P&G’s New Chapter Acquisition, a Year Later: What Difference Can a Year Make?

March 22, 2013

What Difference Can a Year Make?

A year ago, Procter & Gamble’s acquisition of supplements brand New Chapter had critics bristling. “Any time an acquisition like this occurs, consumers worry that the acquiring company might change the product ingredients to make them cheaper and thus boost profits,” says John Barrymore of 6Pacific Group, the former New Chapter equity holder that ultimately helped broker the company’s sale to P&G.

We’re all a year older now. Has the worst happened? Has P&G dominance laid waste to the products and values that New Chapter customers held so dear?

It’s too soon to tell. But according to New Chapter founder Paul Schulick, who remains intimately involved with New Chapter product development post-acquisition, so far, so good. As Schulick tells it, the only changes New Chapter has seen is in resources-as in, more of them. As expected, New Chapter got an influx of P&G manpower for quality control and innovation. New Chapter is also getting high-profile marketing. Thanks to P&G, New York City now displays New Chapter banner and subway station ads.

I asked Barrymore how New Chapter seems to be progressing under P&G ownership, based on what he’s heard. “My understanding is that P&G has not made any drastic changes to New Chapter, especially anything that would affect its mission, identity, or roots,” he says.

“I think as long as New Chapter continues to perform well, P&G will not make any drastic changes,” he continues.

Schulick says that, so far, P&G is keeping its promise to leave New Chapter a standalone and to preserve its products and values. That said, many believe P&G will sooner than later start eyeing how to take the brand bigger, as global corporations are apt to do. (This would also be in line with New Chapter’s desire to get its products to as many consumers as possible.)

For now, both insist that breaking into other channels is not the focus. “As has happened for years, New Chapter continues to get requests from mass-market retailers, but as we have assessed those opportunities, we have determined that we should maintain our focus on our current distribution channels,” says Tom Millikin, global communications, P&G Personal Health Care.

Both Millikin and Schulick emphasize that there is still a lot of room for New Chapter-now a $100 million brand in the natural channel-to grow and accomplish there. “Given the New Chapter brand has less than 1% awareness, our biggest upside is simply in educating consumers in the natural channel in which our brand exists today,” Millikin says.

Outsiders still expect change to come eventually, “because you can only get so big in the natural channel,” Barrymore says. For instance, of New Chapter’s Manhattan marketing campaign, he asks, “Do you think [P&G is] doing this just to keep selling through health food stores?”

Should P&G eventually make moves towards mass and other markets, New Chapter will encounter channel challenges, as any natural brand would. For one, mass-market customers usually don’t get the same level of product education and insight that they typically can get from natural channel personnel trained in natural products.

The question critics want answered is whether New Chapter can operate on a huge, global P&G scale while still maintaining its core principles and product quality. “I know that some brands going into mass have made the decision to reduce product quality for mass in order to achieve a lower price point,” Schulick says. “But I think, with P&G, that it is the exact opposite of what people seem to think could happen. I’ve always believed that it would be very difficult for someone to improve upon the quality of New Chapter, but having seen the types of people that are coming into our organization, and the systems they bring, I think they are actually going to improve our quality.”

Plus, he adds, lowering product quality would be akin to “investing in fine art and then suddenly investing in bad art. It might be a short-term gain, but it will be a long-term loss.”

P&G’s Millikin acknowledges that finding the balance between large scale and maintaining core values-such as sustainability, non-GMO, and whole food-“will be one of the biggest challenges New Chapter faces going forward.”

But, this is also where P&G’s global might can actually help, he adds. For instance, P&G has the reach to source more organic and non-GMO materials internationally; in fact, the firm has already begun to work with its raw material suppliers on this.

“We refuse to walk away from our core principles, so as the business grows, we will need to find ways to continue delivering non-GMO, organic, and sustainably sourced ingredients,” he declares. “While this is a challenge, we view it as a huge opportunity for the industry.”

Let’s see what difference the next few years make, then.

Jennifer Grebow
Editor-in-Chief