SUBSCRIBE

Breaking News on Cosmetics Formulation & Packaging in EuropeUS editionAPAC edition

Headlines > Business & Financial

L'Oreal's Body Shop acquisition meets with mixed reaction

By Simon Pitman , 22-Mar-2006

The fact that L'Oreal's acquisition of The Body Shop will provide plenty of potential growth opportunities is undisputed, but the question of how well the acquisition sits in the portfolio of the world's largest cosmetics company is another matter.

The main area of concern is The Body Shop's strong ethical stand - a key feature of the company that has helped to bring about an image of a progressive and socially responsible business.

As a result of this stand, the testing of ingredients on animals has always been out of the question. Indeed The Body Shop has vehemently opposed the testing of all its products on animals, long before the EU introduced the ban on finished cosmetic products.

 

On the other hand L'Oreal has been criticised for continuing to test certain ingredients on animals. Animal rights groups have protested relentlessly of this issue, saying that the company should be doing more to stop the practice ahead of a total ban on the testing of animal products on ingredients, proposed for 2008.

 

Together with industry experts, animal rights campaigners are asking how The Body Shop can continue to wave the ethical banner when it is owned by a company with seemingly opposing values.

 

In the UK the RSPCA has expressed confusion over the takeover, describing it as looking out of place, particularly in view of the companies very different backgrounds.

 

Dame Anita Roddick, founder of The Body Shop, and respected business figure has also come in for some wrath, with many critics saying that the sale has been a cop out.

 

Roddick and her husband Gordon are estimated to be banking around £120m (€173m) as part of the takeover deal.

 

UK publication Ethical Consumer has described the takeover as 'unethical', suggesting that the deal might not sit well with consumers.

 

But how customers react to the takeover remains to be seen. With the market for ethical goods estimated to be worth £25 billion in the UK alone and rising by 15 per cent, there is potentially a lot at stake.

 

UK-based Organic Monitor says that the takeover could put a number of natural and organic personal care companies in a stronger position to compete against The Body Shop.

 

It believes that some consumers will switch to other natural and organic personal care products for ethical reasons, highlighting UK company Neil's Yard Remedies as likely to be one of the major beneficiaries of the buy-out.

 

However, the business world has largely applauded the sale, in view of the immense opportunities for expansion that the takeover represents. L'Oreal was in desperate need of diversification, and The Body Shop could prove to be perfect.

 

Indeed, if the takeover might pose a potential threat to The Body Shop's squeaky clean image, it will probably prove to be quite the opposite to L'Oreal's image, lending it a credence that up until now it has not had.

 

Equally it offers plenty of opportunities for further expansion of The Body Shop, with the business now being able to tap into the huge marketing as well as research and development resources that L'Oreal has.Ultimately it will be the consumers who will decide and should prove to be a test of just how strong ethical consumer beliefs are.

 

Subscribe to our FREE newsletter

Get FREE access to authoritative breaking news, videos, podcasts, webinars and white papers. SUBSCRIBE

Key Industry Events