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Clorox Inc

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In October 2007, Clorox announced that it would buy Burt’s Bees for $925 million – more than five times Burt’s Bees’ annual sales. Clorox’s move caught many in the industry by surprise. The company was known for bleach, auto polish and other synthetic chemical cleaners. On the other hand, the much smaller Burt’s Bees was best known for its trademark natural lip balm. The company, founded by two people making beeswax candles in the backwoods of Maine, had emerged as a leader in the natural personal care products category with revenue climbing steadily from $23 million in 2000 to $164 million in 2007.Nonetheless, Burt’s Bees retained its folksy image and natural appeal with consumers. Could such a brand find a home within a company best known for a toxic cleanser?

There was no doubt that the entire natural personal care products market had been changing. Like Burt’s Bees, many of these small companies had been founded by feisty nonconformists for whom their companies were an extension of a crusade for natural products rather than just a way to make money. But as the enterprises grew, a number of leading natural personal care companies had sold out to larger multinationals. Estée Lauder bought Aveda; L’Oreal took over The Body Shop; and Colgate-Palmolive gobbled up Tom’s of Maine. But even within this trend, the marriage of Clorox and Burt’s Bees seemed somewhat anomalous.

Certainly, a number of Burt’s Bees’ customers thought so. As soon as the sale was announced, angry calls and emails came pouring in to Burt’s Bees headquarters in North Carolina. “Don’t judge Clorox as much by where they’ve been as much as where they intend to go,” Burt’s Bees’ CEO John Replogle pleaded when customers accused his company of selling out. Indeed a month before the Burt’s Bees purchase, Clorox announced a long-planned extension into the natural cleaning products market with a line of eco-friendly cleaners called Green Works.

But would Replogle’s diplomatic response and Clorox’s push into “green” cleaners satisfy Burt’s Bees’ faithful customers? Had Clorox paid too much for its acquisition? Or, were there potential synergies between the idiosyncratic lip balm maker and the multinational cleanser manufacturer that could justify the purchase? And with so many global conglomerates jumping into the natural personal care products category, what was the future of this market?

Published Date: 12/08/2009

Suggested Citation: Elise Rindfleisch and Allison Mitkowski, "Clorox Inc," Yale SOM Case 09-028, August 12, 2009

Keywords: Personal care, Merger, United States, Burt's Bees, Women in Leadership