Editorial: Do Acquisitions Mean Natural Brands Are Gaining Power?

April 12, 2012

When a multinational giant acquires a small independent, there will be some protest. But when the independent is a beloved natural-products company-and one that has cultivated its identity and loyal fan base around a mission of healing-expect protests to be louder.

When a multinational giant acquires a small independent, there will be some protest. But when the independent is a beloved natural-products company-and one that has cultivated its identity and loyal fan base around a mission of healing-expect protests to be louder.

Paul and Barbi Schulick, founders of the successful New Chapter brand of organic whole-food dietary supplements, are experiencing some of that protest now, ever since news broke that Procter & Gamble is acquiring New Chapter.

On Facebook, the Schulicks have been called “sellouts.” One comment stated that the couple are “naïve to think that P&G will let business run as usual.” In turn, the Schulicks are doing their best to reassure customers that what defines the company-its products, employees, location, and the Schulicks’ own involvement-won’t change. They emphasize that with P&G’s resources, New Chapter can tap into a world of new tools (technical, scientific, regulatory) and reach millions more to take its message worldwide.

Still, opinions will be mixed. Some will continue calling New Chapter a sellout, no matter what New Chapter says. And Paul Schulick himself acknowledged via YouTube, “I’m under no illusion here. Some of you are going to hold your beliefs or opinions, and so I respect those. You’re entitled to them.”

But still others may believe that New Chapter deserves at least a reasonable amount of time to prove that it can retain its identity, integrity, independence, and product quality. Some cite Stonyfield Farm, which was acquired by Groupe Danone, as an example of how an acquired natural company can be allowed to continue operating relatively independently post-acquisition. And, by the way, P&G is no newcomer to the herbal field, having for quite some time sold botanicals in international markets where herbals are regulated as over-the-counter drugs. The company also already owns supplement brands Metamucil (psyllium) and Align (probiotic). Mark Blumenthal, founder and executive director of the American Botanical Council (ABC; Austin, TX), also points out that P&G has been an ABC member for years, along with New Chapter.

Perhaps what bothers those most angry about the New Chapter buy is that they feel “powerless” about the situation, says Paul Schulick. “When I’ve looked at the root of it all, I see a sense of powerlessness that people feel. When people connect so passionately with a brand like New Chapter and a mission like New Chapter’s, they may feel somehow betrayed if they don’t feel included in a decision.” Those are the people who fear that now that New Chapter is under P&G, New Chapter customers have lost their say in what the company does going forward.

But, Paul reminds, consumers aren’t powerless. In fact, consumers wield the ultimate source of power over a conglomerate like P&G: the ability to vote with their dollars.

Those who don’t agree with New Chapter’s decision may choose to no longer buy New Chapter products. But those who remain on board with New Chapter, or who are at least willing to extend some faith to the company as it navigates its way through these waters, will keep buying.

“If consumers continue to cast their ballot for whole foods and non-GMO and certified-organic products, a company like P&G is going to listen to that,” says Paul. “The one thing I’m trying to express to those people who are concerned about directly-or indirectly-supporting P&G is that they should understand that by placing a vote and continuing their confidence in New Chapter, it tells the leadership of P&G that there is something really, really important being done here.”

Blumenthal echoes that sentiment: “P&G would not have invested in New Chapter...if they did not believe there was a strong and long-term consumer demand for these types of products.” And P&G itself, through spokesperson Thomas Milliken, told Nutritional Outlook, “Following the close of the deal, New Chapter and its employees will become a wholly owned, standalone subsidiary of P&G....Our base business plan and primary priority is to preserve and grow what’s working at New Chapter in their current channels.”

I’m not predicting that the New Chapter/P&G deal will turn out one way or the other. What I do know is that consumer and investor interest in natural products will grow together. More acquisitions are ahead, and the outcome of each will depend entirely on the companies involved.  

At this early stage, though, consumers should not feel powerless. After all, they are the ones who may ultimately guide the actions of a P&G. And, if the best-case scenario plays out and New Chapter is both able to retain its identity and product quality and through P&G reach a significantly broader worldwide audience, it will serve to further empower the natural products industry.

As Paul told New Chapter’s customers via YouTube, “Take a deep breath with us, and give us a little bit of time.”

Jennifer Grebow
Editor-in-Chief