SheaMoisture & Bain Capital Partnership Controversy

This post is the first of a series called “Thoughts & Things” where Nature’s Pulchritude will weigh in on relevant topics related to natural and organic beauty and food.

Deep. Sigh.  Finding out that one of your favorite indie/small/niche brands has been bought out or funded by a large privately held entity typically causes loyal supporters to let out a collective deep sigh as they often feel the quality of their favorite brand is soon to decline.  It is not always true, but it most definitely is not uncommon. 

I remember the aftermath in the blogosphere after a well known nail polish brand was acquired by a large beauty company (OPI & Coty).  I also cannot help but recollect when a niche hair and skin brand (Carol’s Daughter) had celebrity investors, changed its marketing strategy, abandoned its core customers, and the debacle that occurred when the brand’s quality declined.  Needless to say, many of the brand’s loyal customers jumped ship once they figured out what was happening.  Said brand went bankrupt before being acquired by a major beauty corporation (L’Oreal).  That brings me to the controversy surrounding the announcement of Bain Capital investing in Sundial Brands LLC which produces SheaMoisture and Nubian Heritage.  Many on the internet have been abuzz about this and have been vociferous about their discontent with the investment partnership.  We have seen this movie before, or have we?  

The Facts

Copyright Sundial Brands, LLC

SheaMoisture is a beauty company that was founded in 1992 that produces hair and skin products that has until recently been exclusively marketed to women of African decent to meet their unique hair needs.  SheaMoisture uses 4 generations old recipes that date back to 1912, started by the founder’s grandmother.  SheaMoisture became a household name natural hair brand when their Curl Enhancing Smoothie became the go-to product for natural hair gurus.

SheaMoisture is widely available at Walgreen’s, CVS, Walmart, Sally Beauty, Ulta and a host of brick-and-mortar and online retailers. Their hair and body products are sold at an affordable price point (typically $10, $20 for professional series) and can often be found on sale.  SheaMoisture has over 20 different collections (including men’s, kids, men and women’s shave, hair color, and makeup), many of which have been introduced in the last 2 years.  All of the hair and skin products contain fair trade and certified organic ingredients, most notably the namesake ingredient (Shea Butter), which is often one of the first 5 ingredients.

Sundial Brands (SheaMoisture’s parent company) is valued at $700 million , with annual venue’s of $200 million, according to Wall Street Journal (via MarketWatch).  Bain Capital’s investment amount is unknown.

SheaMoisture “Sells Out”

The worst case scenario is that SheaMoisture “sells out.”  What exactly is selling out?  SheaMoisture abandons its core customer base for the sake of becoming a “renaissance brand,” its formulas gradually begin to change and the organic and fair trade ingredients slowly but surely disappear, then silicones, mineral oil and the whole gang begin getting added into formulas, etc.  You get the point.  SheaMoisture will go the route of Carol’s Daughter and will lose the quality and integrity that attracted early and loyal customers in the first place.

Many SheaMoisture fans are greatly concerned about the choice of investment partner, as Bain Capital was founded by a former republican Presidential candidate (in the US).  Frankly, I am not sure why this is an issue for some.  If you look at various different organizations it is not unlikely you will find a senior level executive(s) with “eccentric” world views, or some “questionable” practices.  Yes it is very much possible that this particular investment firm may not “understand” the mission and values of SheaMoisture and its customers, but that is the responsibility of Sundial Brands to be firm in their values and establish investor criteria that support those values.

SheaMoisture Stays True to its Mission (and Customers)

Power.  Move.  The best case scenario is the SheaMoisture will stay true to its loyal customer base and ‘self’ as a brand, though they are persuing means to increase their profits, valuation, and market share.  Or in other words this is just a good business move.  It should be noted that Sundial Brands was receiving offers to be purchased (wholly acquired), so perhaps it should be heartening that they chose a minority stake investor instead.  

Ideally, once SheaMoisture reaches the financial level they desire they will pay back their investment, buy out Bain Capital’s minority stake, and continue to make quality products.  They will continue to offer products that meet the hair and skin needs of their core customer base, but will also have offerings that will suit the hair and skin needs of other demographics.  SheaMoisture is no longer aiming to be a great “niche” brand but is instead looking to become a beauty powerhouse that happens to have “clean/natural” formulas and use organic and fair trade ingredients in their products.

This partnership could go either way, but it is likely to go one of the two.  Sundial Brands CEO has noticed and responded to the backlash, trying to ensure customers that SheaMoisture and Nubian Heritage products will retain their integrity.

What are your thoughts on this partnership?  Leave your thoughts in the comments!

