Edgewell Finds COVID Bright Side: Wet Ones On Way To Becoming ‘Little Mega-Brand’

Skin hygiene is one of several categories where Edgewell Personal Care has a “right to win" after 18 months of renovations, according to the company’s 20 November Investor Day presentation. The firm has doubled its production capacity and has plans for a “full suite” of product innovation to build on Wet Ones’ 60% growth in fiscal 2020.

Edgewell Personal Care Company saw 60% growth in its Wet Ones business to $100m in fiscal 2020, despite constrained supply, and expects the brand to double in size over the next three years.

Presenting on 20 November at the firm’s Virtual Investor Day, Edgewell leadership outlined a long-term growth strategy that follows 18 months of rebuilding and the brunt of COVID-19 to date.

Part of that strategy is Wet Ones, which Edgewell’s Eric O’Toole, president North America, called “a gem that has found itself as a must-have product in our new world of germ awareness and protection.”

President and CEO Rod Little offered additional perspective. “We talk about all the negatives from COVID on the sun-care category and the men's shave category. But we have a hygiene category where we participate with the Wet Ones brand as the No. 1 brand in the hand hygiene segment, the body hygiene segment. There's not a close second,” Little said.

 

"We've been too focused on technology as opposed to the consumer, and we were slow to react to the shift to digital and e-commerce. Looking back, it's no surprise that our performance has suffered." – Rod Little

 

Edgewell expects Wet Ones demand to be durable, continuing even in the post-COVID world, due to increased consumer focus on personal cleanliness.

The company has doubled its in-house production capacity for the brand, compared with pre-COVID levels, and has plans for a “full suite” of product innovation to meet consumers’ changing hygiene needs, amounting to what Edgewell envisions as “a little mega-brand in the hygiene space.”

Wet Ones’ expansion will include the introduction of Wet Ones Plus Alcohol to compete in the vastly enlarged hand sanitizer market.

Wet Ones may be late to the game compared with the flood of entries to the hand sanitizer category months back under relaxed regulations, including in the US, to help meet global pandemic demand.

However, Edgewell expects retailers and consumers to embrace “a trusted brand versus something that just popped up,” Little said. (Also see "US FDA Adds Hand Sanitizer Import Alert Category After COVID-19 Production Surge Turned Deadly" - HBW Insight, 18 Sep, 2020.)

He noted that Wet Ones’ international business doubled in fiscal 2020, ended on 30 September, but totaled just $12m, representing significant white-space opportunity.

O’Toole added, “The combination of wipes capacity expansion and the addition of hand sanitizer will continue through fiscal '22, giving us the opportunity to deepen our investment in equity building for this terrific household name. Shaping the brand's image and utility, adding dimension outside of its historical baby and toddler routes, will be the core part of our work here.”

Long-Term Organic Growth Of 2% to 3%

Shelton, CN-based Edgewell, which separated from Energizer batteries some five years ago, identified skin hygiene as one of several categories, including men’s grooming and sun care, where it has a “right to win” with brands that already are recognized leaders with consumers. (Also see "In Brief: NPD On Cosmetic Shoppers; African Beauty Market; Avon’s FY 2014" - HBW Insight, 9 Mar, 2015.)

The firm’s men’s grooming portfolio is made up of Bulldog and Jack Black, whose collective growth has been twice to three times that of the overall category in recent years, and CREMO, acquired in September for $235m.

Headquartered in Laguna Beach, CA, CREMO is one of the fastest-growing masstige brands in men’s grooming, offering a complete line of “barber grade” beard, hair, shave prep and skin-care products, according to Edgewell.

The firm expects 15% annual revenue growth in its men’s grooming segment going forward.

Meanwhile, Edgewell says its sun-care business, featuring Banana Boat and Hawaiian Tropic, gained market share in 2020, an encouraging sign amid heavy COVID disruptions.

“We will continue to leverage our existing compelling brands, deploy our world-class formulation capabilities and create interesting innovation for consumers, all in a regulatory environment that will be increasingly challenging,” chief financial officer Daniel Sullivan said. (Also see "CARES Act Makes Threatened Sunscreen Ingredients GRASE Again, But Next Steps Uncertain" - HBW Insight, 15 Apr, 2020.)

He cited premium sun care as the fastest-growing subsegment of the category and one that Edgewell is keen to tap.

Announced on 11 November, Edgewell’s net sales declined roughly 9% to $1.95bn in fiscal 2020, compared with the prior year, as COVID landed particularly hard on its sun care and wet shave businesses. The latter, its largest business by a good measure, comprises Schick and Wilkinson’s Sword.

Edgewell’s strategy designates Wet Shave as a “right to play” category, along with Feminine Care.

While immediate visibility remains low, Edgewell is targeting long-term organic sales gains of 2% to 3%, beginning with low single-digit organic growth in fiscal 2021.

Some analysts question whether the company’s long-term goals may be overly ambitious. But Little, who served as Edgewell’s CFO before being appointed CEO in March 2019, is optimistic about the moves the company is making, including a new leadership team and an efficiencies program poised to deliver $270m in cost savings.

In the past, he said, “we've been too focused on technology as opposed to the consumer, and we were slow to react to the shift to digital and e-commerce. … Looking back, it's no surprise that our performance has suffered.”

He added, “I’m confident in where we are going as a business and our ability to deliver on our financial objectives.”