Are Multinationals Missing
The Natural Movement?
Small and mid-sized personal care companies have embraced the natural
trend. Meanwhile, large companies only enter the category via acquisitions.
By Imogen Matthews
Consultant to In-Cosmetics
AT FIRST GLANCE, it seems that every company is
jumping on the natural products bandwagon,
making it the hottest trend in today’s beauty
markets. But are they? Most natural/organic
launches have come from smaller, niche brands,
while those from multinationals can probably be
counted on one hand.
The major multinationals have not been reticent in addressing the naturals trend, not by creating their own brands, but by acquiring others
with potential. Estée Lauder jumpstarted the trend back in
1993 when it bought Aveda, while L’Oréal has probably been
the most active this decade, adding The Body Shop, Kiehl’s
and Sanoflore to its portfolio. Yet among the major companies, only Estée Lauder has launched its own natural line,
Origins, which has recently been extended with an organics
The multinationals have been deterred from entering the
naturals market due to the high cost of natural and organic ingredients. To date, this has allowed niche natural/organic brands to gain the upper hand on bigger brands.
So why do the multinationals acquire existing natural
brands rather than launch their own? Euromonitor cosmetics and toiletries analyst Oru Mohiuddin insists that it
makes more strategic sense to invest in products that have
been tested and proved to be successful.
“It saves large multinationals time to research and develop products that may not pass the test or take a long time
before being ready for the market,” she said.
By investing in products already on the market, it leaves
the multinationals with responsibility for marketing and
promoting the brand. This arrangement works well, for they
have the resources to invest in marketing and promoting
brands globally. By contrast, the smaller companies have
the expertise to research and develop new products, but are
unable to market them at the same level.
Estée Lauder made news when it acquired a stake in Forest Essentials.
A Movement Grows
There are signs that the natural trend is going mainstream. Burt’s Bees, once a niche natural toiletries
line, has grown into a $100 million enterprise. Now
under the ownership of Clorox, Burt’s Bees is proving that it can compete with the larger brands.
“Growth can come when a large multinational gives
a particular brand a big global push,” explained Ms.
Estée Lauder Companies is hoping for great things
from its latest acquisition, a stake in the Indian natural beauty spa brand Forest Essentials. Not only
will the brand give it a foothold in the growing
Indian market, but insight into traditional
Ayurvedic practices as well.
“This agreement will help us expand our growing
expertise and competitiveness in the natural products arena,” commented William P. Lauder, chief