Commentary: Major Cosmetics Brand to Acquire Former Natural Beauty Brand

Time and time again we have seen what happens to once coveted natural brands when they are purchased by major corporations.  The company continues to be branded as ‘natural’ despite having lost all of its integrity as a natural product just before or after it was acquired by a major corporation.  Supporters of the brand are left feeling conflicted.  One on hand they are happy that their favorite brand has gained the notoriety to be acquired by a major corporation. On the other hand, reality sets in that the products will likely change–and not for the better.  This same story applies to the brand featured in the article, as well as various others over the years.

IMPACT

Carol’s Daughter was once a well known and respected brand heralded for its high quality products and natural ingredients.  It was particularly unique because it was a small business that catered to an audience of African-American women that had not been specifically marketed natural products before.  Over time as the brands’ notoriety grew and it attracted well known investors the integrity of the product began to change.  The changes got worse over time.  Over the last four years some of the brands marquee products have become unrecognizable due to ingredient changes.  The company has had its share of woes including bankruptcy, losing its core customers (after the brand abandoned them), changing ownership, etc.  Their story is a cautionary tale to companies and consumers alike.

BE AWARE

Pay attention to the ingredients in your products.  Mainstream companies often change the formulas and/or ingredients of their products without notice.  Thus when smaller brands get acquired by large corporations the formulas and ingredients change, meanwhile the packaging typically does not.  This has likely happened to most of you at least once.  If you do notice a change in your products be prepared to complain, and if that does not work, do not continue to buy the product!

Another company listed in the article, Kiehl’s, also has a reputation for being ‘natural,’ with ‘quality’ ingredients.  The packaging has not changed much, nor the price, so most consumers don’t notice the changes in ingredients.  The irony is some of their long term users have noticed a change in how the products work, even if they don’t make the connection to the ingredients.

Many people do not realize that several of their favorite natural brands are not what they think they are or used to be.  Be an educated consumer!   Pay attention to your products!  Company logos on the bottle may be a key indicator of a change even if you do not notice a change in the ingredients right away.

 

Thank you for reading!  Please share any similar experiences you’ve had in the comments!

Walmart to Sell Organic Food, Undercutting Big Brands

It will be interesting to see how this plays out, as it could be a real game changer for organic food and products.  The main barriers to organic food are price and accessibility.  Cheaper prices at Walmart immediately removes those barriers.  This may not only impact Walmart’s direct competition in Target, but also organic retailers like Whole Foods, who can be expensive and are not as accessible as the aforementioned stores.  On the contrary, the article suggests this may actually cause an increase in the price of organic foods over time.  How an increase in demand for these products may impact organic farming, the environment (deforesting for land), and future prices will be important factors to watch.

By Elizabeth A. Harris and Stephanie Strom—Walmart plans to announce on Thursday that it is putting its muscle behind Wild Oats organic products, offering the label at prices that will undercut brand-name organic competitors by at least 25 percent.

The move by Walmart, the nation’s largest retailer and grocer, is likely to send shock waves through the organic market, in which an increasing number of food companies and retailers are seeking a toehold.

“We’re removing the premium associated with organic groceries,” said Jack L. Sinclair, executive vice president of Walmart U.S.’s grocery division. The Wild Oats organic products will be priced the same as similar nonorganic brand-name goods.

For now, Walmart will carry the Wild Oats label, which is owned by the Yucaipa Companies, a private investment firm, only in its pantry section, with items like tomato paste, chicken broth and cinnamon applesauce cup. Over 90 percent of its offerings at Walmart will be organic, while the rest will adhere to company standards about ingredients and additives, a Wild Oats executive said, but not to any government regulations.

Walmart will introduce Wild Oats products in 2,000 stores in the coming months.

Instead of hitting the entire national market at once, Walmart will first introduce Wild Oats at 2,000 stores in the coming months, only half of its national footprint, and then roll it out to the rest of the country. Mr. Sinclair said that concerns about supply kept the retailer from introducing the brand in all its stores at once.

“What we don’t want to do is launch it in 4,000 stores and then not be able to supply those 4,000 stores in the short term,” he said. “Certain commodities are challenging in terms of being able to access both the raw material and the processing capacity.”

In an effort to manage and ensure the supply, Mr. Sinclair said, Walmart plans to enter into long-term agreements with suppliers — for five years, for example — so it can lock in what it will need to meet its enormous requirements.

Over at least the next few years, Walmart’s move is likely to raise prices for organic ingredients, which are already going up because of fast-growing consumer demand. Organic food accounted for $29 billion in United States sales in 2012, according to the most recent data, the Organic Trade Association said. Ten years earlier, its sales were $8 billion.

