Last month, Unilever surprised everyone by purchasing Seventh Generation, a green consumer products company specialized in household cleaning and absorbent personal care items. Unilever reportedly bought the 27-year-old company for about $600 million in cash. Seventh Generation’s sales are estimated to be about $200 million per year, and just a percentage of these sales have to do with absorbent hygiene items which include baby diapers and feminine hygiene items.

Therefore, Unilever’s new role in the absorbent hygiene business will be a small one. When you consider that diaper and feminine hygiene products are a $12 billion global business and Unilever now probably has a less than $100 million stake in the business, it will be interesting to see how the company proceeds.

As a publicly traded, global company, Unilever faces pressures that were not felt by independently owned Seventh Generation. Pricing competition and design trends are just two of the pressures that Unilever will have to deal with as a newcomer to hygiene products. It will be interesting to see if the company—that is so used to having a dominant position in many of its markets—thinks it’s worthwhile to hold onto this diaper business.

Of course, some are speculating that the Seventh Generation acquisition is just the beginning for Unilever. Days before this acquisition was announced, Unilever was the rumored courter of Jessica Alba’s Honest Company, a subscription-based marketer of baby and personal care items. This business, which has sales of about $250 million and a market value of $1 billion, was founded on a similar environmentally friendly and natural products platform as Seventh Generation, but in recent months it has been plagued with a series of false ingredient claims.

If Unilever is not the buyer of The Honest Company, however, who is? It seems quite certain that  the company is on the selling block so sooner or later it will be the next personal care company to be part of the recent M&A trend.

Within the diaper market, of course, another company Babyganics was snapped up earlier this year by—like Seventh Generation—a company well versed in markets like household cleaning but with no experience in baby care, SC Johnson.

Is it a coincidence that both SC Johnson and Unilever, rivals in so many markets, have purchased niche companies that count disposable diapers as one of their products? I guess we will have to wait to see what these two companies do with these businesses.



Karen McIntyre
Editor
[email protected]