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The Green Diaper Boom

Monday, March 9th, 2009

Business may not be so great these days, but the growing awareness of environmental and social issues is creating opportunities for ecopreneurs and their new products and services. In many cases, new green brands are entering and competing in markets that have been dominated by large multi-nationals for decades. This is made possible by the green community, a consumer group that has grown dramatically in recent years and that chooses to distinguish itself by its purchases.

I've documented many of these brand development experiences in my new book, The Gort Cloud, but there are a few stories that did not make it into my book that are particularly noteworthy. One involves a new entrant in the disposable diaper category.

The diaper industry has been dominated by just a few major players: Pampers and Luvs from Procter & Gamble and Huggies from Kimberly-Clarke. The first mass-produced disposable diaper was introduced in 1948 by Johnson & Johnson, followed by the introduction of Pampers in 1961. While parents flocked to the convenience and safety of these products, they also contributed to the growth of the Throw-away Society. By 1970, Americans were going through 350,000 tons of diapers, while today disposable diapers comprise 2.1 percent of municipal waste, per Mother Jones. Adding to the problem is the popularity of adult incontinence briefs, training pants for toddlers and swim diapers. When you add up all the use-once-and-throw-it-away items we toss into landfills, it's a big issue. There's even a movement afoot to ban disposable diapers altogether in some municipalities.

In an effort to lessen health and environmental impacts, a number of new earth and child-friendly brands have entered the market, including Seventh Generation, the eco-category leader; Nature Babycare from Sweden; and TenderCare Plus, Earth's Best and Tushies all from The Hain Celestial Group. These products differentiate from the majors by being variously chlorine-free, latex-free, fragrance-free, TBT-free, etc. Nevertheless, they all wind up in landfills, and the jury is still out on whether disposable is better than reusable cloth, according to an article in Wired.

While the cost and availability of these new brands is a barrier to increased marketshare, it is amazing that they have competed as well as they have against goliaths like P&G and Kimberly-Clarke. This ability to penetrate a sewn-up market is largely due to the green community and its increasing clout. This is particularly well-illustrated by a new flushable diaper product from gDiapers.

gDiapers has an amazing brand development history. Just a few years old, this Portland, Oregon-based company is the maker of a flushable diaper that will not clog pipes if instructions are followed. The product uses many of the well-known diaper materials, fluffed pulp and super absorbent poly-acrylate, but the difference is that the plastic shell is reusable while the soiled pad can be flushed. The product was carefully vetted with sanitation departments and received certification from William McDonough's Cradle-to-Cradle program. However, the real story is in how they developed awareness within the green community with few marketing dollars and a tremendous amount of goodwill. It's a story of the gort cloud in action.

Like many nascent companies, the founders of gDiapers began building awareness in their local community, in this case, the People's Republic of Portland. The Oregonian and Oregon Quarterly were among the first to pick up the story in 2005. This was quickly followed by product-spotting hits in the green blogosphere, notably by Blogging Baby and The Greenerside, and in the green press, Metaefficient, Greener Magazine, Sustainable Industries, Triple Pundit, Grist, Lime, IdealBite, with a big hit in Treehugger in December of '05. These media channels form aspects of what I call the gort cloud, the interconnected and largely invisible community on which green businesses are dependent (in lieu of substantial marketing budgets).

It was from these trusted sources for eco-friendly information that word sprang out to traditional media. Soon gDiapers was picked up by Fast Company, USA Today, Good Morning America, PRI's Marketplace, Fortune, Time Magazine, The Washington Post and The New York Times to name a few. The word was out, but the gort cloud continued to echo the product through green channels like Ecorazzi, E Magazine, EcoStilleto, Plenty, and a rather nice cover by Jill Fehrenbacher in Inhabitots, the family oriented version of Inhabitat, a weblog devoted to the future of design and sustainability.

Of course, exposure also comes from celebrity endorsement, something that came to gDiapers in the form of a cover story in Vanity Fair in November 2007 featuring Julia Roberts. She had discovered the product through echo-effect in the green community,

"I use Seventh Generation [chlorine-free, nontoxic] diapers for Finn and Hazel, and then I was turned on to the [plastic-free, flushable] gDiapers. Henry's got a gDiaper on…. I would recommend them overall. It is flushable, but you've got to stir that thing! If you don't really break it all the way up, it doesn't go all the way down."

The Sundance Channel also featured gDiapers on the EcoBiz section of The Green show hosted by Simran Sethi in July '08.

