While the early November sale of Gardenburger and Bear Naked to Kellogg may not have come as much of a surprise to those who have spent the last decade watching natural foods companies get snatched up by mainstream conglomerates, the Halloween day acquisition of Burt's Bees by Clorox spooked even the most sanguine observers.
Kellogg, which also owns Kashi, Morningstar Farms, Worthington and Loma Linda, is an experienced shopper in the natural and organic corporate marketplace. But that's not the case with Clorox. Along with its namesake bleach, the Oakland, Calif., company makes Fresh Step cat litter, STP auto products and Kingsford charcoal. But lotions, balms and face creams—either natural or mainstream—have never been on Clorox's product list.
So why would Clorox pay $925 million—more than five times the projected $170 million that Durham, N.C.-based Burt's Bees is expected to gross this year—for a cosmetics company? And what does Clorox's interest in glowing, healthy skin and hair mean to natural personal care consumers and retailers?
Like many other businesses, Clorox is trying to green up its image. The company announced in early September it would debut a biodegradable, plant-based cleaning line called Green Works, and buying a natural personal care company complements that move.
Although "the core consumer of natural and organic products is going to immediately know that Clorox is not the company they want to be purchasing from," that probably won't make much of a difference in Burt's Bees' overall sales. "The loss of business from these core customers is not even a blip on Clorox's screen," said Lynea Schultz-Ela, principal with A Natural Resource Consulting in Hotchkiss, Colo.
Clorox execs were tight-lipped about what they're going to do with Burt's Bees, saying only that they plan to expand distribution into more mass-market retailers. However, some analysts have questioned how Clorox, which has no connections in the personal care marketplace, can enhance Burt's Bees' distribution.
Scott Van Winkle, managing director of equity research with Boston investment firm Canaccord Adams, predicted Clorox would follow a standard acquisition protocol with Burt's Bees, spending the first year evaluating the company and then "within two years doing a narrowing of product—cutting down to the higher-volume products."
Roxanne Quimby, who founded Burt's Bees in 1984 with beekeeper Burt Shavitz, said she believes that the "Clorox Co. will support sustainable, patient and steady growth of the Burt's Bees brand." Quimby said she is "delighted" with the Clorox acquisition.
"Although at first blush the pairing might appear unusual, the Clorox Co. has done an excellent job of stewardship of its premier brand, Clorox, which has been a household word for almost 100 years," she said. "It was my dream, as founder of Burt's Bees, to create a ?household word' known and used by many Americans."
Quimby, who bought out Shavitz in 1999, sold 80 percent of Burt's Bees to international investment firm AEA Investors in 2003 for $155 million. The sale to Clorox means she will no longer have a financial or personal stake in Burt's Bees.
Last year, Quimby started a children's organic cotton clothing company, happy?greenbee, based in North Carolina.
Vicky Uhland is a Lafayette, Colo.-based freelance writer and editor.
Natural Foods Merchandiser volume XXVIII/number 12/p.1,20