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Natural Personal Care: Marching Forward in a Period of Uncertainty

By: Jack Corley, Trilogy Fragrances Inc.
Posted: January 27, 2009

In “The F&F Horizon: 2009 and Beyond,” a number of F&F experts discussed their views on the state and future of the industry from the vantage point of formulation to raw materials to the marketplace. (Perfumer & Flavorist magazine, January 2009, Page 45.) In this week’s edition of P&Fnow, we present several extended commentaries from our panel of experts and industry voices.

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Suppliers were overjoyed when Whole Foods Market Inc. announced on Nov. 5, 2008, that Leonard Green & Partners, L.P. were providing $425 million of additional equity from the sale of series A preferred stock to Green Equity Investors V, L.P., an affiliate of Leonard Green, which equates to an ownership interest (assuming conversion of the preferred stock to common stock) of approximately 17%. However, shortly after that announcement Whole Foods Market Inc. said that its profit plunged in the fourth quarter largely due to costs related to its acquisition of Wild Oats Markets Inc. The Austin, Texas-based grocer also cut its earning forecast for the year as sales continued to slow.

During this unprecedented period of financial and economic instability, Whole Foods is fortunate that Leonard Green & Partners, L.P. stepped forward, for it underlies the environment many companies find themselves in today. That is, shrinking income statement values and financial liquidity. Industry after industry, company after company today are faced with this same dilemma. Many are fighting daily to survive. Many will not survive. But all is not doom and gloom.

The natural and organic market continues to grow at an 8–10% rate. This may slow a bit over the next 18 months, but it will continue to outpace conventional personal care growth by a 3:1 ratio in the United States. While slow sales for Whole Foods do not bode well for natural and organic personal care marketers, it is fortunately temporary. The next 12–18 months will require these companies to: