Selling Out Or Changing the Face of Capitalism February 26, 2006
Posted by CamdenKiwi in : Green in the City, Investing , trackbackWhen Green and Blacks was bought out by Cadburys last year, I’ll admit I was disappointed. Fabulous chocolate, fairtrade and being made by a nice wee eco-friendly company ensured my undying loyalty and massive contribution to their profit margins. I still buy it, of course, but with less of the feel-good factor than before.
The Body Shop is a rather different case. It’s a long-established firm which, while remaining true to it’s roots, is not as green as it once was. It’s certainly a while since they’ve been prepared to refill bottles for you, and not all stores have recycling boxes now, but the idea is sound and I believe the goods are still sourced in an environmentally-friendly, fair trade way. The Body Shop has been listed for a long time now, so its profits are already going to a random collection of investors, with a large shareholding is still retained by Anita Roddick.
Now, the Body Shop is rumoured to be the subject of a takeover bid from L’Oreal.
Companies, even green ones, function in the market, and for any investor there comes a time when they need to decide if their money could be better used elsewhere. Perhaps Anita Roddick will come to that point in the next few weeks. Keeping to the founding values must be harder and harder if the company is successful, and rather irrelevant if it is not. Essentially, companies like L’Oreal and Cadburys are buying into a brand, perhaps to strengthen their green credentials but also certainly because they see an opportunity to make a profit. Its unlikely that they would break that brand by taking it too far from its original values, because that would destroy value and profit-making ability.
It is perhaps a cynical move, but at least these companies continue and their founder’s energy and funding can be turned to other projects to further their own ideas. That’s why I’ll continue to buy Green and Blacks, and Body Shop cosmetics, at least as long as the products remain sound and the companies are allowed to retain a reasonable level of green values within their new corporations. My brand loyalty won’t be as strong, and if another new idealistic company appears with similar products, I’ll be more likely to switch.
I suspect Body Shop shares have gone a bit high on the rumours to be a good buy and exposure to the UK retail sector isn’t a good idea right now, so they’re probably not on my list of good investments at the moment.
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