Procter & Gamble: Three Years After Gillette’s “We Believe”
Torches were lit. Pitchforks were thrown. Minds were lost.
On January 13, 2019, personal care brand and Procter & Gamble subsidiary Gillette shocked the internet with “We Believe: The Best Men Can Be”, a campaign advertisement that they believe represents the tagline they proudly donned for over three decades:
“The Best a Man Can Get”.
In a span of one minute and forty-nine seconds, Gillette outlined their chosen corporate social responsibility as a brand by condemning negative behavior common among men such as sexism, sexual misconduct, bullying, and toxic masculinity.
But for many of those who saw it, the reception was nothing of the sort.
Within hours of the commercial’s airing, it was immediately confronted by criticism in the form of an influx of disparaging rhetoric, memes, and comment sections. As of December 2019, the commercial had been “disliked” on YouTube over 1.56 million times, joining the ranks of various popular music videos and episodes of YouTube Rewind as one of the most “disliked” videos in the history of the platform. But as of December 2021, it had fallen out of the top 50.
One look at the feedback at the time of its release could easily lead one into assuming Gillette was perhaps embroiled in scandal.
Gillette was accused of everything including misandry, political propaganda, hypocrisy, virtue signalling, and belittling its own customers. The furor on platforms including YouTube became so volatile that Gillette has disabled its own comments section ever since. For example, British journalist and television personality Piers Morgan accused Gillette of being part of a supposed “pathetic global assault on masculinity,” while controversial right-wing political commentator Tomi Lahren claimed on Twitter, “The only people applauding @Gillette are social justice warriors”.
As for me, I’m not a social justice warrior. Neither am I necessarily criticizing Gillette. I come neither to bury Caesar nor praise him.
I’m simply here to objectively answer a financial and economic question: How has parent company Procter & Gamble performed, three years since the release of Gillette’s attempt at a would-be polarizing call to action?
Especially in light of the onslaught of internet proclamations from disgruntled customers claiming they would boycott Gillette or instead purchase from a competitor brand, it would be easy to assume the stock valuation of Procter & Gamble (P&G) would have gone up in smoke in the months that followed “We Believe”. But to thoroughly understand, one must look back at the current state of P&G as well as the market of personal care products as a whole.
Gillette, which has been around since 1901, had an estimated $43 billion net worth in 1999. In 2005, Procter & Gamble (P&G) purchased Gillette for approximately $54 billion to expand its own international consumer goods trade into the realm of personal care. Today, P&G’s holdings outside of Grooming include Beauty and Care for Home, Feminine, Baby, and Family. In 2018, home care accounted for 32% of total net sales.
As a result of P&G’s massive reach, their subsidiaries in home care alone besides Gillette include Tide and Febreeze. Their global reach has reached well out of their Cincinnati headquarters, touching every continent (sans Antarctica). P&G has also previously owned Duracell (now a subsidiary of Berkshire Hathaway) and the pet food brand Iams (now belonging to Spectrum Brands). Shortly before “We Believe”, P&G reached an agreement in December 2018 with German pharmaceutical provider Merck to acquire Merck’s consumer health branch. The branch is now known as Procter & Gamble Health Limited.
Despite having the expected wealth and influence of any Fortune 500, P&G does face significant competition in the industry of personal grooming…which brings up back to Gillette, as well as the controversy.
Currently, Gillette faces perhaps its most notable competition from Dollar Shave Club (a subsidiary of Unilever) and Harry’s. Additionally, one simply cannot stress the importance of culture trends in the market of personal grooming, as the market plays a role in the global narrative of how superficiality and external appearance is everything. In the fiscal quarter that ended before the release of the ad, P&G sales had experienced a 3% dip in its grooming sector (despite having overall success). Jon Moeller, then-CFO (and current Chairman, President, and CEO) of P&G, said to analysts on Wall Street, “The biggest impact is the societal impacts and incidence of shaving both here and in Europe”, adding, “If you just purchased a package of 12 razor blades from us or from somebody else, we probably won’t see you in that category for a year.”
But even after the release of the ad saw enough furor across the internet to the point where disgruntled Gillette customers began pledging their allegiance to competitors, Phil Wahba, in writing the article “Gillette’s Controversial Ad Is Not Hurting Sales” for Fortune Magazine, hinted that the outrage would not necessarily spell the end of the world for P&G.
In addition to discussing the razor industry as a whole, the article adds Gillette’s latest venture at the time — The Gillette SkinGuard Razor for Sensitive Skin — as evidence that the company was carrying on with business as usual.
As the months passed, P&G has experienced the ups and downs since the Gillette ad’s rude awakening. On April 23, 2019, while the S&P 500 closed in on a new high, the PG stock value dropped 3% while still outrunning earnings and revenue forecasts. But while general sales had grown 5%, Gillette’s sales had dropped 1%.
https://www.barrons.com/articles/gillette-procter-gamble-earnings-51556117984
This information comes courtesy of Jack Hough’s article for Barron’s, “Don’t Blame My Toxic Masculinity for Gillette’s Woes.” The article also adds one particular reason behind the general market’s unpredictability, quoting, “Big razor brands have been struggling with the casualization of workplaces, which means men are growing more scruff…The days of $5 razor cartridges are fading.” It’s mentions how Amazon had listen an eight-pack of Gillette Fusion 5 ProShield razors at a price of $23.49, which divides to less than $3 per cartridge.
In July 2019, the Investopedia piece “Gillette vs. Harry’s vs. Dollar Shave Club: What’s the Difference?” made a detailed summary of Gillette’s competitive advantages and disadvantages in the shave razors industry. The article, which avoids the mention of the ad at all, lists all key products each company provides in its analysis. Most notably, a merger between Harry’s and Edgewell Personal Care was announced in May of 2019. While the company’s stock isn’t publicly traded, it monetizes by offering shaving subscriptions as well as selling in upscale department stores. Meanwhile, while P&G increased Gillette’s valuation with its own brand and publicly traded stock, Dollar Shave Club was the first of the three to offer subscriptions. By the time Harry’s became a subsidiary by the end of the first quarter of 2020, the playing field between these three perhaps became the most level.
A major development was reported between late July and early August, when it was announced that Gillette had lost $5 billion in quarterly sales, resulting in P&G giving Gillette an $8 billion non-cash writedown in terms of valuation.
While it certainly wasn’t a good look — and one led to the original critics of “We Believe” having an opportunity to taunt and snicker — PR was quick to respond. P&G claimed that the ad was not to blame, instead pointing the finger at the aforementioned market competition and fluctuating social norms. The company’s brass also cited fluctuating currency valuations as well. Considering America’s tariff war with China at the time, that point isn’t too hard to comprehend.
Gillette CEO Gary Coombe himself was quick to shield “We Believe” from speculation it was the cause. In fact, he added that the purpose of the ad was to increase their market share around millennial audiences. Regarding the subject of revenue lost due to calls for boycotts that followed “We Believe”, Coombe claimed it was a “price worth paying.”
So now, three year after the advertisement that made Gillette a punchline, how has Procter & Gamble held up? In 2019, their operating income, net income, total assets, and total equity decreased compared to 2018…all the while seeing an increase in total revenue (approximately $67.68 billion).
But in 2021, the metrics appeared on the mend. Compared to 2020, revenue, operating income, net income, total assets (despite a drop in total equity).
In terms of P&G subsidiaries, Gillette is like a drop in the ocean. While Gillette is the big fish and poster face of P&G’s brands in personal grooming, it’s certainly not a one-man band.
As for how they’ve handled it, Procter & Gamble CEO David Taylor said the same month as the release of “We Believe”, “The world would be a better place if my board of directors on down is represented by 50% of the women. We sell our products to more than 50% of the women.” According to the Wall Street Journal, P&G’s board of directors — which includes Intuit co-founder Scott Cook and former eBay CEO Meg Whitman — includes twice as many male members as female.
Additionally, in May 2019, Gillette notably released another campaign advertisement entitled “First Shave”, in which a father teaches his transgender son to shave for the first time.
Even near the end of 2021, Gillette continued to air ads and post to their YouTube channel. While they’ve disabled their comments section and their “dislikes” are no longer publicly visible, it is clear they make no apologies for the mission they set out to accomplish with “We Believe.”
A man of my word, I must hold up my end of the bargain since vowing that this would be an objective analysis. As a result, it’s hard to give a clear-cut answer to the question of whether or not “We Believe” was merely a risk for Gillette or a misfire altogether. One thing’s for sure: The market for grooming razors and personal care has so many confounding variables at play that it’s hard to make predictions at all, especially considering the volatility of any publicly traded commodity.
I’ve seen “We Believe” from start to finish. At a personal level, I couldn’t understand the outrage. However, considering the timing and subject matter, it’s easy to understand how proper execution of the message was key. Although the content of the ad makes the message blatantly clear, it’s easy to see its flaws when you look at the rebuttals (which, of course, involves sifting through plenty of profanity-laced threats and mockery no more than 140 characters each).
For example, Josh Barro of New York magazine commented, “the viewer is likely to ask: Who is Gillette to tell me this? I just came here for razors. And razors barely even feature in Gillette’s new campaign”, adding that the ad appeared to be “accusatory.” Meanwhile, Anne Kingston of Maclean’s felt that the marketing should have focused on more serious issues that still align with Gillette’s vision, such as gender inequality or gender-based price discrimination.
Ultimately, the quality of the ad is entirely subjective and within the eyes of the beholder. Personally, I can see Gillette’s heart is in the right place as a brand based on this. The execution, however imperfectly, is proof of just that.
As for their future, P&G’s stock price stands still strong. Considering their relative wealth, they executed this ad with a mindset of having nothing to lose. After all, Gillette isn’t their only subsidiary. They’ve stood by their message since January 13, 2019 and are ready to handle any PR problem that rises as a result…and revenue fluctuations as well.
After all, as Coombe himself said, “I am absolutely of the view now that for the majority of people to fall more deeply in love with today’s brands you have to risk upsetting a small minority and that’s what we’ve done.”
It’s our job as a society to hold each other accountable as well as hold businesses accountable. If we choose to boycott everything that spurs controversy, we won’t be doing ourselves any favors.
