Thursday, January 19, 2012

Why Companies Reformulate

Right now the internet is all abuzz about a certain popular baby personal care company reformulating their products and adding the preservative sodium benzoate. The company in question has responded and defended their decision. But the question remains: WHY? Why would a company change their formulas when everything seemed to be just fine before?

Now, I can't speak for this company or their particular decisions. But, I can suggest a few ideas that could be a factor in their decision making process. And the answer is the same for this question: "Why are truly USDA organic products so hard to find in stores?"

It all has to do with the way the industry works...

Most of the time cosmetic manufacturers sell their products through distributors. Manufacturers sell their products to a distributor for below-wholesale prices. The distributor then sells the products to the store at wholesale, and the store sells the product for "retail" or the MSRP (manufacturer's suggested retail price.) The retail price is what you see on store shelves.

When a brand is carried in large retailers nationwide, there are a number of requirements that the manufacturer must meet. Some stores will charge for shelf space. Some stores require something called "free fill." This means the store gets a certain number of products for free from the manufacturer. In the cosmetics sector, this usually is six free units per item. So, say a chain of 300 stores came to a company like ours and said "we want to carry your products!" Well, we'd initially be thrilled....but then comes the free fill. Say the store wanted to carry ten different deodorants of ours. That would be 60 free deodorants per store that they'd receive...times that by 300 stores and that's 18 THOUSAND free deodorants that they'd require, just to be carried in their chain.

So, on top of the tens of thousands of dollars of free product, now you need to make sure that the product is selling so that the stores will order again and you can start to recoup the initial cost of the free fill. And the way that stores want you to do this is by a certain number of required "demos." A demo is when you send an employee out to the store with a table to hand out free samples or product information to try to sell the products. They typically require three demos per store in the first month, and then one every month following that. So, somehow you have to get employees to all three hundred stores, three times a month...so you have employee labor costs and travel costs, and the costs of the free samples and product information, and you haven't made a single dime yet. Keep in mind that on top of all this, some retailers will actually charge the manufacturer for their shelf space.

So, in order for a company to be large enough to fulfill that initial order and cover all those costs, they would have to take on investors. The sole goal of an investor is to make money. They don't care about the quality of ingredients--they want to get their money back, plus some. So, if a company has taken on investors, they're going to have immense pressure to be as profitable as possible. This means cheapening the ingredients, eventually leading to the phasing out of organic content in favor of water, synthetics, and preservatives.

Then there's demographics...

While the organic sector is growing exponentially, most people don't know the difference between a fake organic product and a certified organic product. So, of the perhaps 10 percent of people in a conventional grocery store looking for organic products, only a half of a percent are really looking for USDA organic certified. They're going to shop by price, packaging, scents, and other factors. So, because USDA organic products are typically priced higher because they cost more to make, their sales will be slower to the general public. Most people also don't pay attention to an ingredients list. They figure if it's in a health foods store, it must be okay.

Then, there are specials...

The manufacturer receives pressure from retailers to do specials all the time and there is always pressure to permanently lower their prices. And if a company is relying on that retailer for the majority of their business, they're going to basically have to do what they're told. In order to stay in business they have to find ways to make their products cheaper. Sometimes this means getting them produced overseas. Sometimes this means cheaper packaging. Other times, this means boosting the water content of the product and adding stronger preservatives.

As a company we have carefully chosen the stores we are in. In fact, every store that we are carried in has come to us wanting our products, not the other way around. Harmon's has been a fabulous local partner to support our local business, not charging for shelf space or requiring free fill. The Rocky Mountain region of Whole Foods has done the same. We love all the independent shops and salons around the country that carry our products and believe in the importance of USDA organic. If there is one near you, we encourage you to support them.

Bubble & Bee Organic has purposefully chosen to be a company that does most of our business by selling directly to customers, so we don't have immense pressure from retailers. This way, we can be flexible and offer fun new products for the seasons, package deals, and surprise sales. We have chosen to be completely self-funded, so we don't have pressure from investors to always be making a profit. (No matter how much they wanted in, but that's a story for another day.) In this way, we continue to keep our integrity and values, have control over which ingredients we use, and give customers truly certified organic products that they want! We're so happy with our customer base that sees the difference in what we do. As our little beehive grows you will never have to worry about us changing our standards or back-tracking on our morals. Support our business and we'll never let you down!