Today, gDiapers has carved out a modest niche in the previously impenetrable disposable diaper market. Along with other alternative diaper makers, gDiapers has forced P&G and Kimberly-Clarke to yield incremental market share. It is possible that they may counter-attack with green products of their own, like Clorox did with their Green Works line, which reached a $40-million dollar market share in the first year, according to Treehugger. However, they will need to do more than Huggies did by releasing a "naturally refreshing cucumber and green tea" scented baby wipe containing potassium laureth phosphate, glycerin, polysorbate 20, tetrasodium EDTA, DMDM hydantoin, methylparaben, malic acid, aloe barbadensis leaf extract, calendula officinalis flower extract, camellia oleifera leaf extract, cucumis sativus (cucumber) fruit extract, retinyl palmitate, zea mays (corn) oil, phenoxyethanol, butylparaben, ethylparaben, propylparaben, isobutylparaben, fragrance and Vitamin E in the form of tocopheryl acetate. This is typically not the vocabulary of the gort cloud.

The gort cloud is the invisible, yet driving force behind gDiapers and other new green brands leveling the playing field and helping to change the pay-to-play marketing paradigm. It is the ever-growing and ever-louder green community demanding new innovations and changing the rules.

How is 'Green Business' Doing Today?

Wednesday, March 4th, 2009

The Dow closed below 6800 yesterday. The last time that happened I was in my forties and still able to ski black diamonds at Mammoth. Aside from an annoying time check, I'm sure this news motivated a lot of bloggers to get blogging, including me. I've just published a book titled The Gort Cloud about the brand building and marketing experiences of America's leading green brands. I was curious to know how they are doing. So I asked them, "How is your green business doing today?"

First to respond was Carsten Henningsen, founding director and chairman of Portfolio 21 Investments,

"Speaking from the green multinational perspective: Portfolio 21, a mutual fund investing in greener corporations worldwide, is experiencing negative performance like the rest of the world; however, this green basket of 105 companies is outperforming the markets. In other words, Portfolio 21 investors are not losing quite as much as the rest of the markets."

Well, that is reassuring, but who agrees with him? A report just released by the business consulting firm A.T. Kearney reported, "during the current economic slowdown, companies that show a "true" commitment to sustainability appear to outperform their industry peers in the financial markets. Indeed, in 16 of the 18 industries examined, companies recognized as sustainability-focused outperformed their industry peers over both a three- and six-month period, and were well protected from value erosion." And there are other reports echoing the same conclusion, some of which were aggregated in a recent article by the prolific and prescient writer, Joel Makower, in GreenBiz.com. This follows one of my own posts on GreenBiz titled, "Wall Street vs. Green Street: Who is Doing Better?"

So, like the rest of us, I'm wondering why I didn't follow the sage advice to invest in the things you believe in. Instead, my not-so-green retirement portfolio is in shambles.

So if we leave the financial investment world and head over to the personal hedge fund called "your home", we have the perspective of Chris Bartle, founder of Green Key Real Estate,

"In 2008, we definitely felt the downturn in the economy and especially in the real estate industry. We only grew revenues by 50%. However, we tripled the number of franchises we have, tripled the number of agents we have, all while most of our competitors were losing agents and offices. So, our revenue per agent declined, but we continued to attract agents and franchisees who see green as the future of real estate. We are building the business for the return of the market."

Well, they are not making more land but we are certainly making more people. When the housing market comes back, as it surely will, greener buildings should command a premium, especially given that energy costs are not going to decline and concerns about indoor environmental quality are only growing. This should be good news for three other companies featured in my book, Interface, makers of FLOR carpet tiles, YOLO Colorhouse, manufacturers of low VOC paints, and Michelle Kaufmann Designs, designer and manufacturer of green prefab homes.

Shifting gears, let's take a look at one of the founding industries in the green movement: food. It's no wonder that food was the jumping off point for sustainable and healthful products given that food is ingested: LOHAS, the pioneering lifestyle advocates in this space, are known for the mantra, "No impurities in the temple." Chief advocate for this belief is Gary Hirshberg of Stonyfield Farm,

"In general green businesses, like Stonyfield, have more loyalty from their consumers which cushions the blows in times like these. Other companies that do not have value-add propositions can only sell on price; but, when your brand offers added health, safety and environmental benefits, consumers stick with your product and look to save money elsewhere in their budget. In all of my 26 years at Stonyfield, never have I watched sales more closely - and its daily fluctuations. Our category (yogurt) is flat but we are growing slightly, so in fact we are doing better than the two leading brands in the category. Stonyfield is a sustainable brand; our competitors are not. The same is true for other leading companies - Honest Tea, Sambazon, Applegate Farms - all sustainable brands and all in double digits. Not growing as fast as they were but still growing, which in this market is excellent. So yes, the performance of sustainable brands is outpacing their counterparts, even when the market is down and the consumer is worried."

