Rayovac 2005 Annual Report Download - page 27

agreement, United will assign the trademarks to
the customer not earlier than May 1, 2009, but
otherwise within thirty days after the date upon
which such required minimum purchase volumes
are achieved.
Competition
In our retail markets, companies compete for lim-
ited shelf space and consumer acceptance. Factors
infl uencing product sales are brand name recogni-
tion, perceived quality, price, performance, product
packaging and design innovation, as well as creative
marketing, promotion and distribution strategies.
The battery marketplace is highly competitive.
Most consumer batteries manufactured throughout
the world are sold by one of four global companies:
Spectrum Brands (manufacturer/seller of Rayovac
and VARTA brands); Energizer Holdings, Inc. (manu-
facturer/seller of the Energizer brand); The Procter
& Gamble Company and its subsidiary Gillette
(manufacturer/seller of the Duracell brand); and
Matsushita (manufacturer/seller of the Panasonic
brand). We also face competition from the private
label brands of major retailers, particularly in Europe.
The offering of private label batteries by retailers
may create pricing pressure. Typically, private label
brands are not supported by advertising or promo-
tion, and retailers sell these private label offerings
at retail prices below competing brands. The main
barriers to entry for new competitors are investment
in technology research, cost of building manufac-
turing capacity and the expense of building retail
distribution channels and consumer brands.
In the U.S. alkaline battery category, the Rayovac
brand is positioned as a value brand. In Europe, the
VARTA brand is competitively priced with the compe-
tition. In Latin America, where zinc carbon batteries
outsell alkaline batteries, the Rayovac brand is
competitively priced with the competition.
Our primary competitors in the lawn and garden
business segment include: The Scotts Miracle-Gro
Company, which markets lawn and garden products
under the Scotts, Ortho, Roundup, Miracle-Gro and
Hyponex brand names; Central Garden & Pet Com-
pany, which markets garden products under the
AMDRO, IMAGE and Pennington Seed brand names;
and Bayer A.G., which markets lawn and garden
products under the Bayer Advanced brand name.
Our primary competitors in the electric shaving
and grooming market are Norelco, a division of
Koninklijke Philips Electronics NV (“Philips”) (which
only sells and markets rotary shavers) and Braun,
a division of The Procter & Gamble Company (which
sells and markets foil shavers). Only Remington
sells both foil and rotary shavers.
The pet supply industry is highly fragmented with
over 500 manufacturers in the U.S., consisting pri-
marily of small companies with limited product lines.
Our largest competitors in this product category are
The Hartz Mountain Corporation and Central Garden
& Pet Company.
Our primary competitors in the household insect
control market include: S.C. Johnson & Son, Inc.,
which markets insecticide and repellent products
under the Raid and OFF! brands; The Scotts
Miracle-Gro Company, which markets household
insect control products under the Ortho brand; and
Henkel KGaA, which markets products under the
Combat brand.
Our major competitors in the electric personal
care market are Conair Corporation, Wahl Clipper
Corporation and Helen of Troy Limited.
Our primary competitors in the portable
lighting category are Energizer Holdings, Inc.
and Mag Instrument, Inc.
Some of our major competitors have greater
fi nancial and other resources and greater overall
market share than we do. They have committed
signifi cant resources to protect their own market
shares or to capture market share from us in the
past and may continue to do so in the future. In
some key product lines, our competitors may have
lower production costs and higher profi t margins
than we do, which may enable them to compete
more aggressively in advertising and in offering retail
discounts and other promotional incentives to retail-
ers, distributors, wholesalers, and, ultimately, con-
sumers. Companies that are able to maintain or
increase the amount of retail shelf space allocated
to their respective products can gain competitive
advantage.
Seasonality
The acquisitions of United and Tetra have
impacted the seasonality of our business, which,
prior to the acquisitions, was weighted heavily
towards the Christmas season (Spectrum’s fi rst fi s-
cal quarter). Demand for lawn and garden products
typically peaks during the fi rst six months of the
calendar year (Spectrum’s second and third fi scal
quarters) and pet supplies sales remain fairly
2005 Form 10-K Annual Report
Spectrum Brands, Inc.
2005 ANNUAL REPORT 7