Eager to tap into that demand, Target, one of Walmart’s primary competitors, said on Tuesday that it would expand the presence of organic products in its stores.  At Walmart, internal company research found that 91 percent of customers said they would buy “affordable” organic products if they were available, executives said.

While organically produced grains do not necessarily cost more to grow than other types, Lynn Clarkson, founder of the Clarkson Grain, which processes and sells organic and conventional wheat, soy, corn and other grains, said they commanded a huge premium because they were scarce.

“Right now, there is so much demand and competition for supplies that the price is very high, and I cannot imagine that changing anytime soon,” Mr. Clarkson said.

He estimated that farmers in the United States were producing about six million bushels of organic soybeans, for example, when some 20 million bushels are needed to meet current needs. Organic soy is selling for $25 to $30 a bushel, Mr. Clarkson said, or about twice the price of regular soy beans.

The amount of land devoted to organic farming has grown, according to the Agriculture Department, but not nearly enough to address growing consumer demand.

“Younger people are much more interested in the chemistry of their lives, and so for them the issue of pesticides is a troubling one,” Mr. Clarkson said.

Ultimately, however, Walmart’s move could increase the supply, and eventually bring prices down.

The online grocery retailer Fresh Direct has an extensive selection of organic products among its overall merchandise mix. A five-pound bag of conventional russet potatoes was selling for $3.99, while its organic counterpart was $5.99. A box of Driscoll’s organic strawberries is usually a dollar more than its conventional brethren.

“We offer both, but more often than not I try to push people into the organic because I think it’s better,” said David McInerney, a founder of Fresh Direct. “You can compress the margins on organic to make it more attractive.”

Mr. McInerney said he did that in hopes of building the scale of organic products. “Prices can and will come down with scale,” he said. “We’ve already seen that as demand for organic products has grown.”

He said an increasing number of farmers he dealt with were considering switching at least a portion of their conventional production to organic, attracted by the premiums.

But even if a farmer decided to turn to organic production today, various restrictions mean that it would be three years before any crop could receive the federally approved organic seal.

via (The New York Times)

Share your thoughts!

 

The Globes featuring Karen’s Body Beautiful

In honor of Black History Month, February’s “The Globes” are featuring black owned businesses with a commitment to high quality products and ingredients.  Each company has been carefully selected because they align with focal points of this site.  None of these companies have paid to be featured and all opinions are my own!

Karen’s Body Beautiful.

Image Courtesy of Karen’s Body Beautiful

Karen’s Body Beautiful was founded by namesake and proprietor Karen Tappin in November of 2003 in Brooklyn, New York. Karen began making hair and body products after learning about the presence of preservatives and possible carcinogens in many commercially available products, and decided to create all natural alternatives.  Karen’s Body Beautiful went from a small home-based full spa line to a budding brand with a store in Clinton Hill, Brooklyn and a several loyal customers in a short time.  Karen’s Body Beautiful follows the philosophy that “ingredients really matter” and has formulated her luxurious spa quality line to exclude ingredients such as “sulfates, parabens, propylene glycol, phthalates, mineral oil, paraffin, DEA, and artificial color.”  Her products are for all hair types and skin needs.  Offering 13 different fragrances, including unscented, you are sure to find a product that meets your scent, quality, and efficacy standards!  Their products are cruelty free and are not tested on animals. Karen’s Body Beautiful products are packed in PET containers and are recyclable!

Image Courtesy of Karen’s Body Beautiful

Karen is quite the entrepreneur. In addition to Karen’s Body Beautiful, she opened a larger store in Brooklyn, NY in 2006, which also features a spa.  Her products are now available in select Target stores across the country, in addition to being sold on her website, beauty supply stores, and online boutiques.  Karen’s Body Beautiful products have high quality ingredients and feature diverse offerings to suit customer needs.  I appreciate her commitment to quality ingredients, as well as her success as an entrepreneur!  I have yet to try Karen’s Body Beautiful products, but have heard great things about them.  As their presence in Target and similar stores increases I am sure we will hear much more from them in the future.

Nature’s Pulchritude’s Picks: Sweet Ambrosia Leave-In Conditioner, Maximum Moisture Body Lotion, Luscious Locks Hair Mask, Shea Body Butter, and Butter Love

Sweet Ambrosia Leave-In Conditioner

Karen’s Body Beautiful very recently celebrated 4 months in Target and 10 years in business, Congrats! Visit their website to learn more about their products!

Would you like your business featured in “The Globes?” Visit the “Contact” page to get in touch with us!