[Corp. Watch] Beware 'Faustian' brands: Small 'ethical' companies increasingly selling out to unethical mega-corporations

[Corporation Watch]

Burt's Bees, Tom's of Maine, Naked Juice: Your Favorite Brands?

  Take another look -- they may not be what they seem

By Andrea Whitfill

(AlterNet, March 17) -- My first introduction to natural, organic, and  
eco-friendly products stems back to the early '90s, when I stumbled  
upon Burt’s Bees lip balm at an independently owned healthfood store  
in the heart of the Westport neighborhood in Kansas City, Missouri.

	Before the eyesore invasion of ’98, when Starbucks frothed its way  
into the neighborhood, leading to its ultimate demise, Westport was  
the kind of  'hood I still yearn for. It was saturated with  
historically preserved, hip and funky, mom-and-pop-type  
establishments, delivering their goods people to people.

	I was surprised more recently when I saw Burt's Bees products  
everywhere -- in grocery stores, drug stores, corner bodegas, and big- 
box stores like Target and Wal-Mart. I thought to myself, fantastic;  
the marketplace is working, and good for Burt. He has made his mark,  
and the demand for his products is on the rise.

	Needless to say, I was shocked when I recently found out that Burt's  
Bees is now owned by Clorox, a massive corporate company that has  
historically cared very little about the environment, but whose main  
industry is directly associated with harmful chemicals, some of which  
require warning labels for legal sale.

	Clorox; yes, that's right -- the bleach company with an estimated  
revenue of $ 4.8 billion that employs nearly 7,600 workers (now bees)  
and sells products like Liquid-Plumr, Pine-Sol, and Armor All, a far  
cry from the origins of Burt.

	I now understood. The reason Burt's Bees products were everywhere was  
precisely because they now had a powerful corporation in the driver's  
seat, with big marketing budgets and existing distribution systems.

	The story of Burt is a charming one gone bad. Burt Shavitz, a  
beekeeper in Dexter, Maine, lived an extremely humble life selling  
honey in pickle jars from the back of his pick-up truck and resided in  
the wilderness inside a turkey coop without running water or  
electricity.

	In the summer of 1984, Shavitz was driving down the road and spotted  
a hitchhiker who needed a lift to the post office. He pulled over and  
picked up Roxanne Quimby, a 34-year-old woman who eventually became  
Shavitz's lover and business partner.

	Quimby started helping him tend to the beehives, and that eventually  
led to the all natural-inspired healthcare products made with  
Shavitz's honey and the birth of Burt's Bees products.

	Burt's story and very powerful narrative gave Burt's Bees products  
their legitimacy in my book. Creative entrepreneurs and knowledgeable  
consumers together working their magic; not the results of a corporate  
behemoth out to dominate the marketplace.

	However, Quimby and Shavitz's relationship became 'sticky' in the  
late '90s for reasons unclear, yet probably having little to do with  
honey. Their romantic break up carried over to the split of their  
business partnership as well.

	In 1999, Quimby bought out Shavitz's shares of the company for a  
small six-figure sum. Quimby then continued, becoming phenomenally  
successfully and growing sales to $43.5 million by 2002. In 2003, a  
private equity firm, AEA investors, purchased 80 percent of Burt's  
Bees from Quimby, with her retaining a 20 percent share and a seat on  
the board.

	In 2006, John Replogle, the former general manager of Unilever's  
skincare division became CEO and president of Burt's Bees. The company  
was sold to Clorox in late October 2007 for $925 million.

	Quimby was paid more than $300 million for her stake in Burt's Bees.  
At the time of that deal, Shavitz reportedly demanded more money, and  
Quimby agreed to pay him $4 million. Quimby now refurbishes fancy,  
swank homes in Florida, travels the world, and buys massive chunks of  
land in her free time.

	Our bearded man Shavitz, on the other hand, now 73 and unchanged,  
continues to reside amidst nature in his now-expanded turkey coop,  
which still remains absent of electricity or running water.

	The Burt's Bees story is disconcerting. I vaguely remembered long ago  
that one of my favorite ice cream products, Ben & Jerry's, also sold  
out. Unilever (which also owns Breyers), the giant conglomerate with  
an estimated market cap of $50 billion and close to 174,000 employees,  
bought Ben & Jerry's in 2000 for $326 million.

	I began to wonder about the other products I liked, trusted and  
respected for their independence and their social responsibility. How  
many were really owned by big corporations, who were going out of  
their way to hide the link between the big corporate company with the  
small, socially responsible brand?

	It didn't take long for my list of disappointments to grow and grow.

	Upon first meeting someone, I can usually tell a quite a lot about  
them by the contents of their bathroom. The brand I see most often  
behind medicine cabinets of people I consider to be environmentally  
conscious is Tom's of Maine. What Tom's says to me about the person is  
that they are willing to spend a little bit of extra cash in order to  
take proactive steps to help green the Earth.

