Five years ago American Safety Razor Co. was an orphan with a bleak future.
Its parent, Philip Morris Inc., had decided to get out of the razor blade business and was preparing to close the factory when a group of employes came up with a plan to buy the company.
Skeptics doubted they could succeed where the giant cigarette and beer manufacturer had failed, but today American Safety Razor's sales and profits are sharp.
Once on the verge of going under, American Safety Razor is tied for first place in the women's razor market, is the biggest manufacturer of private-label blades -- supplying People's Drug Stores, Drug Fair and Safeway -- and is expanding into the soap and candy business.
"I can't overemphasize the great pride in being owners," says John R. Baker, 61, who had been president of the company for only three months when he and other executives bought it from Philip Morris.
"Sure, we all cared about the business when it was owned by Philip Morris. But now we just care a lot more. Even though we maintained our market share and realized a profit, we weren't important enough to the parent company."
Baker will not reveal exact financial figures for the privately held business, but says ASR's net income in 1981 was nearly $4 million on sales of about $125 million. For 1982, he added, sales are running at a $200 million annual pace, including several acquisitions in the soap and candy lines.
American Safety Razor's troubles began in 1969, when Philip Morris acquired the Miller Brewing Co., explained Peter A. Milone, ASR's vice president in charge of the international division. "Once Philip Morris obtained Miller, we knew it was all over for razor blades. We just did not fit into their highest priorities."
Philip Morris finally gave up in 1974, and after several other deals fell through offered to sell ASR to the French Bic company, a big maker of disposable razors.
But the Federal Trade Commission challenged the Bic acquisition on the ground that it would reduce competition. Philip Morris executives disputed that allegation and the company warned that it would liquidate its razor division if the Bic sale fell through.
Five hundred ASR employes traveled to Washington to lobby the FTC, but when their efforts failed, Bic withdrew its offer.
Finally, with the assistance of the San Francisco investment banking firm of Bangert, Dawes, Reade, Davis & Thom, nine ASR employes raised $16.8 million -- the bulk in government and private loans -- and on Oct. 1, 1977, became the owners.
Founded in Brooklyn 106 years ago, American Safety Razor has always been primarily in the shaving business, but its entry into other areas could not be called a bold departure. "In the 1970s, we were part of Philip Morris' general products division," Baker points out, "and that meant making gum and soap as well as blades. We've just decided to become more involved in these non-blade areas ourselves."
Razor blades still constitute the lion's share of the business. Thirty-five percent of ASR's sales are repesented by its own brands of razors for women and men. Its women's razor, Flicker, no longer is the largest selling product in that market, but in total market share for women, ASR is neck and neck with Schick products. Each commands 35 percent.
In addition to its women's shaving products and the Personna line for men, ASR is the largest private label blade manufacturer in the country. These brands compose 25 percent of total sales. Another 25 percent is surgical and industrial blades.
When measuring total market share of men and women's razor blades, the Gillette Co. is all by itself. According to the most recent A. C. Nielsen data, Gillette has 59.4 percent of the market, followed by Schick with 22 percent, ASR with 11 percent and Bic at 7 percent.
When it comes to selling women's razor blades, the story is different. ASR and Schick evenly split 70 percent of that market, while Gillette has about 18 percent. Women's blades represent only 7 percent of the blade market.
Figures through June from Towle-Oller Trends Inc., which monitors health and beauty aids shipments to stores across the nation, show that ASR differs greatly from Schick in the way it distributes its women's products.
About 54 percent of Schick's women's shavers are sold at food stores, while only 21 percent of ASR's are sold there. "It's interesting," said Diana Temple, vice-president of Salomon Brothers, who follows the personal grooming industry, "ASR obviously has carved out a significant niche for itself in the women's shavers and private label areas. But when it comes to distribution, they sure do not prefer supermarkets. On the other hand, Schick, which is neck and neck with them, prefers food store outlets."
For years, Philip Morris made high-quality, private label soap, and in July 1980, ASR decided to branch out into the same field. It purchased Hewitt Soap Co. from Procter & Gamble and a year later bought the Duveen Soap Co. from the Squibb Corp.
In 1981, ASR decided to enter the candy business by adding Schrafft's and Bartons to the family.