One secret to a long-lasting business is finding some product or process that will be needed over and over again. Hair grows, and barring fashions or religious traditions, those hair will have to be shaved. For a long time, the industry had an emperor. But there was some smart competition on the street.
Getting rid of facial and other bodily hair is an activity with a long history. Shaving implements were discovered among relics of the Bronze Age. Ancient Egyptian culture held barbers with great respect as priests and men of medicine are the earliest recorded examples of barbers. It was believed that evil spirits could invade a body through hair and cutting it would set up a definite barrier to the little devils. Implements of different type came and went through the centuries: flint, shells, and hammered metal just to name a few. Fast track to the twentieth century, which brought men the custom of shaving every day, thanks to innovators such as King Camp Gillette. Gillette improved on earlier safety-razor designs, and introduced the high-profit-margin stamped razor steel blade. There’s an old saying in business school circles that the easiest way to build a long-term revenue stream is to “give away razors and then sell the customers razor blades”. In some cases, that bit of wisdom turns out to be literally true. Much like Henry Ford, he envisioned mass-producing razors and although the blades dulled quickly, that only meant he could sell replacements more often. And sell them he did… by the millions.
Today’s disposables, for the most part, are no different in theory or practice than those sold a hundred odd years ago. They are often produced and sold cheaply and are notoriously short-lived and unreliable. It is this commoditisation that Rocky Malhotra, then young Indian entrepreneur, sought to remedy in 1985. Super-Max, the company he founded with his father, managed the feat of becoming the world’s second largest producer of razor blades. Although in the midst of a heavily competitive market, he saw the long-term potential of adding technology to a century-old concept and quietly set out to plant the foundations of a cutting-edge empire.
“Our first steps were not of the groundbreaking type,” Rocky Malhotra explained during a recent stopover in Geneva. “We initially continued what we were good at, what my father’s previous family-owned company founded in 1949 with his brothers did: producing low-cost razor blades by the ton. At Super-Max, we focused on increasing capacity and selling as much as we could and, in the early days, we mostly produced for private brands of retailers located in the United States and Western Europe. This allowed us to not only expand production but to also create economies of scale.”
There are several advantages to this type of contract manufacturing arrangement. For the manufacturer, there is the guarantee of steady work. Having contracts in place that commit to certain levels of production for relatively long periods of time makes it much easier to forecast the future financial stability of the company. But there can be a major downside to this strategy and Rocky Malhotra admits to having had a great deal to learn: “We rapidly came to the conclusion that our customers were not always our friends and if we were not careful, we could jeopardise our operations.”
This point made by the industrialist illustrates the risk mitigation that Super-Max had to consider. Although filling the pipeline by producing for third parties makes sense, it is often the manufacturer’s role to cover the cost of starting up a production platform, manage pipelining the necessary materials, and managing component liability. All these activities may expose the manufacturer to elements over which he has no control and at the mercy of future price compression demands on the part of customers. “When we produced for mass distributors,” Rocky Malhotra continues, “we quickly saw that although sales were increasing at high rate, profits were not following suit”.
An in-depth review of the company’s direction had to take place and Super-Max founders decided to take a major risk: to create their own brand. To take a bold step in a particularly cut-throat environment where one player held over 60 percent market share. But to do so took more than a leap of faith. “Our suppliers, financial backers and consultants thought we were crazy,” says Rocky Malhotra with a glimmer in his eye. It was a very important decision and many partners felt it would be suicidal. “But we did it,” he adds. “And got away with it!”
The task seems, in retrospect, quite daunting. Competing with multinational groups that have spent tremendous resources to grow their brand recognition over decades was no easy task and required a step-by-step process. “We may be the world’s second largest razor blade manufacturer by volume today, but during the transitional period, we did make mistakes.” Over time, through trial and error, the brand succeeded with a painstaking market-by-market approach. “Although this proved to be very time and capital consuming, in the end it was quite rewarding,” he says. “Each market has its particularities and we had to shrink our mindset to the local market level. I do not like repeating the old mantra of ‘think globally and act locally,’ but that is just what we did.”
