The business case of a socially conscious brand acquisition
The Fear of Socially Conscious-Turned-Social Destruction
When Ben & Jerry’s* announced it would be acquired by Unilever, many fans could only think two words: “Sell out.” Their beloved environmentally-conscious and socially positive ice cream brand would be reduced by a foreign conglomerate to a mockery of Vermont hippie culture, they feared– leaving behind the positive social values for which the brand had become famous.
The reality was much less dire; in fact, not dire at all: Unilever kept the brand wholly intact, even expanding the brand’s product offerings along with its socially conscious missions. New flavors were introduced, along with new initiatives and additional funds for socially conscious causes like minority-owned businesses and employee bonuses. The original factory in Waterbury, Vermont remains a popular tourist destination along with remaining a seat of brand production.
Why Do These Fears About Socially Conscious Brands Persist?
But there’s just something about good brands getting acquired by conglomerates that sticks in the socially conscious consumer’s craw. When Maine-based brand Burt’s Bees was acquired by Clorox, a consumer firestorm ensued, fueled by brand evangelists that felt personally threatened by the destruction of Burt’s Bees. Tom’s of Maine being acquired by Colgate… Well, you get the picture. Yet like Ben & Jerry’s, the fears so vehemently expressed were the opposite of how the acquisitions have played out.
The fear, whether founded or not, appears to be based in the belief that large companies and conglomerates simply do not care about people, and therefore they will see no value in keeping the socially conscious aspects of brands they acquire. Essentially, acquisitions are seen as a big, out-of-touch rich company greedily taking away a small company that they felt valued their needs and validated their lifestyles. That fear is sure to provoke defensiveness and outrage.
The Business Case for Acquiring Socially Conscious Brands
When larger companies acquire socially conscious brands, the key part to understanding why is to remember that they are acquiring because of, not in spite of, the brand’s socially conscious mission. In fact, in accounting terms, companies often pay a premium, called Goodwill, for a socially conscious brand. There are for main factors behind why a company would pay extra to acquire a socially conscious brand:
- The company itself (and its current brands) are not known for being socially conscious.
- The company believes it is a profitable business decision to sell socially conscious products. (Spoiler alert: It IS a profitable business decision!)
- The company’s financial forecasters find that it will likely hurt current business if it attempts to change the branding, ingredients, target audience, etc. of a current brand.
- Rather than taking the time to grow a new brand with audiences that may be skeptical (or hostile) to the company as it is, the decision is made to acquire a current brand that has already found a market.
Why Would a Socially Conscious Company “Sell Out”?
- Like any brand, socially conscious businesses are motivated by profit (and that is a good thing). More money means they are able to reach more consumers and benefit the community in a greater way.
- Socially conscious brands, like any brand, want to expand market share and an acquisition means more resources to do so.
- When selling to a larger company, a socially conscious brand often makes sure their mission will be kept intact as part of the deal.
Verdict: To Buy or Not to Buy?
There are good cases here for both sides, and the decision ultimately rests on what kind of socially conscious consumer you are. The following criteria assumes, as will be the case in nearly all instances, that the socially conscious mission of the original brand remains intact or expanded by the acquisition:
- Brand loyalists will be rewarded: You will be able to enjoy expanded product offerings and can purchase through more channels than before, all while continuing to support the socially conscious mission that attracted you to the brand in the first place.
- You vote with your dollars by continuing to buy the brand: This tells the large conglomerates that socially conscious brands are indeed a good business decision.
- Small business supporters: You will likely want to shift your purchases to a small business that meets your needs, as your dollars will still funnel into a large corporation if you continue to buy post-acquisition.
- Local and independent shoppers: You will need to evaluate on a case-by-case basis, since some acquisitions do leave local production and/or independent franchise ownership intact.
What do you think: Are acquisitions of socially conscious brands a good thing? Let us know in the comments!