	Well, no more. My bathroom assessments will never be the same. Tom's  
of Maine is owned by Colgate-Palmolive, a massive, tank-like company  
with an estimated 36,000 employees and revenue of approximately $11.4  
billion. Its big products include: Ajax, Anbesol, and Speedstick.

	I am only left to wonder, is Trader Joe's, popularly known to  
showcase Tom's of Maine in its hygiene department, just as much in the  
dark about all of this as I have been? Or is Joe's simply another  
conduit for big corporate products?

	As my curiosity grew, I took a little field trip to the grocery store  
with one of my friends to be a 'brand anthropologist.'

	"Let's get to the bottom of this," I said, aiming to check out all of  
the brands that I and countless other good consumers were buying in  
our efforts to support grassroots business and not corporate  
behemoths. Little did I know how deep the hole was going to be, and in  
some cases, how hard to find out who owns what.

Thinking Dairy

	In the dairy section sit many flavors of Stoneyfield Farm Yogurt. I  
knew its socially conscious CEO, Gary Hirshberg, had created major  
organic brand recognition to become the No. 1 seller of organic yogurt  
in the United States, but since then Danone, the French conglomerate  
(which also owns Brown Cow), acquired a majority holding in Stoneyfield.

	This is the same Danone that had to recall large quantities of its  
yogurt in 2007 after it was found to contain unsafe levels of dioxins.  
(In an interesting twist, the still-active Hirshberg sits on the board  
of Dannon USA. Unlike most of the early entrepreneurs, who took the  
dough and left the scene, Hirshberg is still involved. )

	Meanwhile, I learned that Horizon Organic milk was bought out by the  
largest diary company in the U.S., Dean Foods Co., in 2005.

Thirsty? Juices and Water

	Next I ventured to the juice section. Drinking Odwalla juices was an  
expensive habit I had justified for years because of its healthy  
California brand. The ubiquitous refrigerators in thousands of stores  
should have given it away that Odwalla wasn't the small company it  
once was. It is now owned by Coca-Cola.

	Almost as soon as Coca-Cola bought the company, back in 2001 for $181  
million, it stopped selling the fresh-squeezed OJ that had made  
Odwalla famous and popular among the healthy set. With its massive  
distribution system, fresh squeezed wouldn't last the days and weeks  
the juices are in transit or on the shelf.

	Not to be outdone (although it took it a while), Pepsi bought Naked  
Juice in 2006 for $450 million, in order to compete with Odwalla.  
Smuckers, the brand we are told is the "brand we can trust", grabbed  
several juice mainstays from the healthfood store shelves: R.W.  
Knudsen and Santa Cruz Organic.

	Turns out that Coca-Cola also owns Glaceau, the company once known  
for its "fresh new approach to bottled water that is inspired by  
nature and enhanced by science." Glaceau is the maker of Vitamin  
Water, Fruit Water, Smart Water, and Vitamin Energy -- all bottled  
waters that are adorably marketed and loaded with sugar.

	It's no wonder Coca-Cola was slapped with a lawsuit in 2006 for  
making deceptive and unsubstantiated health claims in its Vitamin  
Water marketing strategies; they are selling glorified sugar water.

	As for bottled water, egads! That's a whole article in and of itself.  
The scourge of bottled water is, of course, an environmental disaster  
on many levels, as corporations have moved in to take control of water  
local supplies.

	These companies have utilized their mega advertising budgets to  
creating a giant market for bottled water, with enormous waste from  
plastic bottles and giant carbon footprints as water is shipped over  
many thousands of miles from Fiji or Italy, when tap water is usually  
of higher quality and more closely tested than bottled water.

	In fact, many times bottled water is tap water. Contrary to the image  
of water flowing from pristine mountain springs, more than a quarter  
of bottled water actually comes from municipal water supplies.

	The industry is dominated by three companies, who together control  
more than half the market: Coca-Cola, which produces Dasani; Pepsi,  
which produces Aquafina; and Nestle, which produces several "local"  
brands, including Poland Spring, Arrowhead, Deer Park, Ozarka and  
Calistoga.

	Coke and Pepsi exclusively use tap water for their sources, while  
Nestle uses tap water in some brands.

The Breakfast Nook

	Over in the breakfast aisle, my friend was a bit apoplectic when we  
learned that the "super healthy" Kashi cereals, the favorites of  
millions of healthy breakfast eaters, was bought in July 2000 for an  
"undisclosed sum" by Kellogg's, the 12th-largest company in North  
American food sales, according to Food Processing magazine.

	I picked up a box of Kashi's "Go Lean Crunch" and searched every  
word; not one mention of the fact that Kellogg's owns them -- that  
change was really below the radar. In 2004, Kraft Foods, known for  
processed cheeses and Kool-Aid, bought the natural cereal maker Back  
to Nature.

	Kraft is a subsidiary of Altria, which also owns Philip Morris USA,  
one of the world's largest producers of cigarettes. According to the  
New York Times, "Many of the alternative cereal brands are owned by  
larger companies, including Kellogg and General Mills."

