Sellouts in the Green Sector?

The natural products industry has seen a rash of buy-outs of late. In October, Clorox acquired Burt's Bees, maker of an eco-friendly line of beeswax skincare products, for $913 million. And in November, Kashi (a subsidiary of Kellogg's) paid $122 million for two natural foods companies: Connecticut-based granola manufacturers Bear Naked and Wholesome & Hearty Foods, the parent company of Gardenburger.

Sales have slumped for the 23-year old veggie burger brand in recent years, but all three were considered leaders in the field. Burt's Bee's saw revenues of $164 million last year—up $141 million since 2000—and Bear Naked is currently the top selling granola in natural food markets and number two in mainstream chains like Target.

Brands that achieve any real success in the natural space, it seems, are destined to be acquired by a larger corporation that might not necessarily share their triple bottom line: people, planet, and profit. Companies whose natural products have broken into the mainstream are particularly attractive to behemoths like Kellogg's, which snatched up breakout vegetarian frozen food company Morningstar Farms in 1999.

One blogger likened the recent round of acquisitions to a fire sale. Another asked, "Who's next?"

In the case of Colgate-Palmolive, which paid $100 million cash for privately-owned toothpaste company Tom's of Maine in 2006, the corporation was looking to expand into higher-margin items. With Burt's Bees, Clorox is interested in greening up its image, especially in the face of criticism from environmentalists that bleach is dangerous when drained into urban sewer systems.

Reporter Nitasha Tiku covers technology, finance, green business, and social entrepreneurship for Inc. magazine and contributes to the staff’s daily links blog. Her work has appeared in New York magazine, The Villager, Chelsea Now, and on nymag.com. She lives in Brooklyn, New York. @nitashatiku