Unilever will buy cleaning products maker Seventh Generation
September 19, 2016 02:44 PM
(Bloomberg)—Unilever agreed to acquire Seventh Generation Inc., a Vermont-based company known for natural and eco-conscious cleaning products.
Seventh Generation posted sales of more than $200 million last year, with compound annual growth in the double digits over the past decade, Unilever said in a statement Monday. Terms of the deal weren’t disclosed. Seventh Generation in February 2015 stopped selling directly to consumers online; its site redirects shoppers to retailer e-commerce sites such as Amazon.com or Target.com, and it allows consumers to enter their city and ZIP code to find a store nearby.
The transaction is part of a push by Unilever to claim more of the natural section of supermarket aisles. Millennials have increasingly sought out upstart brands that are seen as being environmentally friendly, putting pressure on some traditional wares. Unilever considers Seventh Generation a “purpose-driven brand,” akin to its Ben & Jerry’s and Dove products.
“This addition to Unilever’s product portfolio will help us meet rising demand for high-quality products with a purpose,” Nitin Paranjpe, president of Unilever’s home-care division, said in the statement.
Seventh Generation—promoted by comedian Maya Rudolph in ads—sells detergents, dish cleaners and other products that are free of artificial fragrances and dyes. The lineup may help Unilever mount a bigger challenge to market leader Procter & Gamble Co., said Ali Dibadj, an analyst at Sanford C. Bernstein.
“We have for a long time been very impressed by Seventh Generation in terms of its management, its innovation and bringing to the consumer what it is they want,” he said. “It puts a little more pressure on companies such as Procter & Gamble to offer what the consumer wants in terms of environmentally friendly products.”
Unilever in July acquired online-only shaving supplies subscription service Dollar Shave Club for a reported $1 billion. Dollar Shave Club, No. 238 in the Internet Retailer 2016 Top 500 Guide, has been one of the fastest growing online retailers since launching in 2012, growing to $152 million in sales in 2015, up 700% from $19 million in 2013. Unilever said at the time of the acquisition that Dollar Shave Club is on pace to eclipse $200 million in sales this year.
Unilever previously has expressed interest in buying The Honest Co. (No. 132 in the Top 500), a person familiar with the situation said last week. That company, co-founded by actress Jessica Alba, also has a natural focus, though it concentrates more on baby care and personal-hygiene products. That raises the question of whether the Seventh Generation deal will affect those deliberations, Dibadj said.
“On one hand, it does suggest they’re interested in this sort of business,” he said. “On the other hand, it feels like they’ve now already made a bet in that space.”