Saturday, March 18, 2006

Body Shop acquired by L'Oreal

This piece of news came to a shock to me on a Saturday morning.

By ELIZABETH KUSTA,
Associated Press Writer Fri Mar 17, 5:05 PM ET

LONDON - Body Shop International PLC, the British retailer that promotes natural-based cosmetics, said Friday it has agreed to be taken over by L'Oreal SA of France in a cash deal worth 652 million pounds ($1.14 billion).

Body Shop will retain its separate identity and current management, the companies said.
"A partnership between our companies makes perfect sense," said L'Oreal Chairman and CEO Lindsay Owen-Jones. "Combining L'Oreal's expertise and knowledge of international markets with The Body Shop's distinct culture and values will benefit both companies."


Body Shop was founded 30 years ago in Brighton, England, by Anita and Gordon Roddick, and there are now more than 2,000 stores around the world.

The Roddicks stepped down from managing the company in 2002, but have remained as non-executive directors and stand to bank around 117 million pounds ($204 million) from their 18 percent stake.

Anita Roddick, who will retain her current role as a consultant, said the company's values would not change.

"I don't see it as selling out," she said. "L'Oreal has displayed visionary leadership in wanting to be an authentic advocate and supporter of our values."

But criticism of the deal came Friday over the linkup between Body Shop, known for products that aren't tested on animals, and L'Oreal, which has yet to ban animal testing.

"It's ironic that a company well known for its anti-animal testing stance should sell out to one that tests on animals and which has yet to show its commitment to any ethical issues at all," said Ruth Rosselson of Ethical Consumer magazine.

Anita Roddick said Body Shop is about more than just animal testing and that a benefit to joining with L'Oreal is that Body Shop will be able to teach L'Oreal about issues such as "community trade, which is the best poverty eradicator in the world."

Owen-Jones also said L'Oreal wouldn't be able to stop animal testing overnight, but it does have the long-term plan of "joining Body Shop on the issue."

The Body Shop has in recent years moved toward the luxury end of the cosmetics market to avoid direct competition with supermarket and drugstore mass merchandisers such as Tesco PLC in Britain and Wal-Mart Stores Inc. in the United States.


Why this came as a shock to me was clearly stated in the article - conflict in company policies and values. I always supported the Body Shop in terms of its policies against animal testing and Community Trade. Since young I have bought and used a lot of body Shop products, although now it is considerably less now as I now try other brands such as Skin Food and Thalgo. I truly admire their bold move then to move away from animal testing, and applauded their efforts to promote community trade.

During my first few working years, I actually started using some products from L'Oreal. Somehow rather I didn't quite like how the brand projects itself (a lot of celebrity endorsements, and knowing how much the company pays them to endorse their products, and how many chemiclas in their brands just for us to look good), so gradually I stopped using their products and upgraded to more premium brands such as Estee Lauder and Thalgo (Note : Estee Lauder does not perform animal testing), as well as the newly available Korean skin care brand Skin Food.

Now with the acquisition, I truly could not agree with companies with different value working together. My initial thought was that Body Shop's policies could be compromised, but now thinking back, it could have good effects on L'Oreal. Body Shop is known for its ethical practices policies, and there's no way L'Oreal group would force them to abolish their policies, as that is what the Body Shop brand is all about. So it may end up L'Oreal adhering to Body Shop's policies and methods, to a more ethical business mode. However, with one company endorsing sciene, and the other endorsing natural products, will there ever be a compromise between these two? I believe L'Oreal would have more to lose if they force Body Shop to adhere to their values, but let's see how it goes.

Another alternative would be to continue operating as separate entities, but it would look so wierd that this company, being so different from the parent company, is allowed to operate in its own manner, with its own values. Anyhow, L'Oreal has every reason to believe that by acquiring Body Shop, it will gain market share and achieve more sales to be (or to retain) its lead as top cosmetic brand.

Would I still buy Body Shop products? For now, yes - but I can't guarantee if I will have the same answers 5 years later. It will all have to depend on how these two companies have to work together, even though they will operate through separate entities.




1 comment:

Anonymous said...

Hello,
Would you happen to know if Skinfood does animal testing?
Thanks!
~Fiore.