for $1 billion. Scott Galloway has some advice for all parties involved. Video above published September 20, 2016, by L2inc.com. Scott Galloway is a NYU Stern Marketing Professor and founder of L2inc.

Note: "CPG" is Consumer Packaged Goods.

Domains of the brands referenced above:
  • unilever.com
  • pg.com
  • gillette.com
  • harrys.com
  • dollarshaveclub.com
  • honest.com

Transcript viaYouTube.com:
0:00  So the celebrity deathmatch of this week Apple vs Samsung? No. There's a bigger
0:10  fight shaping up and that's between Unilever and Procter & Gamble what
0:14  brought this on the category has enormous margins and it's still growing
0:18  but not for the big players 90 of the 100 biggest cpg brands in the US lost share last
0:24  year and two-thirds decline in revenue why largely because of the death of the
0:29  industrial advertising complex these companies are great advertisers and
0:32  advertising has become the valarium steel that is losing its edge it's
0:37  getting dollar and dollar in addition the firms are largely dependent upon
0:40  distribution that is in structural decline specifically brick-and-mortar
0:44  grocery distribution and their investors have become addicted to their profits
0:49  similar to a heroin addict so they're likely to tell them to ya go innovate
0:53  but don't give out my profits bc is an entrepreneur smell blood in the water
0:57  these unbelievably rich margins and there's now dozens of startups armed
1:02  with cheap capital and no legacy reflex reaction toward broadcast media or
1:06  traditional channels so two very different reactions PNG is aggressively
1:11  invested in there too let's shave club
1:13  however unilever is taking a different tack and going for the chin and ass the
1:17  baby ass for some sort of analogy and I just can't figure it out with
1:21  acquisitions that directly take on the core of PNG's business specifically
1:25  diapers and razors so on friday was leaked the unilever was in talks with
1:30  the honest company to acquire them for a billion dollars fast on the heels of
1:34  their billion dollar acquisition of dollars shave club by the way it was
1:37  probably leaked by Unilever who wanted to see if the financial markets threw up
1:40  on it before they proceeded both startups are masters of the medium and
1:44  catalyze more traffic and searches in the Cincinnati and London _____ and
1:48  more depth with social platforms and more aggressive with online advertising
1:53  granted it's easier to be innovative when your investors are rooting for you
1:57  to grow and spend more money versus unilever and PNG investors who are
2:01  rooting on them to grow as long as they stay profitable so some unsolicited
2:05  advice to the various parties here first off disclosure we work with both procter
2:10  & gamble and Unilever like them
2:12  with a lot and our backers of the same backers of the honest company's you're
2:15  about to see me kiss everybody's ass every day that goes on the price is
2:20  going to get better
2:21  there is no other acquire the honest company threatened to go public that is
2:25  never going to happen the public markets have become more discerning in the
2:28  private markets let's flip back to the honest company another big piece of
2:31  advice to you sell you are being valued at three to four times revenue in an
2:36  infinite multiple on your even you are cpg company and you are never going to
2:42  get this price again in my view . advice for Procter & Gamble specifically the
2:46  folks at Gillette I think this warrants an adult conversation that if you don't
2:49  invest $MONEY to $MONEY billion dollars plus in your own subscription effort
2:53  specifically Gillette Shave Club you are going to lose share so how does this all
2:57  play out your diapers and your razors are about to become a lot less expensive
3:02  jessica alba and exact set both firms that get this stuff about to get a lot
3:07  richer and tens of thousands of people who manufacture and market razors and
3:12  diapers are going to make less money why the future involves higher stock prices
3:17  more billionaires but fewer middle-class households both firms will come under
3:22  pressure to reduce costs specifically people with technology however the
3:28  upside razors and diapers whenever and wherever you need them
3:33  yay
3:35  mmm


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