Annie’s. Barbara’s Bakery. Cascadian Farm. Tom’s of Maine. All of these brands have a few things in common: they like to talk about their all-natural, environmentally responsible products, and they’re owned by big corporations that don’t necessarily share those ideals. The trend of big companies buying organic and “sustainable” brands has sped up in recent years, led by a growing realization that consumers increasingly want pronounceable ingredients in the products they use every day.
One company, green cleaning products giant Seventh Generation, is taking a different path. Instead of allowing itself to be subsumed into a larger corporation, the company has taken $30 million from Al Gore’s investment fund, Generation Investment Management, so that it can purchase other companies itself.
Seventh Generation now has annual sales of over $300 million–proof that there is a market for the company’s brand of environmental optimism (Seventh Generation’s mission, according to its website: To inspire a consumer revolution that nurtures the health of the next seven generations.).
“The consumer tide has been favorable to our business. Now that we’re national, at scale with a full team, what we think the greatest thing we can do to drive our mission forward is to build a portfolio of like-minded purpose-driven brands and help them scale,” says CEO John Replogle. “We look for companies in the human health space that are environmentally responsible and have the ability to scale to a sustainable business model.” All of the companies will be part of Seventh Generation Ventures, the household product maker’s newly hatched social venture arm.
Replogle says that Seventh Generation plans to remain independent–and remain a privately held company, at least for now. “I think there’s an insidious dilemma in the public markets today, that causes CEOs to not look at a longer timeline. Something that would be a sustainable investment with a five-year payback likely would not be pursued in most large public companies, but if it has a positive impact on consumer health and a positive environmental footprint, we’ll look at that,” he says.
In spite of the consumer backlash that can occur when big companies like General Mills buy independent enterprises like Annie’s (at least among a brand’s dedicated fans), he believes that smaller, sustainably minded companies can have a positive impact on the corporations that purchase them. It’s not always the kind of situation where the bigger company swallows up the smaller company’s values. He gives the example of Ben and Jerry’s, which has been owned by Unilever for over a decade.
“It’s had a net positive effect on Unilever,” he says. (See: Unilever’s ambitious Sustainable Living Plan, which has garnered much praise but is still questioned by mainstream investors.)
In a sense, Seventh Generation Ventures is similar to Patagonia’s $20 Million & Change–an internal venture fund that also has the goal of supporting companies that aim to make the world a better place.
In the coming years, says Replogle, Seventh Generation Ventures aims to build “a string of pearls, portfolio of brands admired by consumers. We’re encouraged every day by the number of consumers coming to understand and care about what goes in, on, and around them.” As long as they keep caring, Seventh Generation will keep making money.