It's Easy Being Green

The first thing that hits you is the virgin scent of rosemary. Then a woman approaches with a steaming cup of peppermint tea, and tribal chants descend around you. Yucca plants are sprinkled throughout the room, and a Tibetan-looking arch lies a few steps ahead. You can feel your shoulders relax, your mind pause. You barely notice the shelves lined with $11 bottles of shampoo, the reason you walked in here in the first place.

Aveda has been seducing customers with this holistic salon and store experience for the past 26 years -- and making a pretty buck too. According to Estee Lauder, which in 1997 bought the high-end organic-cosmetics brand for $350 million, Aveda is now one of its top-selling brands, its annual sales having almost doubled since 2002.

In the saturated beauty industry where fickle consumers are always looking for the next best serum to defy frizz, Aveda is a case study in how to woo and win customers with a strong ideologically based brand. This would be notable in any business, but especially so in an industry that's notorious for animal testing and extraneous packaging. "What I find is that the beauty industry is not very beautiful," says Aveda president Dominique Nils Conseil. "It can't be beautiful if it's not also doing good."

In Conseil's eyes, much of this environmental inertia can be blamed on the desire for cheap ingredients and a lack of innovation when it comes to botanical science. "Some people say you cannot pursue naturalness and deliver cutting-edge results," he says. "That's just something petrochemical companies say. They have to discredit nature because they cannot take a patent on a plant." Conseil has made a commitment to the biosphere in every business decision he has made since he came on board to lead Aveda four years ago, proving that exercising values can lead to leaner spending, better products, and ultimately a better brand.

Aveda's sense of environmental responsibility stems from its founder, Horst Rechelbacher, an herbal zealot who opened a Minneapolis salon in the 1970s and was later inspired to launch a plant- and-flower-based beauty line. "By changing the world of hairdressing, we could change the world," he loftily believed. Crazy, no? Today, "there are rain forests still standing in Peru that probably would not be if not for Aveda," says Glenn Prickett, executive director of the Center for Environmental Leadership in Business. Eileen Rappaport, a 15-year Aveda user, captures how this translates to customers when she says, "My dad's obsessed with Aveda's rosemary-mint shampoo. There's something spiritual about it."

In his first days on the job in 2000, Conseil had to confront whether this spirituality remained in the wake of the Estee Lauder acquisition. "A lot of my employees came to me and asked, 'Is it still okay to live up to the Aveda mission?' " he recalls. "I realized that people in the company needed to see that the mission of Aveda was still core to the company." For both his employees and his customers, Conseil had to prove that Aveda could be even more effective than before. "What ideologically based companies do is make a contract with the consumer," explains Douglas Atkin, author of The Culting of Brands (Portfolio, 2004). "If they break that contract, consumers will reject them as fervently as they [supported them]."

So Conseil started with the products themselves. In 1998, Aveda had discontinued a line of perfume after learning that the Indian sandalwood oil used in it was untraceable. That meant that gangs could be poaching the sandalwood and in the process killing the "sacred trees," elephants, and perhaps even people. Conseil decided that if he could find a completely traceable sandalwood source, he would revive the line. In 2002, his team discovered Australian aboriginal communities that could harvest sandalwood while protecting the trees and planting new ones. Aveda could relaunch the line, keeping the local community's biodiversity intact while providing it with a sustainable business model. The line is now flourishing, and Conseil has subsequently implemented a checklist that ensures that all product ingredients aren't harmful to the environment or indigenous communities.

Product packaging, a particularly wasteful part of the beauty biz, has also been a priority. Over the past four years, Aveda has increased its use of postconsumer recycled (PCR) content in its shampoo bottles to 80% from 45%; some packaging is as high as 100%. To do that, Aveda has forced its packaging-design team to stretch its creativity, which last year resulted in a prestigious design award for its environmentally progressive lipstick tube. The new packaging has also led to Aveda's saving more than $1 million a year in costs. Conseil's ultimate goal is to have zero waste.