When Unilever acquired Schmidt’s Naturals in December 2017, the brand had 160 employees and two retail partners. Now, eight months later, it can lean on thousands of Unilever employees in areas like international distribution and sales, is in seven retailers in addition to its previously existing e-commerce site, has entered two new product categories in toothpaste and soap, and plans to expand internationally.
Prior to its acquisition, the company was preparing for an initial public offering, which would have injected it with capital but not given it the structure and resources to support its rapid growth. But Unilever was able to convince the brand that it would be better to leverage what Unilever has already built, in terms of distribution, consumer base and R&D, and help it scale faster than it could on its own. The terms of the deal were undisclosed, but WWD reported at the time of acquisition that Schmidt’s Naturals had earned about $45 million in sales and was on track to double in 2017. While it offered security for the brand, the acquisition came with its own unique challenges: Schmidt’s had to quickly adjust the business, learn how to scale while under new ownership and figure out how to take advantage of the in-house services its parent company could provide.
Overall, Unilever was on a buying spree of beauty brands in 2017, snatching up other brands like Hourglass in June, K-beauty brand Carver Korea in September and Shea Moisture in November. This is in-step with a boom in acquisitions and investments in the beauty space — as of July, investors have poured about $464 million into startups in the space, per the investment data company PitchBook, more than any other year in the last decade. The onboarding process after Unilever acquires a new business can vary, according to Unilever, but in the case of Schmidt’s, Unilever added resources in areas like supply planning, marketing operations and finance to complement existing capabilities. Separately, Cammarata said the brand was planning on additional hires for its IPO but had not made them yet.
Culturally, there was also concern from Schmidt’s Naturals employees about adjusting to the environment of Unilever. To help assuage those, Cammarata spoke to Unilever’s goals to increase sustainable practices and grow its natural beauty category. Since 2010, when Unilever launched its “Sustainable Living Plan” — which aims to increase growth while maximizing positive social impact and minimizing its environmental footprint — brands in that category, like Seventh Generation and Love Beauty and Planet grew more than 50 percent faster than the rest of business, and also delivered more than 60 percent of Unilever’s 2016 growth. Schmidt’s Naturals was targeted for acquisition because it aligned with the Sustainable Living Plan and filled a gap in the natural deodorant space, according to Kees Kruythoff, president of Unilever’s North America business and global head of customer development, prior to his promotion to president of Unilever’s home-care business in January 2018.
“[Schmidt’s Naturals] is a beautiful band that filled a gap in our portfolio, and [Cammarata] is an entrepreneur who through his drive and capabilities adds value to Unilever,” he said.
Schmidt’s Naturals has grown 300 percent in sales since January through its new retail presence in Walmart, CVS, Urban Outfitters, Macy’s and Costco, in addition to its previous Target and Kroger relationships, and will continue to add more sales channels toward the end of the year as it enters Europe in the fourth quarter. This week, it also added a new dimension to the company by launching its first limited-edition product with a philanthropic angle: a deodorant that donates a percentage of sales to the Jane Goodall Institute.
“We now have more [business] insight, more data and R&D,” said Michael Cammarata, CEO of Schmidt’s Naturals. “The hardest thing is keeping up with [the pace of growth].”
When Cammarata joined Schmidt’s Naturals in January 2015, there were four employees — by the time the brand was acquired in 2017, there were 160. The brand declined to say how many employees it now has. After the acquisition, the workload quickly tripled, Cammarata said, as he was ambitious to expand into new verticals, as well as seek an international expansion.
Kruythoff said that when smaller brands such as Schmidt’s join the 88-year-old public company, there are often growing pains associated with shifts in production and IT, for example. To help the brand better leverage the Unilever capabilities, Unilever helped identify a key hire in Unilever veteran Ryu Yokoi, who was previously marketing director for food, as its COO.
“In the beginning, you need to work hard to really understand each other and learn each other’s rhythm,” said Kruythoff. “To put in a COO as a bridge [between Schmidt’s Naturals and Unilever] really helped.”
Meanwhile, Jaime Schmidt, the founder of the brand who previously served in a CEO until Cammarata officially took over the role in 2017, decided to step away from day-to-day decision making and become a public-facing brand ambassador instead. But the impact of the founder’s exit was reduced, not only because Schmidt is still attached to the brand but also because the brand never solely relied on the founder story to drive the brand; instead, it supplemented Jaime’s founding story with a conversation around the natural-beauty movement by encouraging customers to talk about what ingredients or scent profiles they wanted to experience, share their experiences using the product, and ask questions about natural ingredients on social media platforms like Instagram, Facebook and Twitter.
“We wanted to keep the story about the consumers the No. 1 focus. It’s always been an ingredient story rather than a founder story,” Cammarata said.