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Following a feel-good deal between P&G and New Chapter last week, execs on both sides of the acquisition are spreading the intention to not "mess up the magic" of New Chapter. We dive deep into P&G's acquisition, including what it means for natural retailers and the future of the supplements company.
Making a huge foray into the dietary supplements business, Procter & Gamble closed a deal on March 15 to purchase Brattleboro, Vt.-based New Chapter Inc., a leading supplement brand within the natural retail channel. Financial details of the purchase were not released.
In a memo to New Chapter employees, the company's co-founder, Paul Schulick, said that the acquisition would open up "countless opportunities" for New Chapter. "Procter & Gamble has the ability to turbocharge our mission while sustainably delivering the wisdom of nature to people and the planet in ways we never even imagined," Schulick wrote.
According to the Brattleboro Reformer, P&G is not planning any immediate changes at New Chapter—other than a few role changes. Paul Schulick will become the executive vice president of science and innovation, and Barbi Schulick will become vice president of organization and culture. P&G's Kyle Garner will become New Chapter's new CEO.
"Of utmost importance to us as founders is the assurance we have received from Procter & Gamble that New Chapter will be a wholly owned subsidiary with headquarters remaining in Brattleboro," Schulick wrote in his employee memo. "They have also assured us that no significant changes in jobs, compensation, benefits or business processes are planned. So let me repeat that: jobs remain the same and we are a standalone entity."
Thomas Finn, president of Global Health Care at P&G, told the Reformer that his company does not want to "mess up the magic" that has made New Chapter so successful within the growing world of dietary supplements.
New Chapter: A best-in-class brand
Founded in 1982 by Schulick and his wife, Barbi, New Chapter is known for its high-quality formulations and commitment to organic supplements. The company makes a wide range of products that include organic, whole food multivitamins, the Wholemega fish oil brand, LifeShield Mushroom line and Zyflamend suite of products.
Nutrition Business Journal estimates New Chapter's 2011 sales at around $110 million. According to Paul Schulick, P&G evaluated "close to 20" supplement companies before deciding to purchase New Chapter. "None have met [P&G's] standards—until now," Schulick wrote to employees.
Janica Lane, a partner at Partnership Capital Growth, concurs that New Chapter represents "another best-in-class brand" for the P&G portfolio, which includes Tide, Gillette, Iams, Downy, Duracell, Ivory, Pantene and others that are among the "best brands in the CPG world," Lane said.
Along with being a leader within the small but growing world of organic and whole food supplements, New Chapter is also known for its loyalty to the natural retail channel, said Bill Crawford, director of retail programs at New Hope Natural Media. "[New Chapter] is a direct line, with high retail profit margins, a very strong consumer ad spend and a history of only supporting the natural channel."
Given that it has stakes in just about every other part of the consumer packaged goods world, Lane said it's not surprising that P&G would dip its toe into dietary supplements. Although supplement sales expansion has slowed over the last few years and the industry continues to weather questions regarding product quality and integrity, supplements remain a thriving business and are viewed as an essential health and wellness tool by many consumers.
"We at PCGA have long said that none of the major food and CPG companies can afford not to have a presence in healthy, active and sustainable living, and P&G is no exception," Lane said.