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The Wall Street Journal this morning reports that Unilever is in negotiations to acquire Honest Co., the environmentally friendly CPG company co-founded by actress Jessica Alba that sells "disposable baby diapers, household cleaners, personal-care and beauty products and has built a loyal following among young mothers." Eighty percent of the company's sales reportedly come through an online subscription service.

Honest Co. reportedly generates about $300 million in sales a year, and the purchase price is said to be in the neighborhood of $1 billion. Last year, Honest Co. valued itself at $1.7 billion when it flirted with an IPO. The story says that if the Unilever talks stall, an IPO remains a possibility.

Honest Co. has been criticized for selling products that are not as green as advertised, though it has disputed the tests that led to those criticisms.

The Journal notes that for Unilever, "an acquisition of Honest would be its second recent purchase of a California e-commerce consumer products company. In August, it paid $1 billion to acquire Dollar Shave Club, a premium to the $615 million valuation that company fetched a year earlier. The fast-growing but unprofitable startup provides a mail-order service that ships disposable razors for a flat monthly fee. There have been a string of high-profile startups, including and Dollar Shave Club, that have recently decided to sell to established corporations as the IPO market cooled and investors insisted that startups operate in the black."
KC's View:
The most interesting thing about this is the whole e-commerce/subscription component, and how Unilever is clearly focused on getting as much knowledge and experience as it can in this area.

Retailers need to pay close attention, because if Unilever can find ways to sell direct to consumers via e-commerce, and then doing automatic replenishment via subscriptions, those all will be sales that previously would've gone to traditional retailers. It is called disintermediation, and it has the potential of being a real problem to retailers that do not have their own plans in these areas.