Super-Max currently has production units in eight countries and surprisingly perhaps, labour costs were not his only consideration when deciding on location. “Over the last 20 years,” Rocky Malhotra explains, “we have been transiting from an environment of barriers to entry and high import duties to a more open and liberal market. Despite this, establishing regional production often makes sense: higher oil prices influence transportation costs and retailers who are transiting from independent shopkeepers to major retailer accounts often prefer to feel and touch their manufacturer. Consequently, instead of opening a factory and then looking for customers, we follow the customer though established continental hubs.”
Reinventing the razor
In addition to a “glocal” approach, the company etched out an equally important plan: to introduce the notion of innovation in an arena distinguished by cheap “stone-age” technology. “We firmly believed that innovation was going to be our locomotive, the real added value to our product. We had to rapidly learn to invent our way into the market, to carefully listen to our customers and to streamline our production methods.” This ability to identify changing consumer tastes and needs, develop new technology and differentiate Super-Max products was essential in order to gain market acceptance of new products in the face of stiff competition. “In India, our home market, where we command a 60-percent market share today, we started up with the conventional old style double edged razor, which ironically still is the best seller worldwide by units. At the time, technological considerations such as ‘inter-blade span,’ ‘skin bulge’ or ‘frictional characteristics’ were not our main concern. We initially launched a double-blade razor followed in 2000 by the launch of the first triple-blade razor, followed by a 4-blade and a battery operated disposable razor.”
Innovating in such a crowded market seems both costly and complicated. In 2010, men’s grooming was worth USD 26 billion globally, accounting for eight percent of the total global cosmetics and toiletries market and of which shaving products hold the lion’s share. Getting a cutting edge is challenging when issues such as patents, copyright, trademark and trade secrets maintain proprietary rights in technology. The complexity increases when dealing with multiple product lines. Super-Max has branched out into toiletries, cosmetics and even stationery, where the company applies a technology-driven growth approach.
Recently, Swiss innovation was added to the mix. Zug-based Innovative Packaging Solutions AG, a leader in mechanical and pressure-controlled dispensing technologies, began shipping the first Airopack dispensers to Super-Max. “Airopack is used in our Super-Max Enviro shaving gel line,” says Rocky Malhotra. “The system operates without propellants thanks to eco-friendly Swiss technology and compressed-air. Airopack units are manufactured with 65 percent fewer CO2 emissions and 20 percent less energy than aluminium aerosol cans. This is proof, in my mind, that in order to ensure growth, we must do things differently all along the line, from production procedures to final product.”
Room to grow
The growth strategy Rocky Malhotra has adopted over the years has clearly paid off. Super-Max market men’s and women’s grooming aids on all continents in 150 countries. He details his strategy by saying that Super-Max products may not yet be prominent in western European markets, but that is by design. “Much of our current expansion comes from the BRIC countries, especially our home market, but also Brazil. We have surfed on growth in the emerging markets where literacy is growing and important infrastructure investment is taking place,” he says. “I project that 60 percent of our growth will be generated in these regions over the next few years.”
Recently, Super-Max relocated its global distribution headquarters from London to Dubai in a bid to focus more on the Asian market and surrounding regions and leverage the skilled manpower available in the Gulf city. They are also planning to set up a razor blade factory in Abu Dhabi soon. Being Chairman of the Board of a multinational company does necessitate intensive travel, and Rocky Malhotra seems to enjoy this lifestyle. His two children reside and study in London, which allows for frequent stop-over to visit with them. “I admit that at times, travelling a lot may take its toll. On the other hand, in doing so, I can keep in constant contact with my representatives, suppliers and retailers and, equally, being on location gives me the opportunity to keep an ear to the ground.” Question is, when does he find the time to shave?
- 8 plants
- 19 international offices
- 60 nationalities
- 70 countries of operation
- 7000+ employees
- Born 1963 in Calcutta
- Studied Accountancy at Malvern college
- Currently resides: all over the world
- Last seen: at the 2012 Cannes Film Festival
Article by Raymond Langley