CloroxCo. posted a remarkable 28% increase in profits during its second fiscal quarter, thanks in part to a boost in sales of disinfecting products amidst fears of the H1N1 virus. Clorox’s brands of natural & organic personal care (N&OPC) products and household cleaners—including N&OPC sales leader Burt’s Bees and eco-friendly household cleaning giant Green Works—have proven less recession-resilient, however. According to Clorox executives, both brands exhibited reduced volume growth in 2009. Burt’s Bees saw its growth percentage fall before stabilizing in the mid single-digits, while Green Works dropped more precipitously after 2009 detergent sales fell below expectations. “Green Works and Burt’s have definitely taken a hit from the current economic situation,” said Larry Peiros, executive vice president and COO of Clorox North America. “We still absolutely believe in those two businesses, and we think over the long-term they’ll obviously return to more substantial health.”
To combat stagnation and decline in sales, Green Works has reduced premiums on its detergent products in order to bring its prices closer to those of leading conventional brands. Burt’s Bees introduced a new line of natural toothpaste in January and has announced plans for international expansion to help spark future growth.
Clorox launched Green Works in 2008. The introduction of the line helped to boost overall natural & organic household cleaners sales 35% to $737 million that year, according to Nutrition Business Journal research. Clorox acquired the Burt’s Bees brand in October 2007 for $925 million.
NBJ Bottom Line
The reduced growth of Burt’s Bees and Green Works is not an isolated drop, but it may not necessarily be a symptom of a general downward trend for these product categories either. Since 2008, the N&OPC market has shown a steady deceleration of sales expansion. After riding high on spectacular double-digit growth from 2004 to 2007, consumer sales growth dropped from 16.8% in 2007 to 8.4% in 2008. Burt’s Bees has topped NBJ’s list of U.S. N&OPC companies from 2005 to 2008, and its second-quarter growth rates remain on par with those of the entire N&OPC industry—an industry that continues to outstrip the growth of conventional personal care products. Consumers also have become more selective and savvy about the natural & organic products they buy. Thus, these declining rates of expansion may be a factor not only of the global recession, but also of the maturation of the N&OPC industry as a whole. Clorox executives expect expanded growth for its N&OPC brands in the second half, anticipating that Burt’s Bees will return to mid to high single-digit growth.
NBJ’s 2010 Organic issue will include coverage of the N&OPC and household products category. To order a copy or become a subscriber, visit the NBJ subscription page.
Related NBJ Links:
2009 Natural & Organic Personal Care & Household Products Report
Amidst a Grim Economy, N&OPC Product Sales Continue Growing in 2008
Europe Says “Oui” to Natural Personal Care
Related Functional Ingredients magazine link:
QAI Launches First “Made with Organic” Personal Care Certification & NSF Label