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In 2014, Schmidt’s made its natural deodorants in a 1,200-square-foot facility that had only four employees; a pet turtle lived in the bathroom. It offered its products in jar form, and you could only buy them at farmers markets and natural grocery stores.
Fast-forward to a month ago: The company was acquired by Unilever, the huge consumer products company that also owns Dove, Degree, Suave, and Axe, all brands that make traditional antiperspirants. “It’s a sign of a shift in the industry,” says Jaime Schmidt, 40, who founded Schmidt’s in 2010 out of her kitchen in Portland, Oregon. She’s right. In November, it was announced that P&G, which owns Secret, Gillette, and Old Spice, was acquiring the VC-backed natural deodorant company Native.
According to global market research firm Mintel, 25 percent of US consumers purchase natural deodorant. In a December 2017 report shared with Racked on the behaviors of shoppers who buy natural products, about 56 percent of adults surveyed think that it’s important for their personal-care products to be “natural or organic.” However, 16 percent of consumers who still buy only mainstream brands “express ingredient safety concerns,” meaning there’s potential for the category to convert new shoppers to so-called naturals. Natural deodorant sales will likely grow as the natural category as a whole gains new shoppers.
To clarify terms here, the difference between a natural deodorant and a traditional antiperspirant like Secret is that, per FDA guidelines, only a product that stops sweating can be called an antiperspirant. Deodorants can only claim to stop odor. Odor is caused by bacteria on your body that mixes with sweat, which is sterile and smells like nothing when it’s released. Most antiperspirants use aluminum compounds to temporarily clog sweat glands and prevent sweating.
Viral emails from the early 2000s and articles that started popping up online claiming that aluminum causes breast cancer and Alzheimer’s disease inspired consumers to look for alternatives to antiperspirants. The American Cancer Society, the Alzheimer’s Association, Cancer Research UK, and even the EU’s Scientific Committee on Consumer Safety (the organization that has banned more than 10,000 personal-care ingredients in the EU) have all proclaimed that there is no good evidence that the aluminum in antiperspirants causes either disease, both of which likely have complex and multifactorial origins. But the genie is out of the bottle, and the mantra of those that make and buy natural products is, “Better safe than sorry.”
Schmidt has a background in HR and holds a master’s degree in sociology, but describes feeling unrooted a decade ago and unfulfilled by a series of office jobs. She moved across the country from Chicago to Portland, where she ended up getting a job at a “vegan hot-dog shed working late nights serving hot dogs to drunk people.” At the time, Portland was in the throes of a makers movement, and she started experimenting with natural deodorant recipes as a hobby, selling them at farmers markets and getting real-time feedback from customers. She says she had switched to mostly natural products for her own personal use, but had yet to find a natural deodorant she liked. “Many of them didn’t work, and I just succumbed to the fact that maybe I would just be a little stinky or would use the chemical [products].”
In 2014, current CEO Michael Cammarata, 32, found Schmidt’s, turtle in the bathroom and all, while looking for companies in which to invest. Schmidt’s is his first experience in the beauty and personal-care space. He claims he made his “first million” at the age of 13 with a web hosting company, then got into online advertising, then consumer electronics (working with Costco), all ending in a gig with Viacom and Sony managing Big Time Rush, a band featured on the eponymous Nickelodeon show. It is there that Cammarata was exposed to the world of natural beauty.
“That’s where I learned about females’ buying patterns,” Cammarata says. “I would always ask the talent what natural products they were using. I saw it was a common theme, so I was looking at five different companies at that point and Jaime’s was one of them.”
At the time, Schmidt’s was bringing in only about $400,000 in annual revenue and was not in hyper growth mode. “But the consumers were raving about the product online, so that kind of piqued my interest,” Cammarata says. He eventually struck a deal with Schmidt. “I’m an investor/operator. I don’t write founders checks and let them go on vacation. This is what my vision is: Let’s create it together. I put my money directly into the company.”
