Unilever Positioning to Add Online Honest Company to Portfolio

TechCrunch is reporting that Unilever is negotiating to buy Jessica Alba’s e-commerce start-up The Honest Company as another online offering, like the Dollar Shave Club.

As the world’s third largest multinational consumer goods company, the British-Dutch giant distributes about $60 billion products in 190 countries, which include top brands such as Chesebrough-Ponds, Best Foods, Ben & Jerry’s, Alberto-Culver, Lux, and Dove. The company is extremely profitable, with about $10 billion in operating profits.

The Honest Company was founded by Golden Globe-nominated actress Alba, whose career includes roles in films such as Fantastic Four and Little Fockers, as well as television series like Dark Angel, The Office and Entourage.

The five-year-old company, named after Alba’s 4-year-old daughter, Honor, does about $200 million in sales and emphasizes non-toxic household products to supply the marketplace for ethical consumerism.

The mother of two states on the company’s website, “When I became a mom, I finally became the person I am, that I always should have been.” She adds, “It’s the most satisfying job in the world. But, it can also be overwhelming and confusing. I created The Honest Company to help moms and to give all children a better, safer start.”

Alba came from a family with modest means and suffered from severe food allergies as a child. She believes that three to four percent of adults and six to eight percent of children have serious food and clothing sensitivities, affecting 15 million Americans.

The Honest Company’s co-founder and Chief Products Officer is Christopher Gavigan, father of 3 children and former CEO of Healthy Child Healthy World, a national nonprofit that claims to empower parents to protect their children from toxic risks. Gavagan wrote the 2009 best seller, Healthy Child Healthy World: Creating a Cleaner, Greener, Safer Home, and catapulted his child’s health message online by collaborating with Web MD.

Although The Honest Company was preliminarily valued at $1.7 billion last year, the Unilever offer is rumored to be closer to $1 billion.

Unilever’s $1 billion acquisition of “Dollar Shave Club” in July launched a mergers and acquisition demand for e-commerce startups such as Birchbox, Stitch Fix and now the Honest Company. These brands’ appeal is more customer based than just online sales prowess, such as the Walmart $3.3 billion buy-out in early 2016 of Jet.com.

David Pakman, a partner in Silicon Valley’s Venrock venture capital, told Bloomberg when the Dollar Shave deal was announced that he never saw the shaving upstart as an e-commerce company. The key to success is how Shave Club built relationships with men wanting an alternative to high-price blades from Gillette and Schick.

The originally narrow-casted Honest Company product line of hypo-allergenic diapers and baby formula has branched out on the celebrity status of Alba to beauty products.

Unilever has massive field staffing for distribution to traditional consumer products retailers. Hooking up with the once boutique online seller now makes sense with The Honest Company Shampoo and Body Wash now being sold in big volumes at Costco.


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