Bleach manufacturer Clorox is the latest big player to muscle into the naturals market with the acquisition of Burt’s Bees for $925m.
Large companies are beginning to pick off small natural and organic personal care firms to capitalise on the growth of the niche market and ultimately boost its top-line growth.
On its current double-digit growth path Burts Beesis set to achieve sales of $170m in 2007, which is around five times less than the price Cloroxpaid for the company.
Justifying the high price is the sales potential of Burt’s Bees. Clorox expects the acquisition to provide an additional two points of sales growth in the fiscal years 2008 and 2009.
Clorox CEO Donald Knauss said: “This acquisition allows us to enter a growing market that’s consistent with consumer megatrends.”
“The Burt’s Bees brand is well-anchored in sustainability and health and wellness, and we believe it will benefit from natural and ‘green’ tailwinds”
Organic Monitor director Amarjit Sahota told CosmeticsDesign.com that Colorox will also benefit from the green image of Burt’s Bees.
As for Burt’s Bees, Sahota questioned whether the move would be in the long-term interests of the firm, despite the deal meaning that Burt’s Bees products will be sold through mainstream retail channels.
He said: “We expect Burt’s Bees to become damaged by the acquisition because of its impact on customer and retailer perceptions of the brand.”
In a recent interview with CosmeticsDesign.com Sahato expressed concern that multinationals with strong established retail channels are marginalising smaller brands and selling diluted natural and organic products.
He called for tighter regulation of the naturals market to prevent companies from selling ‘natural’ cosmetics that contain relatively few natural ingredients.
Burt’s Bees, which was previously owned by private equity firm AEA Investors, has been a strong campaigner for greater regulation of natural and organic cosmetics in recent times.
Sahato fears that may not continue after the latest buy-out because of the demands of the mass-market and the fact that Burt’s Bees new parent company has no history of selling natural or organic products.
The takeover of Burt’s Bees follows two major acquisitions of natural personal care players last year, namely L’Oreal’s acquisition of Body Shop and Colgate-Palmolive buy-out of Tom’s of Maine.
Hi Christine –
Thanks for joining us. I’m a big fan of your photography. =)
Yes, Burt’s Bees was owned by an investment firm but somehow that seems more … pure than being owned by Clorox. It’s just a strange play by Clorox to buy them since Clorox is mostly in the cleaning market but maybe this is their move into natural products and we’ll see Burt’s Bees hit it out of the park with some new and natural cleaning products?
Before this, they were owned by someone else. (EAE Holdings, if I remember right from seeing it in Hoovers.) They became the majority shareholders in or around 2003, from what I could tell in my Google searches yesterday.
But Clorox? That just makes me feel … dirty.
May I also post this on my blog as well? Wow, all these small companies are being scooped up, although I would hardly call making $170M a year small, lol!
I am doing a give away (it is a cntest) with some of your oils. I am sure people will be scrambling to get them! Your oils are really amazing, have I mentioned that?
Can I reprint this on my blog and OF COURSE give you full credit and a link?
There’s another article about Burt’s Bees right here:
http://www.nytimes.com/2007/05/16/business/smallbusiness/16burts.html?ex=1205640000&en=b4630f701659f3d8&ei=5087&mkt=bizmainheadB
Yes, it is good news for the Indies since Burt’s Bees definitely had the “We’re the little guys!” angle going for them for a while.
It’s also great news that they are selling so much based on their “naturals” market – sales of $170million in just lotions, soaps and a small line of make up. That means that there’s a lot of room for all of the little guys to worm their way in and get a seat at the table.
Whaaaaat? Tom’s of Maines too? I posted before reading the entire thing. *not happy over here.
But Joanna has a good point. Thats a good optimistic view Joanna, thank you for that reminder 🙂
That puts an end to all my burts bees purchases. THANK THANK THANK YOU AM for this post and keeping me us all informed of these changes. It probably would have been ages before I had learned of this.
yeah, seriously wondering who i can shop with now. seems like every time i buy ‘brand’ anything, i’m now giving money to a major corporation without even realizing who it ultimately goes to.
i’ll definitely be looking more at local and independently produced products.
woah. I guess this is good news for us indies.