Read about our organic certification here.

26 comments:

Anonymous said...

Stephanie,

I just want to say how much I, as one of your customers, appreciate the explanation of the system, and how much you stick to what is best for people - not for the bottom line.

You guys rock, we love your stuff, and will keep coming back for more.

Nancy M.

Greg said...

Thank you for holding to your standards. My Dad taught me that there are two things that you take to your grave, #1 is your Name, #2 Is how people know you, by doing what you say you will do.

Its called Character and Integrity. Thank you Bumble and Bee for having Character and Integrity. You have my support.

Greg O.

bill said...

All I can say is I am so happy that I found your company and your wonderful products. I have watched as my previous go-to companies (Burt's Bees, Tom's of Maine, etc.) have sold out and their products turned into lethal scent bombs, just like the rest of the garbage on store shelves. Thank you, Stephanie, for providing me and my family with safe products ... and for not being a sell-out.

Anonymous said...

ever since I descovered B&B I feel good about applying things to my face and body without the worry of "what's in this stuff?" slowly but surely I'm moving toward the all organic world. Diane D.(Ohio)

Patricia said...

The recently launched company by Jessica Alba "www.honest.com" sells an (honest) products called "honest lotion" (and safe for babies). I think she means well, however she is very uninformed, as they list Sodium Benzoate as a "Kosher/Food Preservative". Go figure. Here is the list of ingredients:

Organic Aloe Barbadensis Leaf Juice*, Carthamus Tinctorius (Safflower) Seed Oil, Ethylhexyl Palmitate (from coconut), Glyceryl Stearate, Sorbitan Olivate, Butyrospermum Parkii (Shea Butter), Macadamia Ternifolia Seed Oil, Olea Europaea (Olive) Fruit Oil, Simmondsia Chinensis (Jojoba) Seed Oil,Glycerin, Rosa Centifolia Flower Water, Tocopherol (Vitamin E), Hydroxyethylcellulose (Cellulose Gum), Xanthan Gum, Organic Chamomilla Recutita (Matricaria) Flower Extract*, Organic Calendula Officinalis Flower Extract*, Capryloyl Glycine, Undecylenoyl Glycine (amino acids), Sodium Benzoate (kosher/food preservative), Potassium Sorbate (kosher/food preservative).*certified organic ingredient

Adriana said...

I agree with everyone else! I don't know what we would do without you and B&B. Thank you, Stephanie! You rock!!

ghourliana said...

I have to agree with everyone. I am thrilled to be able to purchase products without worrying if they are truly natural/organic. You not only provide wonderful products, but also peace of mind and helpful information! Thank you!

Anonymous said...

Again thanks for sticking to your guns. It's good to know that there are still people out there with moral fiber who aren't worried about getting to Fortune 5000, but helping each other out.

Anonymous said...

THANK YOU for this explanation! A local lady whose products I loved (and who has been on the move to get her products in stores nationally as well as our local "chains- and has succeeded) has changed her ingredients and added some really "yucky" ones. This makes sense now. Very sad. I can no longer buy her products due to this...but means you'll be getting my business now. :)

Phil said...

I too am glad I found you through Whole Foods while living in Boulder, CO otherwise I probably never would have found these great products. Now that I live in IL I'm still having your products shipped here while I work on getting my local co-op to carry your line of good stuff.

Crissy said...

Like others...I just want to say how much I appreciate what you do. I really really do. I'm SO glad I stumbled upon your company. I had been looking for body care products like yours. I love that you are so committed to your products being truly organic and safe...something that is very important to me. Your stuff is AMAZING! :)

Laura said...

Stores get THOUSANDS of free products!? What the hell kind of warped industry demands free products!? Common sense would tell me to stay away from doing business with freeloaders demanding free stuff. They surely have more money to spare than little companies making lotion and shampoo.

Thank you for not being foolish enough to get involved with businesses like that. I am on the cusp of starting my own business, and I would never EVER allow profiteering frauds to dictate the quality of my products. I would go out of business before I would sell out like that. My integrity is something no one can take from me without my consent.

Anonymous said...

