“Green” pickings for P&G, Unilever, Reckitt ?

method_handsoap

 

 

 

 

 

ecover

Coke has just bought a minority stake in Innocent Smoothies. Before that it was Glaceau Mineral water in 2007. Further, the $2bn proposed acquisition of China’s biggest juice maker Huiyuan will also most likely come through. While Pepsi was off the blocks earlier with Tropicana and Gatorade, Coke’s non carbonated beverage portfolio is clearly looking more sparkling now.

The  beverage giants are nicely rounding off their portfolios with the “healthier” offers.  I wonder why we haven’t seen similar activity in the cleaning products category. We have 2 “green” brands in the category which have been growing their business, profile and footprint over the last 3-4 years : ECOVER and METHOD. ECOVER is almost 30 years old, is Belgium based,  available in 26 countries, growing at 20%+ and will do $100mn+ revenue in 2008. METHOD is only available in US, UK, Canada and Australia. It has private equity backing.

Both brands offer a full range of cleaning products- laundry, household, dish, personal wash- plus  air care products. Both are premium priced and my guess is margins are also higher vs the leading brands. Either of these will be a great buy for P&G, Unilever or Reckitt. The capital infusion and distribution muscle will help immensely. Volume and margins will almost definitely be net incremental plus retailers will love the premium price ( they have already seen the magic with Organic food ranges) and extra margins.  

This is a Win-Win for everyone : company, retailers, consumers and the environment. I am sure the investment bankers have been exploring. Don’t be surprised if you hear of it sometime in the near future.

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4 responses to ““Green” pickings for P&G, Unilever, Reckitt ?

  1. There is a major difference between Method and ECover products. The latter actually work whereas the former require so much elbow grease that good old soap and water would have sufficed.

    Shouldn’t brands stand for more than just values? And actually _deliver_ some real, functional benefits too?

  2. A few years ago I had a chance to attend a training course in the UK, there was a guest speaker who was supposed to be very famous in the merger & acquisition area, and I still remember he shared a very interesting view on the impact of acquisition on stock price. According to his theory, when acquisition happens, the stock price of the merged company would normally decrease, and it would take them quite a while to go back to the pre-acquisition stock price. The reason is because shareholders understand that for any acquisition to be successful, the “take-over company” would normally need to purchase the shares of the “acquired company” at an above-average price, which to the shareholders mean reduced profit / cash flow for the “take-over” / merged company, hence the lower stock price.

    I haven’t actually validated this theory but I guess that could potentially explain why some acquisitions haven’t happened as soon as we thought?

  3. Summit, You make a good point. Of the 3 companies mentioned P&G and Reckitt have a very good track record of integrating acquired brands. P&G has done a good job on WELLA, CLAIROL, HERBAL ESENCE, GILLETTE over the last 5-6 years. Reckitt last year bought some brands from Boots and these are doing very well. Unilever hasn’t been as successful with the brands it acquired though.

  4. The company features a presence in around 80 countries and
    2,000 dealerships, with founded relationships with BMW, Nissan, Mercedes
    and VW.

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