Rayovac 2015 Annual Report Download - page 25

Competition
In our retail markets, we compete for limited shelf space and consumer acceptance. Factors influencing
product sales include brand name recognition, perceived quality, price, performance, product packaging, design
innovation, and consumer confidence and preferences as well as creative marketing, promotion and distribution
strategies.
The following factors contribute to our ability to succeed in these highly competitive product categories:
•Strong Diversified Global Brand Portfolio. We have a global portfolio of well-recognized consumer
product brands. We believe that the strength of our brands positions us to extend our product lines and
provide our retail customers with strong sell-through to consumers.
•Strong Global Retail Relationships. We have well-established business relationships with many of the
top global retailers, distributors and wholesalers, which have assisted us in our efforts to expand our
overall market penetration and promote sales.
•Expansive Distribution Network. We distribute our products in approximately 160 countries through a
variety of trade channels, including retailers, wholesalers and distributors, hearing aid professionals,
construction companies and Original Equipment Manufacturers.
•Innovative New Products, Packaging and Technologies. We have a long history of product and
packaging innovations in each of our seven product categories and continually seek to introduce new
products both as extensions of existing product lines and as new product categories.
•Experienced Management Team. Our management team has substantial consumer products experience.
On average, each senior management team member has more than 20 years of experience at Spectrum
Brands, VARTA, Remington, Russell Hobbs or other branded consumer product companies such as
Newell Rubbermaid.
Global Batteries & Appliances
The consumer battery product category consists of non-rechargeable alkaline or zinc carbon batteries in cell
sizes of AA, AAA, C, D and 9-volt, specialty batteries, which include rechargeable batteries, hearing aid
batteries, photo batteries and watch/calculator batteries; and portable lighting products. The battery product
category 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. (“Energizer”) (manufacturer/seller of the Energizer brand); The Procter & Gamble Company
(“Procter & Gamble”) (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 in the consumer battery
market. Typically, private-label brands are not supported by advertising or promotion, and retailers sell these
private label offerings at prices below competing name-brands. The main barriers to entry for new competitors
are investment in technology research, cost of building manufacturing capacity and the expense of building retail
distribution channels and consumer brands.
The majority of consumers in North America and Europe purchase alkaline batteries. The Latin America
market consists primarily of zinc carbon batteries but is gradually converting to higher-priced alkaline batteries
as household disposable income grows. In the U.S. alkaline battery category, the Rayovac brand is positioned as
a value brand, which is typically defined as a product that offers comparable performance at a lower price. In
Europe, the VARTA brand is competitively priced with other premium brands. In Latin America, where zinc
carbon batteries outsell alkaline batteries, the Rayovac brand is competitively priced.
We believe that we are the largest worldwide marketer of hearing aid batteries and that we continue to
maintain a leading global market position. We believe that our close relationship with hearing aid manufacturers
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