Burt’s Bees cos­met­ics:

Or­di­nary state­side, spe­cial abroad

Bloomberg Businessweek (Asia) - - CONTENT - −Lau­ren Cole­man-Lochner, with Cyn­thia Kim and An­nie Lee

A best-sell­ing item at the Burt’s Bees store in Seoul’s IFC Mall, a 0.6-ounce pack­age of Res-Q oint­ment for cuts and scratches, sells for 18,000 won (about $15.47)—al­most three times the U.S. re­tail price. A 113-gram tube of di­a­per cream goes for about $26; the av­er­age price in Amer­ica is $10.

Lo­cated amid ma­jor re­tail­ers such as Ar­mani Ex­change, Jill Stu­art, and Uniqlo, the store is one of 13 stand­alone bou­tiques the Clorox- owned brand op­er­ates out­side the U.S. In Asia, where con­sumers place a premium on all­nat­u­ral, gen­tle-on­the-skin beauty prod­ucts, Burt’s Bees has great ap­peal. “They’re us­ing less chem­i­cals than some of the lo­cal brands here,” says Lee Jee Ha, who shops for her Burt’s Bees fa­vorites, es­pe­cially its baby oil, at any of sev­eral Seoul branches of South Korea’s

Olive Young drug­store chain. Burt’s Bees is also found in up­scale depart­ment stores such as the U.K.’s John

Lewis and some drug­store chains in Lon­don. At a time when large con­sumer­prod­ucts com­pa­nies are strug­gling with slug­gish sales, Burt’s Bees and the premium prices it com­mands overseas rep­re­sent growth po­ten­tial for Clorox. “This is a very prof­itable busi­ness in­ter­na­tion­ally,” says Chief Ex­ec­u­tive Of­fi­cer Benno Dorer. The com­pany, best known for its bleach and Hid­den Val­ley ranch salad dress­ing, bought the small, Maine-based maker of lip balms and honey-in­fused creams and cos­met­ics for $925 mil­lion in 2007. At the time, the line was sold in five coun­tries out­side the U.S.; now it’s in more than 40. It en­tered half of those mar­kets in the last three years, Dorer says. The new­est in­ter­na­tional

out­post opened on March 9 in Tokyo’s Shin­juku neigh­bor­hood.

Ini­tially, Burt’s Bees loy­al­ists wor­ried Clorox would strip it of its au­then­tic­ity. But the brand has held on to its all-nat­u­ral ca­chet and grown steadily. Its co-founder, Burt Shavitz, died in July 2015, but his like­ness will re­main on prod­ucts, the com­pany says.

Sales have in­creased at least twice as fast as those for the par­ent com­pany over­all. Today Burt’s Bees ac­counts for 4 per­cent of Clorox’s sales, which last year to­taled $5.7 bil­lion. In the last fis­cal year, 82 per­cent of to­tal sales came from the U.S.

Dorer is look­ing for 10 per­cent to 15 per­cent growth in Burt’s Bees’ sales, com­pared with 3 per­cent to 5 per­cent for Clorox over­all. Oru Mo­hi­ud­din, a beauty an­a­lyst at Euromon­i­tor In­ter­na­tional in Lon­don, says com­pe­ti­tion from such brands as

L’Oc­c­i­tane and Weleda is strong, but hav­ing baby­care prod­ucts and be­ing priced in be­tween mass and premium brands gives Burt’s Bees a niche. And there’s a lot of un­met po­ten­tial, she says. In the U.S., where its largest dis­trib­u­tors are big-box re­tail­ers like Wal­mart and Tar­get, “the po­si­tion­ing was not to its best in­ter­est,” Mo­hi­ud­din says. Given its nat­u­ral in­gre­di­ents, she says, the com­pany could have mar­keted the brand as an up­scale prod­uct early on. Clorox says sell­ing through mass re­tail­ers has driven growth.

Whether U.S. cus­tomers would spend more for the balms and lo­tions is un­clear. Candy Le­ung, in Hong Kong, is happy to pay a premium. She was in­tro­duced to the prod­ucts while vis­it­ing fam­ily mem­bers in the U.S. “If I need it, I buy it.”

The bot­tom line When Clorox bought Burt’s Bees for $925 mil­lion in 2007, it was sold in five coun­tries out­side the U.S. Today it’s in more than 40.

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