Burt’s Bees Faces Future as Clorox Brand
Burt’s Bees CEO John Replogle believes the company’s sale to Clorox makes a lot of sense.
“The consumer is going natural. Natural is becoming mainstream,” he told The Associated Press. “We’re just moving with the consumer to make our natural products available to them in the places they typically shop.”
While Burt’s Bees will become part of a CPG powerhouse’s brand portfolio once the deal is complete, the company is not looking to turn its back on its natural products past. Burt’s Bees will continue to be run as a “semi-independent” operation from its North Carolina home.
Mr. Replogle believes that the distribution power of Clorox will enable it to find more space in stores in the U.S. and also abroad.
Clorox sees Burt’s Bees continue to grow as consumers place increasing emphasis on health, wellness and the environment.
“We believe that this business will continue to benefit from those tailwinds for years to come as more consumers adopt these lifestyles,” said Beth Springer, Clorox’s executive vice president for strategy and growth.
Discussion Question: How will being owned by Clorox affect the Burt’s Bees business?
This is a great deal for Burt’s Bees. This is a questionable deal for Clorox. While Clorox will be able to expand distribution greatly, the jury is still out whether or not they overpaid for this business. There is no question that the consumer who helped build the Burt’s Bees sales is different than the consumer who shops for bleach at Wal-Mart. Clorox will have to be very careful not to alienate these original loyal consumers. No matter how much money you have, you can’t buy culture. Clorox has a huge challenge in front of it to make this deal work.
John Replogle is exactly right that “natural” is becoming mainstream and natural products are becoming increasingly available where mainstream consumers shop. Burt’s Bees has done an incredible job with helping to build and capitalize on this mainstream natural trend while they have achieved amazing distribution levels through permanent display vehicles. If Clorox allows Burt’s Bees to proceed with its own focus and expertise, as Colgate has done with Toms of Maine, then Clorox will achieve the value and benefits they sought.
In 20 words, John Replogle explained the Clorox strategy. Why not market the brand more widely? When Unilever bought Ben & Jerry’s, they didn’t ruin the product and they helped widen the distribution. Hain Celestial has also improved the distribution of many smaller brands.
Clorox continues to expand its portfolio of products to address consumer needs for products that deliver on efficacy. The company also has a keen eye on being responsive to the growing consumer bias toward sustainability, and this acquisition broadens the company’s ability to deliver more effectively. while broadening the scope of categories in which it plays.
It’s a solid move.
I hated to see “Burt” sell out. Clorox will probably help get Burt’s Bees products in more conventional stores. Overall, a good move. The negative I see is that I fear there may be a reduction in quality as the big corporation tries to cut costs.
The critical point, as alluded to above, is for Burt’s Bees to retain it’s brand integrity, thus maintaining price integrity and protecting margins over the long term. If Clorox allows Burt’s Bees to market the brand autonomously, then this will work for everybody.
The 4 “P”s of marketing are promotion, place, price, and product. Burt’s Bees will control all of these forces if we are to believe Clorox: it has expressed its intent to allow the company to operate semi-independently.
With Burt’s Bees still in control, the company can use it brand’s credibility as a “natural” product to profit from the “trading-down to trade-up” phenomenon.
For example, many people who have annual incomes between $50,000-$150,000 do not need to shop at Wal-Mart. But they do because it leaves them a greater percentage of their total disposable income to spend on lifestyle or luxury purchases.
If one of these people is shopping at Wal-Mart, and she sees Burt’s Bees during her trip, then she has saved time getting the Burt’s Bees product somewhere else.
Clorox is a finely tuned machine–they understand execution and get distribution where it’s the right thing to do. Expect them to continue adding strong brands to their stable and take advantage of their retail teams.
The loser in this transaction will be the small store that stocked the product when it was a unknown and will soon have to drop it as the chains under-price them. Time to look for the next Burt’s Bees.
I think Clorox was very insightful to purchase the brand. It demonstrates their recognition of the growing wellness category and the potential to grow a niche brand into a dominant force. I would envision Clorox differentiating the brand in a number of ways to attract new shoppers and retain loyal customers. Burt’s needed some marketing muscle–Clorox clearly brings that to the party. I hope that the cache of Burt’s Bees is not lost, however. Toms of Maine is doing fine alongside Colgate. And, as cited earlier, Ben & Jerry’s is chugging alongside a large parent.
Good move, Clorox. And, good luck.