Your guide to natural and organic living

Natural body care takeovers

February 19, 2009

Multinationals and large corporations buying out smaller companies is nothing new. Ownership of brands quietly shifts and in some cases, brands that seem unrelated to each other are surprisingly connected.

To name a few of the more well known takeovers:

  • L’Oreal buys the Body Shop
  • Clorox buys Burt’s Bees
  • Colgate Palmolive buys Tom’s of Maine
  • McDonalds buys Pret a Manger
  • Pepsico buys PJ Smoothies
  • Estee Lauder buys Aveda

The main concerns and criticisms with these sorts of takeovers are that:

  1. It saves an often unethical parent company from addressing core issues across the rest of their business. By having a natural brand under their belts, many feel that they are doing their bit.
  2. Unethical parent companies could just be after the market share. For example Clorox – a cleaning products company well know for bleach, buys out Burt’s Bees – a company making natural body care products.
  3. Large companies and multinationals are recognising that natural brands are a very profitable trend with high market share value

Of course the optimist in all of us hopes that these deals will influence the parent company to be more green/responsible/ethical and that this ‘ethical mainstreaming’ will increase the standards of natural body care products across the board.

The Body Shop

The Bodyshop was founded in 1967 by Anita Roddick. Her company was born out of consumers’ desires for cruelty free cosmetics in a time where animal testing was a common occurence. She started making natural skin care products to create an income for her and her two daughters while her husband was away. Six months later with a bank loan of £4,000, £3,000 loan from a friend and the return of her husband, she opened the first shop in Brighton.

She campaigned passionately for human rights, the environment, women and FairTrade – the Bodyshop was the first company to use FairTrade ingredients in its products.

The Body Shops campaigning against animal testing saw it was banned in the UK in 1997. As from March 2009, no cosmetics tested on animals will be permitted for import from Europe or anywhere else in the world.

L'Oreal buys out the Bodyshop

For
  • The Body Shop’s decision to enter into a partnership with L’Oreal was to show them how easy it is to run a successful business without supporting unethical practices like animal experimentation
  • L’Oreal have developed the growth of human skin in a lab, in order to test cosmetics. This technique could virtually eliminate the need for animal testing
  • L’Oréal ring-fences the money that comes from the Body Shop’s sales, which means it stays within the Body Shop and helps to develop the company.
  • Half of the profit from the sale to L’Oreal was donated to the Roddick Foundation – funding campaigns on green issues, human rights and Third World debt.
Against
  • A large percentage of L’Oreal is owned by Nestle. Nestle’s ethical track record leaves something to be desired!
  • Nestle will indirectly profit from the buyout of the Body Shop as it holds a large percentage (26.4%) of L’Oreal shares. If L’Oreal’s share prices increase from having the Body Shop on board, so will the value of Nestle’s shares – making the overall value of the company greater
  • L’Oreal has been criticised for lobbying against an EU ban on animal testing for cosmetics. There is alot of conflicting information on the internet about L’Oreal’s animal testing policy so I decided to email them. I asked them if they test any of their products or the individual ingredients on animals and received this answer,

    “L’Oréal voluntarily stopped using animal testing for the evaluation of its entire range of finished cosmetic products in 1989″.

    It states that finished products aren’t tested on animals, but I didn’t receive any information about the testing of individual ingredients.

  • In an interview with The Telegraph Anita Roddick was asked about her views on wrinkle creams,

    “Moisturisers do work, but the rest is complete pap. There is nothing on God’s planet, not one thing, that will take away 30 years of arguing with your husband and 40 years of environmental abuse. Anything which says it can magically take away your wrinkles is a scandalous lie…I have always said that if they [Body Shop] ever consider putting one on the market, I am out of here like a bat out of hell”.

    Therefore, it doesn’t seem right that the Body Shop has been sold to a company that manufactures products like L’Oreal Revitalift Anti-wrinkle Cream and Collagen Filler Target Wrinkle Reducer.

Tom’s of Maine

Tom’s Of Maine was formed in 1968 when Tom and Kate Chappell moved to Kennebunk in Maine with the goal of “moving back to the land”. They began living on simple and unprocessed food but had trouble finding natural products to use. After getting a $5000 loan, they decided to create and sell their own products. The first product they created was a non-phosphate liquid laundry detergent (Clearlake) which had a “post back” label so they could be refilled and then returned back to the customer. In the first 5 years of their company they developed products for the home and natural body care products, including the first natural toothpaste. This range gradually progressed to mouthwash, soap and deodorant

In 2006, Tom’s of Maine decided to enter a partnership with Colgate Palmolive

Colgate Palmolive buys out Tom's of Maine

Pros
  • Toms and Kate still have a minority ownership (16%) in Tom’s of Maine – Colgate Palmolive own 84% of the company rather than all of it
  • Tom and Kate will continue to hold CEO and Vice President positions which means they still have a say in the way Tom’s of Maine is run
  • Colgate-Palmolive are one of the leaders in oral care. Tom’s of Maine are the leaders in natural care, who also make oral care products. A winning combination?
  • Ethical mainstreaming – Tom and Kate said that their decision to sell to Colgate was partly about broadening Tom’s of Maine’s reach,

    ”We chose Colgate as our partner because they have the global expertise to help take Tom’s of Maine to the next level.”

  • Tom’s can use Colgate’s massive marketing and distribution network to sell their products in many more stores
Cons
  • So far in relative terms, Tom’s of Maine products are in small demand – increased demand could call for shortcuts which could impact on the quality of the products
  • It will be difficult to maintain small town values and standards in a big corporation
  • Colgate are company that do not have any natural oral care lines or use natural ingredients in their oral care products
  • Colgate don’t have a very good track record with animal testing. I emailed them twice to ask if they still test their products or the individual ingredients on animals and they said,

    “In 1999 we adopted a voluntary moratorium on all animal testing of our adult Personal Care products and the ingredients used in these products…Currently more than 99% of our safety clearance reviews are conducted without the use of animal tests”.

  • Some consumers used Tom’s of Maine products because it was small brand with big values – selling to a multinational like Colgate may alienate a loyal consumer base
  • Tom’s of Main’s profit margins are 10 percentage points higher than Colgate’s – it’s a no brainer…
  • According to founder Tom Chappel, maintaining ethical standards such as bio-degradability of ingredients and staying in Maine were ‘deal breakers going into the process’. However Colgate agreed to keep the business based in Maine,

    “Staying here is smart from Colgate’s perspective” said Kate Chappell, who founded Tom’s with her husband in 1970. “They are respecting the fact that we have a unique approach to creating efficacy with natural ingredients and a total values approach to doing business.”

Conclusion

Corporate interest in natural companies is not a clear cut case of good or bad. In most cases of large multinationals buying out these natural brands there is hope that the company has good intentions and that the sale will gradually increase standards of the body care industry as a whole – core values are mainstreamed, more people adopt these values and therefore creating a stronger demand for change in industry.

The best case scenario would be if this could happen without natural brands being bought out by larger, less ethical companies! It seems real a shame that many multinational companies like Colgate and L’Oreal don’t take the initiative to make these changes for consumer and environmental health.

All we can hope for is that products better for the environment and the people that use them will replace many of the less beneficial products on the market.

How do you feel about takeovers of this kind? Do you use any products by made by companies featured in this article? Have you considered boycotting the Body Shop or Tom’s of Maine products?

Sources

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