As soon as Cammarata got involved, he and Schmidt started working on the deodorant in stick form, which both retailers and customers wanted. “It’s not as easy as dumping the same formula in a stick and calling it a day in terms of the product holding up in different temperatures or gliding on the underarms,” Schmidt says. “That was a struggle.” When Cammarata came on board, the company moved to a 5,000-square-foot facility, hired more people, and prioritized the stick, which they eventually figured out.
First, Schmidt’s was carried in natural grocery store chains and other natural-skewing retailers, then later in regional grocery stores. In February 2017, it launched in Target. Cammarata proudly contends that Schmidt’s was the first natural deodorant brand to take market share from the mainstream brands there.
“What we noticed was one third of [Schmidt’s customers at Target] had never purchased deodorant from Target previously. They started purchasing deodorant when we launched our brand there,” Cammarata says. He also says that of the people purchasing Schmidt’s at Target, 43 percent had previously purchased Dove and 39 percent had previously purchased Secret.
Schmidt’s is now sold at multiple retailers, including Walmart, CVS, Macy’s, and Urban Outfitters, and will launch in Costco soon. It’s also sold on its own website, where it offers a subscription service. Cammarata would not share exact sales figures, but says, “The first year I got [the company] into the multimillions, the second year into 10-plus million in revenue, and the third year a hell of a lot more than that.” He had hoped to take Schmidt’s to an IPO and was in the process when Unilever came calling. Schmidt and Cammarata sold the company for an undisclosed amount.
Schmidt’s sells deodorant in stick and jar form in five scents and a fragrance-free version. Its bestseller is the rose and vanilla scent, which the brand crowdsourced via social media (the top two responses were rose and vanilla, so the company combined them). A new charcoal and magnesium formula, released mid-2017, is also selling strongly. Finally, the brand has a sensitive formula that’s made without baking soda, an ingredient that often causes irritation and skin discoloration.
Schmidt’s has had a totally different trajectory from its competitor, the now P&G-owned Native, which launched in July 2015 as a direct-to-consumer product founded by a Silicon Valley entrepreneur. Native has double the number of scents that Schmidt’s does, and offers limited-edition seasonal fragrance offerings, like peppermint and sugarcane. Like Schmidt’s, it also has a “sensitive” baking soda-free formula. The brands’ main formulas are similar, with primary ingredients including arrowroot powder, baking soda, coconut oil, and shea butter. Schmidt’s is cheaper at $8.99 for its original formula stick; Native is $12 for a stick. (That’s two to three times more expensive than traditional antiperspirants, though.) It’s unclear if P&G will wholesale Native to sell in stores, but a P&G exec told CNBC that its direct-to-consumer status was attractive to the company. (Native did not respond to requests for comment for this story.)
Sales potential aside, it’s not surprising that larger companies want to acquire natural brands. Large personal-care conglomerates have lately been making concessions to consumers who are demanding more transparency. P&G pledged to list fragrance ingredients on its labels by 2019. (Currently, most companies list fragrance on labels as “fragrance,” because it’s considered proprietary and they aren’t required by regulatory bodies to reveal the individual ingredients that make up the fragrance.) Schmidt and Cammarata both mentioned Unilever’s sustainability pledges and commitment to other global issues. (Unilever does still get well-deserved criticism for selling skin-lightening creams in other countries.)
In the long term, Schmidt’s wants to move beyond your armpits. It recently started offering soap and toothpaste; the charcoal toothpaste sold out in less than a week. Unilever also owns the eco-friendly Seventh Generation, so Schmidt’s could round out a household that wants all its products to be natural. Jessica Alba’s Honest Company is struggling, but while that’s a cautionary tale to companies about making sure you can actually deliver what you promise to shoppers, it’s also an opportunity for small natural companies to step in.
As for Schmidt herself, she says she’s stepping back from the company’s operations, though she’ll be involved with product development and brand events. “We started pretty humbly and were acquired by one of the biggest companies,” she says, “and I think that’s an inspiration to a lot of people.”