I would not be surprised to hear that three of Gary's Vermont neighbors, Ben & Jerry's Homemade, Seventh Generation and Green Mountain Coffee, would agree. They too are subjects of my book.

Rounding out this perspective are the opinions of one of the original thinkers and inventors in the green space, Spencer Brown of Rent-A-Green Box, the green moving solution. Spencer has a long history of creating solutions, more recently solutions that will bring us closer to the Age of Sustainability. Spencer shoots from the emotional hip,

"people are so tired of doing things the same old way that if there's a new choice, one that is cheaper and greener and makes sense, they (will support it because) they are doing something good for themselves and the planet… and (if) it's new, they want new… out with the old and in with the new… its like a weird thing… green business is good, bright, feels good, the right thing in a world of wrongs and mistrust… and lies and all of the BS that we are seeing… green guys are the new eco-heroes of the economy… That's a huge plus, and I think green companies are getting these fence sitters who are like.. wow… I really want something that makes me feel good… so out with the old and in with the new… and green is serving that feeling."

Well, that's how I feel. Out with the old. In with the new and the green. Damn the torpedoes. Full green ahead.

Executive Compensation and Corporate Social Responsibility

Friday, February 6th, 2009

As I've been reading accounts of the mob with pitchforks going after greedy C-level exec's on Wall Street, I'm reminded of a prescient chapter in my book, The Gort Cloud, that deals with this red hot issue. The subject of the chapter is a hip and eco-conscious clothing maker in Portland called Nau, Maori for "welcome, come in."

When this band of ecopreneurs founded the company, they set out to do many new things. Of course they were committed to making clothes from sustainably sourced materials, clothes that would be easy on the earth to maintain and that would be long lasting. They would also give a large portion of revenues to environmental causes. They set out to do many things, but one of the most interesting was the commitment to tie executive compensation to overall employee compensation. In their minds, executive compensation was just as important to CSR objectives as, say, how much impact their choice of cotton had on cotton workers in Peru. Although a private boardroom decision for most corporations, Nau decided that fairness dictated another system. If the employees worked hard and produced profits, then all boats should float. If the CEO could take Fridays off for golf, then the others could go to T.G.I. Friday's for a drink – or mountain biking, which would be the more correct analogy for the Nau team. It's the fairness doctrine built into the corporate charter.

This is how Ian Yolles, Nau's director of brand communications put it, "This entire effort has been an exercise in design in the fullest sense of the word. We've had a real opportunity to design an entire enterprise strategy, informed not only by the goal to make a profit, but also by our commitment to sustainability and a responsibility to the community. From day one, we've tried to be intentional and deliberate and conscientious about every decision we've made with those bigger ideas in mind."

To that end, Nau's original founders agreed, among other things, to abide by Robert Hinkley's Code for Corporate Citizenship. It states that the "duty of directors shall be to make money for shareholders, but not at the expense of the environment, human rights, public health and safety, dignity of employees, and the welfare of the community in which a company operates."1

Nau included a version of these 28 words in their bylaws. They went a step further, and included a document called "Rules of Corporate Responsibility" with eight "commitments," one of these stating that the highest paid employee cannot make more than 12 times the salary of the lowest paid employee, and another stating that the company would never pay less than l.5 times the U.S. minimum wage. A third point states that all spouses or partners are guaranteed benefits regardless of sexual persuasion. "The kicker to all of this – it says that none of these rules or commitments can ever be changed without a minimum of 75% shareholder agreement," explains Yolles.

When companies are privately held, the fortunes of the owners, who are often the managers, rest with the performance of the company. With public companies, executives are paid obscene sums that have nothing to do with performance because it is the shareholders (or taxpayers) who take the hit when bad decisions are made. Likewise, it is the rank and file that suffers through job loss and pay cuts while executives escape on golden parachutes. Nau's corporate rules brought fairness into the equation.

