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The Honolulu Advertiser
Posted on: Wednesday, March 22, 2006

Colgate buys small company, big values

By Theresa Howard
USA Today

NEW YORK Consumers have shown they are willing to pay a premium for "natural" products from values-oriented companies that make them feel good, and big marketers want a piece of the profitable trend.

Colgate yesterday became the second multinational corporation in a week to buy a small company with a message of social responsibility. It bought 84 percent of Tom's of Maine, the all-natural personal care brand based in Kennebunk, Maine, for $100 million.

Friday, French cosmetics giant L'Oreal bought London-based retailer The Body Shop, a personal care chain known for its avoidance of animal testing and its support for human- and animal-rights causes.

It's no wonder small brands with values messages are popular. They can turn commodity products into premium products. All-natural personal care products represent a $3 billion market that's growing 15 percent per year, according to Colgate.

Marian Salzman, a trendwatcher at ad agency JWT, New York, calls it the "Rise of Ethical Consumers" in her upcoming book "Next Now." "Good for you and good for the planet is the ultimate win-win," she says. "Being a consumer can make you feel selfish, but buying such brands can make you feel selfless."

The buyer's marketing challenge is to maintain the smaller brand's roots and cachet. "If you lose the edge of being of the community, then you are just a big brand," Salzman says.

Marketing expert Marc Gobe said the buyers aren't just after profits. The smaller companies "have a discipline of ethics they want to emulate in their own companies," said the CEO of marketing agency Desgrippes Gobe Group and author of "Citizen Brand: 10 Commandments for Transforming Brands in a Consumer Democracy."

What they're buying:

  • Tom's of Maine. The top-selling natural oral-care brand also sells such products as lemongrass soap and calendula shaving creams made with natural and biodegradable ingredients. Maintaining those standards was key to getting a deal done, said founder Tom Chappell in a phone interview.

    "We had some deal breakers going into the process," he said.

    Another was keeping the company in Maine. "Staying here is smart from Colgate's perspective" said Kate Chappell, who founded Tom's with her husband in 1970. "They are respecting the fact that we have a unique approach to creating efficacy with natural ingredients and a total values approach to doing business."

  • The Body Shop. L'Oreal chief executive Lindsay Owen-Jones said in a statement that L'Oreal paid $1.1 billion for the 2,085-store chain for its "distinct culture and values" and growth potential. Founded by Anita Roddick in 1970, it was a pioneer in environmentally friendly packaging and animal testing standards.