Procter & Gamble Co., which is losing market share to eco-friendly products, is under mounting pressure to either fend off the competitors or buy one of them.
The maker of Tide and Crest is struggling to maintain its position in key categories, including skin care, razor blades and laundry detergent. Companies with so-called sustainable brands — products that are seen as more natural, environmentally sensitive or purpose-driven — are chipping away at P&G's longstanding hold on American households. Though P&G remains the world's largest consumer-products company, its wares don't have the same maverick appeal as newer brands.
Unilever, P&G's top competitor, raised the stakes last month when it agreed to acquire Seventh Generation, a Vermont-based company that makes sustainable cleaning products. The company had previously acquired Dollar Shave Club — another startup targeting America's bathroom cabinets — and expressed interest in Honest Co., the household-products company co-founded by actress Jessica Alba.
The situation may lead to a broader hunt for other sustainable acquisitions, said Philip Gorham, an analyst at Morningstar Inc. Buying a brand like Honest Co. or Method Products -- assuming those businesses can be acquired -- could help P&G appeal to younger consumers.
"The consumer products industry is going niche," he said. "Any number of the multinational consumer product manufacturers would want companies like Honest Co. and Method Products in their portfolio."
P&G's sales in core categories have slipped in recent months. Its share of the U.S. skin-care market fell to 12.7 percent in September, down from 14.2 percent in July, according to Bloomberg Intelligence, which cited IRI retail data. And the company, which owns Gillette, is facing a declining market for razor blades.
At the same time, Dollar Shave's smaller rival, Harry's, has been gaining share. That company recently began selling at Target stores, further squeezing P&G.
P&G just sold 41 beauty brands to New York-based Coty Inc., a deal that closed on Monday. But the company may soon return to acquisition mode. Chief Executive Officer David Taylor signaled on a conference call in August that P&G will rely on deals to fill out its product portfolio.
"Am I open to M&A bolt-on acquisitions that we think are strategic and would help accelerate the growth in any of our 10 core categories? The answer is clearly yes," he said.
Damon Jones, a spokesman for Cincinnati-based P&G, declined to comment on its acquisition strategy.
Unilever, meanwhile, has been more aggressive in snapping up nontraditional brands. It agreed to acquire Dollar Shave Club in July in a deal that was said to be worth about $1 billion. Unilever then set its sights on Seventh Generation, announcing plans to purchase that company in September. The buying spree raised questions about other brands.