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When Procter & Gamble bought Gillette for US$57 billion in 2005, it created the world's largest consumer brand business with combined sales at the time of above US$60 billion a year. They had 21 brands that each boasted annual sales of more than US$1 billion; five of Gillette's brands and 16 of P&G's.
One element of the merger was to create a business better able to defend itself against the big retail brands like Walmart through equalling its financial muscle and having those “must have” brands where consumers will not accept substitutes.
Over 100 years earlier, also in the U.S., 86 tanners put their over 100 tannery units and associated extensive forests into the United States Leather Company in the hope that its huge size (US$130 million in 1893) would allow it to counterbalance the power of the meat packers and stop hide price rises. The United States Leather Company was the largest company in the U.S. and a founder company of the Dow Jones.
The ownership of brands where there is consumer pull makes all the difference here. The United States Leather Company strategy never worked and, indeed for a while, they looked more like a lumber company than a leather group. The slogan which they adopted for their major product, hemlock tanned heavy leather, was “there is nothing better than leather”.
While the Gillette takeover worked well, the United States Leather Company was by comparison a failure. The packers found ways to bypass them and a couple built their own large tanneries, adopting more up-to-date processing methods. A few years later, as their margins had slipped away and technological changes eroded the U.S. Leather market share, a commentator wrote that this slogan was an error and should have been “there is nothing better than leather at 16 cents a pound” (heavy leather is sold by weight).
He was emphasising that leather needs to offer value for money and should have added that some innovation, strategic and product innovation, was also required. The marketplace was evolving and leather was not evolving with it. Sadly, when the industry came back to strength it was with largely new companies and the old ones had closed.
The current issues we see around the world have some similarities. Complaints about dishonest advertising by synthetics are valid but defending against them and doing nothing more is not a quick fix. If the industry agrees that after years of denial it wants a promotion campaign, then let’s make it a long, constant well planned one. A lot of uncoordinated, bitty, parallel campaigns carrying an expectation of quick sales and higher margin; and without the associated product and process development to keep leather reinventing itself for a changing world.
Leather has been a ubiquitous, versatile material since its origins in the mists of time. That versatility has allowed it to adapt and grow to fit knew roles and end uses as society has advanced, and tanners have worked hard to adapt it to physically, chemically and aesthetically perfectly offer the features and benefits required.
If ever we needed such a new proposition, supported by a simple long-term commitment to a promotional and educational programme supported across the globe (and all sectors) is now.
Dr Mike Redwood
July 4, 2018
Follow Dr Mike Redwood on twitter: @michaelredwood
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