Now it is true that Nau has had its ups and downs in this challenging economy, but the model they set forth could suggest a new and more equitable path for corporate governance and compensation. It's not socialism. This is capitalism that guarantees rewards for all stakeholders.

 

Richard Seireeni is president of The Brand Architect Group, Los Angeles, a strategic brand consultancy with affiliated offices in Tokyo and Shanghai. Seireeni is the author of The Gort Cloud, which describes the invisible network that is powering today's most successful green brands.

 


 

1 You can read more about Robert Hinkley's ideas in this article originally published in 2002: "How Corporate Law Inhibits Social Responsibility," http://www.medialens.org/articles/the_articles/articles_2002/rh_corporate_responsibility.html.

Robert C. Hinkley has been a corporate lawyer for more than 20 years. In June 2000, he resigned his partnership at Skadden, Arps, Slate, Meagher & Flom LLP in order to devote more time to promoting the Code for Corporate Citizenship.

Extremes Vying for Your Sustainability Dollars

Wednesday, January 28th, 2009

I, like the rest in the green community, am breathlessly waiting to see how Obama's stimulus plan will benefit our movement. How will it actually create new jobs and for which businesses?

In the meantime, I'd like to comment on the striking clash of cultures I witnessed at last week's Go Green Expo in Los Angeles. What struck me was the different experiences I felt walking down each of the aisles. Mostly on one side of the hall were the tech products, the ones that promise to get us to paradise with new gadgets and technological breakthroughs. On the other side were the crunchy lifestyle goods.

The latter was filled with what I can only describe as stalls I might find on the edges of the local farmer's market. These vendors were hawking tie-dye tees, skirts made of burlap, chemical-free baby clothes, and more, yes more, earth-friendly skincare brands. Earth lovers must be in particular need of epidermal restoration, and I wonder if it has anything to do with the burlap? Anyway, these products had a decidedly Earth Mama, made-in-the-garage feel, and I actually did see macramé plant holders hanging from display racks. There must be a market for these products because the LOHAS movement was founded in this lifestyle and it's still going strong. The individual price points throughout this section were mostly under $50 or within what marketers describe as the impulse buying range.

At polar extremes (pun intended) were the tech products that were invariably vying for an endorsement by Ed Begley Jr., "actor and activist" according to the official website. I think I saw four or five life-sized standups with Ed in signature jeans and denim shirt smiling next to things like water ionizers, which are surely sustainable. His TV show is a parody of his obsession with such things, so it wasn't a surprise to see that he is in fact America's No. 1 spokesperson for green gadgets. But whether or not a portion of your green investment dollar is going into Ed's pocket, this stuff is expensive! We're talking major investments in tankless water heaters, water capture systems, solar and wind turbines, whole house insulation, and so on and so on. As the majority of these products are aimed at residential customers, I couldn't help wonder how these businesses are doing when home equity is in the toilet, grey water notwithstanding.

Traveling from one side of this hall to the other felt odd. I was trying to figure out which customer psychographic I fit into. Too poor these days for one and too snobby for the other.

Prediction 2009: Social Networks Overpower Traditional Media

Wednesday, December 31st, 2008

Social networks will become a critical media for marketers and advertisers.

Of course, many professionals in marketing and advertising can bear witness to the massive changes that have overtaken traditional media. Network TV viewership is down. Cable is crowded with repetitive pitches for products like Snuggie and ShamWow. Newspaper and magazine circulation is so bad that publishers have taken to giving subscriptions away as a means of increasing readership numbers. Digital media is a spider's nest of dubious CTRs (click through rate) and SEOs (search engine optimization). Usurping the importance of print, broadcast, outdoor, live and digital is the 6th media: Social Networks.

Forget about Facebook and Linkedin. These engineered networks represent only the tip of the iceberg. Social networks are any group of people linked by a common interest, and they tend to spring up all on their own. How people in these networks find each other and trade information is the mission of a new cadre of social network analysts. It could be that tiny group of employees who still smoke. While on breaks out on the street, researchers have found that they tend to share information more readily than their non-smoking colleagues. It might be a group of bloggers who share information about some obscure ritual in the Russian Orthodox church, or it might be a community of online gamers. My book, The Gort Cloud, explores the invisible green network that is powering today's most visible green brands. What I and others have discovered is the vast power of social networks to deliver partners and willing customers at a fraction of the price of traditional for-profit media channels. As more companies discover how to connect a narrowly crafted product message with a highly targeted network of customers, they will increasingly choose social networks (and social media) over traditional media.