Clorox—the multinational CPG behind such brands as the eponymous bleach, Kingsford charcoal and KC Masterpiece barbecue sauce—has announced the launch of the new Güd line of natural personal care products. Already owner of the largest U.S. natural personal care company, Burt’s Bees, Clorox looks to leverage that experience to fill a market hole that Burt’s does not quite cover.
Earlier this year, in January, Clorox took a goodwill impairment charge of $250 million to reflect a decline in the value of the bee product maker. Originally, Clorox acquired the brand in 2007 for $925 million, a value that proved to be entirely too enthusiastic down the line.
Before the recession, natural personal care was the darling of finance, with the Burt’s Bees purchase representing the capstone of a series of private equity and strategic buys. Four years and one recession later and the initial expectations seem to have been overblown.
Poor, underappreciated twenty-somethings
The new Güd brand, comprised of 24 SKUs targeting women in their twenties, is expected to carry a palatable price tag more appropriate for mainstream retail. Products include a shampoo, conditioner, body wash, body mist and a foaming hand wash.
“It’s a pretty aggressively-priced line directed at the mass market,” says Farah Ahmed, associate general counsel at the Personal Care Products Council. This positioning, in and of itself, is nothing new, she says, as brands like Burt’s Bees and Yes to Carrots have already been successful in mass for several years.
If anything, says Ahmed, “it’s an indication that the natural cosmetics space is very vibrant right now.”
According to Nutrition Business Journal estimates, natural & organic personal care sales grew 6 percent in 2010 to reach $8.2 billion in U.S. sales. This growth came after a flat 2009, when recession-shocked beauty consumers traded down to cheaper fare.
And Güd targets a younger demographic not yet fully enthralled by natural personal care products.
“A lot of people tend to get in touch with the products that they’re using as soon as they have children,” says Cara Welch, PhD, director of scientific and regulatory affairs for the Natural Products Association (NPA). But, she adds, “Many consumers now entering their 20s have been raised with green and sustainable all around them, so it’s an intuitive jump. At the same time, it may make them more wary of natural marketing.”
An aggressively-priced natural personal care line is of course bound to raise suspicion of greenwashing, but that remains to be seen. NPA offers the NPA Natural Seal certification for both personal care and household cleaning products, an attempt to add some definition to the word natural. So far, the organization has about 30 companies using the seal on about 500 products. Burt’s Bees has the most products certified under NPA, so it’s not unlikely that Güd will apply for certification as well.
“We don’t know the specifics of their formulation yet,” says Welch, “but we’ll certainly be reaching out to them to see if they’d like to certify with NPA.”
NBJ Bottom Line
Despite the Burt’s Bees write-down, the Güd launch signals good expectations for the future of natural & organic personal care.
“Natural in the mass market is very healthy right now,” says Welch. “If a company comes at the mass channel with a strong offering, like Clorox can, they can really make a dent in the market.”
That Clorox wrote down nearly a quarter of Burt’s Bees’ value this year might suggest the contrary—that natural personal care is a slow market. However, the problem with Burt’s Bees seems to be caused by historically unreasonable expectations, not waning consumer demand. Feature that for the first quarter of fiscal 2012, the brand recorded double-digit volume growth and several new product launches, according to financial filings from Clorox.
“Dial back five or seven years,” says Ahmed, “and we didn’t even have a retail category for natural.” Now natural personal care has its own shelf at most major retailers.
Macro trends in the overall nutribeauty market (which NBJ defines as the $15 billion intersection of the beauty and nutrition industries) point toward convergence of conventional and natural players. The purity that consumers expect of their food they now expect from their skin creams.
Mainstream brands like Covergirl and Neutrogena have jumped on the natural bandwagon, with their respective Nature-Luxe and Neutrogena Naturals lines. “Companies are trying to get whatever marketing edge they can,” says Welch. “And natural is a common one.”
However, in the personal care world, natural or not, success is most often driven by strong branding and customer loyalty. “At the end of the day,” says Ahmed, “the brand speaks for itself.”