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Household Battery Industry Gross Margin Prognosis

Apr. 28, 2017 1:11 AM ETBRK.A, BRK.B, ENR, SPB
Robert Altabet profile picture
Robert Altabet


  • Household battery industry pricing should continue stable in the U.S. and in Europe.
  • While there will be some pressure on battery costs from EMD and Zinc, this should be manageable within the current cost structure.
  • Graphite and steel for batteries look to be stable.
  • The gross margin prognosis for alkaline batteries is only modest pressure which should be well manageable with cost cutting.


Prior to 2013, price, costs and margins had been a battery industry concern for years. Duracell (Berkshire Hathaway, NYSE: BRK.A, BRK.B), the company that had led all price changes since the mid 1970s had not led any pricing action since 2007. And that price impact was mitigated by the switch to larger pack sizes at lower per cell (UNIT) prices. Alkaline category pricing got even more complex when Duracell ran bonus pack and free goods offers in 2009 and 2010 to help recover share losses. An already soft category was in danger of losing its profitability until Energizer (NYSE: ENR) bit the bullet and led the price action for the category in March 2011 and again a year later in February 2012. That courageous move restored margins and profitability for the category, but came with consequences from which they have finally recovered. There have been no pricing actions in the category since February 2012. Rayovac, (Spectrum Brands, NYSE: SPB) while lower priced than the premium battery brands, has typically followed either Duracell or Energizer on a percentage basis in all pricing actions.

That need for pricing was exacerbated by the run-up in costs of two key battery commodities zinc and graphite in the 2010 to 2012 period.

Alkaline Battery Pricing

By early 2013, U.S. retail pricing stabilized and the impact of the 2012 pricing action was fully embedded at retail. Europe, which had always been a more challenging price market than the U.S., finally saw pricing gains at retail in 2013 and 2014, leveling off in late 2014.

The last 3 years has continued with stable pricing with no commodity cost pressures.

Alkaline Costs

Four commodities cover 95% of the material cost of an alkaline battery. Of those, Zinc and Manganese have shown the most volatility over the last 7 years. Both of

This article was written by

Robert Altabet profile picture
Since 2002, I have been the owner of a consulting business, Alpha Beta Planning, that specializes in the areas of business development and planning as well as sales and market forecasting. I also provide marketing and forecasting due diligence for investors in the private capital markets. I am an  Advisory Board Member for BWG Strategy, consulting on battery related companies. I am a former Vice-President, Business Management at Duracell Batteries where I spent 28 years with experience that included extensive work in new product development and licensing, marketing management, market research and sales forecasting as well stints in manufacturing and financial planning.

Analyst’s Disclosure: I am/we are long ENR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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