The acquisition of The Body Shop by L’Oreal is likely to open up opportunities for natural & organic personal care product companies.
L’Oreal has agreed to purchase the British retail chain of natural-based cosmetics for GB £652 million (EUR 945 million). The French cosmetics giant owns a plethora of brands that include Lancome, Garnier and Maybelline. It reported US $2.35 billion profits from US $17.3 billion sales in 2005.
Formed in 1976 as a single retailer in Brighton, The Body Shop has grown to become an international chain of over 2,000 shops in 53 countries. The Body Shop brand is based on a highly ethical approach to business. Its products are made from natural ingredients and are not tested on animals. The company has invested in third world community projects and has had close ties with NGOs like Greenpeace and Amnesty International.
Some regard the decision of The Body Shop as a sell-out. Anita Roddick, the founder of the British firm, often spoke out against large multinationals, trumpeting fair trade over profits. A few years ago, L’Oreal was criticised by the company founder for its sales tactics. Although The Body Shop will remain an independent outfit and continue to champion environmental & ethical causes, its business ethos could erode as it becomes part of the L’Oreal empire.
The Body Shop’s take–over presents opportunities to natural & organic personal care product companies. The Body Shop has been the major competitor to retailers and producers of these products with many consumers mistaking The Body Shop products as natural & organic. Although they are made from natural ingredients, they contain synthetic preservatives and chemicals that are not found in most natural & organic personal care products.
Producers and retailers of natural & organic products are now in a stronger position to compete against The Body Shop. Some consumers will switch to natural & organic personal care products because of ethical reasons. Others will opt for natural & organic products as they scrutinise the ingredient composition. Brands like Dr. Hauschka and Weleda are already highlighting the quality and traceability of their ingredients in marketing campaigns.
Neal’s Yard Remedies, the leading British brand of organic personal care products, is the most likely to capitalise on The Body Shop’s buy–out. Like The Body Shop, it has its own chain of retailers. The shops encourage consumers to recycle packaging and they run natural medicine, aromatherapy, and nutrition courses. The company was bought by a private investor in December 2005; with renewed investment, Neal’s Yard Remedies could emerge as the natural alternative to The Body Shop.
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#1203-60 The UK Market for Natural & Organic Personal Care Products
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Posted: March 20th 2006