Yes, another thank you for this explanation. How completely unfair. I have boycott big supermarkets, and this adds to the reason I have steered clear of them. Congrats on your morals, stick to it.

Anonymous said...

Thank you so much for this post, I follow your posts and you are fantastic for consumer awareness. Your products are wonderful, please please keep up the good work.
I'm so glad I stumbled onto the Environmental Group Website and found you through the Skin Deep database last year!

I can't believe how greedy these companies are demanding all these free products! as if they don't make enough money out of the poor consumers, they are inadvertently poisoning us too, its disgusting!

Organic products may cost more to start with, but if you buy creams and cosmetics from big name brands it actually costs you far less in the long run. I found this out buy converting to buying only organic products this year. They are superior by far and you can really tell the difference. Lets hope the word spreads soon... :-)

Anonymous said...

This was an excellent article, explaining so much and making me even more grateful for you all and all you do! I am so thrilled to do business with you. Please keep up the great work; you all make me so proud. Thank you for sticking to what you believe in--quality & doing the right thing all around.
xoxo

Anonymous said...

Thank you for having integrity and standing by what your believe in! Love all your products!

Meagan said...

I saw a link to this article online and just had to comment. I wanted to say thank you for coming forward and taking the initiative to explain something to us about what could make this company make the decisions they did.

While I have never bought your products before, or even heard of them before today-because of this post I will be trying out your products in the near future!

Stephanie Greenwood said...

Wow thank you so much for everyone's kind words! We truly appreciate it!

Anonymous said...

Thanks for this article and for all of your educational posts. I too love your products and your unyielding commitment to such high standards of organic purity. I am surprised, however, that people who use products like California Baby are so upset over the reformulation, since it was not certified organic in the first place and contains loads of other nasty chemicals (no matter what inconclusive EWG rating they get). That said, I hope this uproar genuinely motivates people to make the switch to companies like yours! People need to realize that, at present, going truly organic is not so easy. It often requires ordering products online and paying a little more for them because they cost more to make. It also means foregoing the "normal" lotions and getting body butta or lotion sticks that do not have water in them and do not need any preservatives. People need to get used to a new "normal." They might learn to love it and never look back-- I know I did!

Mrs.Smitty said...

The forthright tone of this post, along with the honesty and open communication dialogue make for great customer service. I've never used your products, but I feel compelled to try them now. You now have another potential customer, thank you!

Anonymous said...

Thank you, thank you, thank you for posting this! As a huge (former) fan of 'a certain popular baby personal care company', I was outraged when I found out the changes. I did nothing different with my 15 month old guy, except buy the new formulated lotion and hello red bumps and rashes! In the bin it's going. So unfortunate.

I look forward to buying and trying your products! Thank you so much for your honesty! xx
Mary

Anonymous said...

keep it up steph!!!!!=)

Janelle B. said...

I haven't had a chance to try your products. I am trying to finish up some of the stuff I have. I have recently become more and more aware of all the harmful chemicals that are being put into our cosmetics and skincare products. Last year I had my thyroid removed due to Hashimotos which is an autoimune disease in which your body attacks your thyroid. Well ever since my surgery I have been trying to search for things that aren't so harmful!! I hope to try your products soon!

Anonymous said...

I noticed you are only using rosemary extract as a preservative in your product that contain water. This is an antioxidant, and does nothing to inhibit the growth of mold and bacteria. In the struggle to stay 'organic', one can not to forget to protect the public from a health threat far worse than those presented by a 'synthetic', many of which are totally harmless.

Stephanie Greenwood said...

I assume you're talking about the shower gel? It actually has no water added after the saponification process (just the water needed to dissolve the alkali) just a touch of aloe. Now, yes, aloe does need a preservative, however, it is only a touch that is used for its soothing properties, and the alkaline pH of the soap itself keeps the product stable and from growing pathogens. It has been tested and confirmed that this formula doesn't grow bacteria. The rosemary extract is used as an ant-oxidant, but yes, you are correct in that it does NOT have preservative properties. We do agree that inadequately preserved products pose a very high risk to customers, and thus take much care in formulating and testing our products.

Anonymous said...

I just found this site while looking for some cream with licorice in it. I was a California Baby customer, but no longer. I already ordered some of the products from your site, thank you for valuing integrity and honesty instead of only profits.