	"Cereals, like milk, are one of the primary entrance points for use  
of organics," said Lara Christenson of Spins, a market research group  
for the natural products industry, "which is pretty closely tied to  
children -- health concerns, keeping pesticides, especially  
antibiotics, out of the diets of children."

	"These large firms wanted to get a foothold in the natural and  
organic marketplace," Chistenson explained. "Because of the mindset of  
consumers, branding of these products has to be very different than  
traditional cereals."

	These corporate connections are often kept quiet. "There is  
frequently a backlash when a big cereal package-goods company buys a  
natural or organic company," she said. "I don't want to say it's  
manipulative, but consumers are led to believe these brands are pure,  
natural, or organic brands. It's very purposely done."

	A little more digging shows that General Mills owns Cascadian Farm;  
Barbara's Bakery is owned by Weetabix, the leading British cereal  
company, which is owned by a private investment firm in England;  
Mother's makes it clear that it is owned by Quaker Oats (which is  
owned by PepsiCo); Health Valley and Arrowhead Mills are owned by Hain  
Celestial Group, a natural food company traded on the NASDAQ, with  
H.J. Heinz owning 16 percent of that company.

The Sweet Tooth

	After the Kashi news, I wondered what was next? I didn't have to go  
any further than the organic chocolate aisle of my favorite deli to  
find Green and Black's organic chocolate was taken over in 2005 by  
Schweppes, the 10th-largest company in North American packaged-food  
sales.

	And even more surprising to chocolate lovers is that Dagoba  
Chocolate, which had a little cult chocolate following for a while, is  
-- surprise, surprise -- owned by Hershey Foods.

	There seems to be an apt analogy between the huge growth in  
"naturalized" packaged foods in stores and the massive transformation  
of organic fresh foods. Organic farming, which began as a grassroots  
movement to produce food that was healthier and better for the land,  
is now a $20 billion industry increasingly dominated by large  
agribusinesses.

	So while it may cheer some to know that McDonald's has served fair- 
trade-certified Newman's Own organic coffee in its restaurants on the  
East Coast, others may cringe at the words of Lee Scott, former CEO of  
WalMart, when he said, "We are particularly excited about organic  
food, the fastest-growing category in all of food."

	"What's important to keep in mind is that these big corporations are  
getting into organics not because they have doubts about their  
existing business practices, or doubts about chemical-intensive,  
industrial agriculture," said Ronnie Cummins, national director of the  
Organic Consumers Association.

	"They're getting in because they want to make a lot of money,"  
Cummins said, "and they want to make it fast." He said the companies  
couldn't care less about "family farmers making the transition to  
organic farms."

	What does this all mean? One conclusion it is easy to come to is that  
big food companies and the stores that deliver their goods have  
stretched and abused descriptions of food until they are sometimes  
almost meaningless, while consumers believe that they are getting more  
benefits than they actually are.

	Consumers "walk down the aisle in the grocery stores' health and  
beauty area, and they're confronted with 'natural' at every turn,"  
says Daniel Fabricant, vice president for scientific and regulatory  
affairs at the Natural Products Association. "We just don't want to  
see the term misused any longer."

	On the other hand, "If you want to change what people consume on a  
grand scale, you have to penetrate mass markets," said financial  
commentator Roger Cowe. "And you can't do that if you're a small,  
specialist brand stuck in the organic or whole-food niche, even if  
that means you are on supermarket shelves."

	"It is a familiar dilemma," Cowe continued. "Stay pure and have a big  
impact on a small scale, or compromise and have a small impact on a  
grand scale."

	Some think that socially responsible businesses don't lose all of  
their ethics when selling out. Both Craig Sams from Green and Black  
chocolate and the late Anita Roddick from the Body Shop (sold to  
L'Oreal/Nestle -- one of the most vilified of multinational companies)  
have said that they believe that an acquired ethical company can  
influence its new parent to improve its corporate behavior.

	Others are not so positive about this turn of events. Judy Wickes  
from the Social Venture Network describes corporate takeovers of  
socially responsible businesses as "a threat to democracy [because]  
wealth and power are concentrated into a few hands."

	And David Korten, in his book, 'When Corporations Rule the World',  
explained how sustainable business "should be human scale -- not  
necessarily tiny firms, but preferably not more than 500 people --  
always with a bias that smaller is better."

	It is clear that so-called organic brands are a rapidly growing  
portion of the consumer dollar, and that every major food corporation  
has invested deeply in buying these already-established brands.

	Marketing strategies have been fooling us to trust that the niche  
brands continue to be small, environmentally conscious businesses that  
combine ecologically sound practices with a political agenda to put  
products out on the market under a business model of "the greater good."

	In fact, they are frequently cogs in the giant corporate wheel. I  
like to refer to this as the "We've Been Had" business model. It is  
time for we, the consumer, to question how much the unethical  
ownership and deceptive marketing of these "pseudo" responsible brands  
warrant crossing them off our shopping list.

	And it is time to find products more in tune with our values, which  
include thinking small. At least until they, too, get bought out by  
some large conglomerate.