Disciple of enlightened growth

Listen to this article

00:00
00:00

At the head office of Seventh Generation, there is plenty of evidence of what Jeffrey Hollender, founder and chief executive, likes to call “the swirl”.

Several affable dogs wander round the premises of the environmentally friendly household products company in Burlington, Vermont. There are complementary weekly massages for staff and a games room with ping-pong and table soccer.

And then there is Gregor Barnum, the company’s “director of corporate consciousness”, a serene-looking man who talks of the importance of challenging linear thinking and stresses the process of “becoming” over “being”.

“Gregor sent me a note about a meeting yesterday, and I’m, like, ‘what’s this about? It’s from outer space’,” says Mr Hollender. “But he forces you to think differently.”

Of late, the swirl has been working overtime at Seventh Generation – its name inspired by a precept that required Iroquois tribal leaders to consider the impact of their decisions on those at least seven generations to come.

Compared with industry leaders Procter & Gamble and Kimberly-Clark, Seventh Generation remains a tiny player in the household products business, with overall sales now approaching just $100m and only 52 employees. Its 92 per cent share of the natural market for disposable nappies in the US translates into just 0.2 per cent of the overall market, with a similarly small share in other categories.

But the company now styles itself as “the leading brand of non-toxic household products”, occupying a place in the US similar to Belgium’s Ecover in Europe. Its products, ranging from bathroom cleaner and laundry detergent to paper tissues and tampons, appear on a growing number of supermarket shelves as well as at a number of Target discount stores.

“It’s really only in the last five years that we’ve started to do well,” says Mr Hollender, who started the company in 1988 and recalls the struggle of trying to sell organic cotton clothes and book bags throughout the 1990s.

After going public in 1993 in the search for funds, a group of investors took the company private again in 1999, just as Seventh Generation began to experience a remarkable shift in fortunes.

The change was driven not just by its own efforts but also by the dramatic expansion of its largest retail
client, Whole Foods Market, the supermarket chain that was prospering on the growing interest in natural and organic food and products.

“Whole Foods has played an incredible role in our success,” says Mr Hollender of the chain that has expanded from 87 stores in 1999 to more than 180 today. “Every time a Whole Foods store opened, they exposed a whole bunch of new consumers to our brand.”

Seventh Generation also caught the zeitgeist as it widened its marketing message beyond concern for the environment to issues of environmental health in the home – epitomised by the launch of its unscented “free and clear” detergents and cleaners.

“Because there were so many people with asthma and so many people with allergies, we just struck a chord by having products that were unscented,” he says.

Backed by the demand, the company introduced chlorine-free disposable nappies in 2003 and organic cotton tampons this year while working to improve the performance of its existing cleaners and detergents.

It has now arrived at what Mr Hollender believes is a defining moment in its development. Instead of a largely passive approach, which sought to make “less bad” versions of existing products, Seventh Generation is now aspiring to make products that are, he says, “actually good”.

“We’re changing from being driven by what the manufacturers could and wanted to do . . . to a whole different perspective that is much more driven by the consumer and by where we believe we need to go,” he says.

Over the past year, its staff has doubled in size while it has tripled its previously low level of spending on product development, including heavy investment in new packaging.

All this has stirred the swirl. This summer Mr Barnum organised the first of a series of “biomimicry design” brainstorming sessions, “to think about the process of innovating some of our products using designs inspired by nature”.

He also played a leading role in the discussion of whether the company should start to source its bottle tops from China – for a 60 per cent cost reduction. The decision was no.

“It was a big ‘no’. It was also a big ’know’,” he says of the way that debate forced the company to look at where it was going.

Executives at Seventh Generation’s giant rivals, P&G and Kimberly Clark, sound dismissive when asked about its efforts, arguing that requiring customers to pay a premium for “green” products will eventually fail, just as it did in the 1970s.

Mr Hollender counters that the company strives to remove the pricing differential on conventional products and that Seventh Generation and Ecover now set standards on issues such as transparency on ingredients, which have been adopted by their larger competitors.

The brand’s recent successes have attracted attention from private investors and others, raising the question whether Seventh Generation will go the way of other US standard-bearers of alternative business such as Tom’s of Maine, the natural toothpaste firm bought this year by Colgate, or Ben & Jerry’s, the Vermont ice-cream company bought by Unilever in 2002.

“I have a list of natural products companies that are still independent and it is not a very long list,” says Mr Hollender. He argues that larger packaged goods companies have a record of stifling innovation at the takeover target and poorly serving its employees.

He has, he says, not even asked the value of a series of offers from interested investors and that the company’s principal investors support its longer-term goals, which include increasing employee share ownership from 14 to 50 per cent over the next five years.

Mr Hollender, who was recently persuaded by his staff to trade in a fuel efficient Audi convertible for a 1983 Mercedes Benz diesel that can burn vegetable oil, half jokes that sometimes he wishes there was a little less swirl and a little more linear thinking at Seventh Generation’s head office.

But the company’s very public efforts to work out what is the best thing to do – frequently laid bare in its website and three employee blogs – are also a fundamental part of what the marketing world would call its brand promise.

“In a sense, we’re not selling a product,” says Mr Hollender. “We’re really selling a point of view about the world and where we want to go that we hope more and more people will want to be a part of.”

Quest for the right chemistry

Naturally Clean, published last year and written and compiled by Jeffrey Hollender, his daughter and two employees of Seventh Generation, the non-toxic household goods company, lists a range of chemicals that are found in common household cleaning products.

Most, such as amyl acetate, used in furniture polish, are not regarded by federal regulators as posing significant risks to environmental health. But amyl acetate has been named as a suspected neurotoxin by environmental health experts in Scandinavia.

According to the precautionary principle, endorsed by Mr Hollender and his company, this means amyl acetate should be avoided, together with a host of other chemicals that have been introduced into homes. “We should err on the side of caution when making our decisions,” the book argues.

Mr Hollender sees current demand for organic food and natural body products as connected with broader concerns about environmental health.

“It was food, it was stuff that you put on your skin, and now, in many cases, it is the air you breathe,” he says.

The book also provides a list of recommended “natural” cleaning products that name the chemicals they contain. In three categories, it even gives a higher safety rating to some of Seventh Generation’s competitors.

Naturally Clean, New Society Publishers, 2005

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.