Behind P&G’s Native strategy—and what’s next

Brands on the Rise is a regular Ad Age feature spotlighting the marketing and business tactics of successful challenger brands. Read other installments here. When Procter & Gamble announced it would acquire natural deodorant brand Native in November 2017, the packaged goods giant was under pressure from such direct-to-consumer rivals—and from investors worried it was losing its market share and edge to them. Activist investor Nelson Peltz of Trian Partners was just about to muscle his way onto P&G’s board. A month later, rival Unilever would buy the similar Schmidt’s Naturals brand, a year after buying Dollar Shave Club. Ad Age Small Agency Conference & Awards Join us July 23 & 24 in Boston Learn more here Six years later, Native is delivering big for P&G. It more than doubled sales in 2023 and accounted for almost all the company’s sales growth in measured U.S. retail channels, according to Evercore ISI’s Circana data. Native’s U.S. sales are now ahead of such venerable P&G brands as Pantene and Tampax. Schmidt’s Naturals, meanwhile, has grown relatively slowly. Unilever last year divested Dollar Shave Club after years of disappointing results. And Peltz, having been on the board during a broader P&G turnaround, now has turned his attention to Unilever, whose board he joined last year. Buying emerging DTC brands is no sure thing for big packaged goods companies. But while Native is only part of P&G’s turnaround, it’s a part it’s looking to repeat, including with the acquisition of Miele Organics last year. Native has been an acquisition success story for a company that had more mixed results acquiring such big brands as Gillette, Duracell, Clairol and Wella in recent decades—all but Gillette has since been divested. Below, a closer look at Native’s origin story and the marketing approach that has fueled its growth. Also read: DTC marketing news to know How it started Moiz Ali got the idea for Native in 2014 when he read the back of a can of Unilever’s Axe and had no idea what the ingredients were, according to a LinkedIn post by Codie Sanchez, co-founder of the firm Unconventional Acquisitions. But he knew natural products were hot, so he made inquiries on Etsy to find makers of natural deodorants and got one to agree to let him put the Native label on their products. Through trial, error and fine tuning products in successive batches to improve online customer reviews, he got to a 4.7-star rating and 50% repeat sales rate by January 2016, growing to $1 million in sales by November 2016. By the following year, Native sales were in the $25 million to $35 million range, and Ali sold the company to P&G for $100 million. Ali, according to Sanchez, picked P&G because he saw alignment with the company’s values and respect for his vision. Ali stayed on as CEO through January 2020 with his team of eight in San Francisco. P&G veteran Vineet Kumar took over as CEO of Native in 2020 but stayed based in San Francisco, where most of the original team also works. Under P&G, Native brought in Curiosity, a Cincinnati shop with a history of working with P&G, as its agency of record; launched its first ad campaign; and moved from direct to consumer to retail stores. How it’s going Native U.S. sales soared 109% to $782 million in retail channels tracked by Circana and reported by Evercore ISI in 2023. Even against tough comparisons, brand sales were up another 43% in the four weeks ended May 5. That doesn’t count DTC sales, which Native also continues. A major part of the growth has been the expansion of Native from its original foothold in natural deodorants into body wash in 2018 and hair care in 2021, while continuing its focus on natural ingredients plus effectiveness, said Freddy Bharucha, president of North America personal care and beauty operations for P&G. The core proposition is complete transparency about “clean and simple ingredients, free of what we call the nasties,” Bharucha said, combined with technology and great performance. Adding P&G’s retail distribution capability and more mass advertising, which has extended to digital, audio, social, connected TV and more recently linear TV, “has allowed this brand to go “from a DTC world to a DTC-plus retail world,” Bharucha said. Native occupies the “super-premium” space in mass retail, with its body wash and shampoo priced between $13 and $14, or 15%-50% ahead of comparable products from P&G’s Olay and double the price of Old Spice and Pantene on a per-ounce basis at Walmart. Beyond natural ingredients and effectiveness, scent and surprise have been big factors behind growth, Bharucha said. That includes a February launch of Girl Scout Cookies-scented products in such varieties as Thin Mints, Trefoils and Coconut Crème and the launch last year Spiked Eggnog-scented products and Pina Colada products. The latter was featured in a satirical ad from VCCP, “The Return,” in which a man supposedly lost in the woods returns home to a suspicious wife and police because he still reeks of pina coladas thanks to the long-lasting scent. In another spot, a woman after being pulled over for speeding, tells a police officer she smells like spiked eggnog because of her Native hair-care products, which he proceeds to smell vigorously, to the dismay of her husband in the passenger seat. Key players Bharucha, a 28-year veteran of P&G, has overseen Native and its integration with the company since 2018, first as senior VP and general manager of personal care in North American and global brand franchices, later as president of North America personal care. Kumar, an 18-year P&G veteran, took over as CEO of Native in February 2020 after working in Asia on skincare. He succeeded founder Ali, who stayed on for two years before exiting. Kumar also lists on his LinkedIn profile that he’s an early-stage tech investor and marketing consultant with Konglo Ventures. He and much of the original Native team left behind by Ali remain based in San Francisco. Cincinnati-based Curiosity is Native’s agency of record and has worked with Native since 2019, originally hired by founder Ali. As part of P&G’s “fixed-and-flow” model for project work, Native has begun working with VCCP. That includes the “Unbelievably Good” campaign, including “The Return.” Raindrop Agency handled the latest creative for Native whole body deodorant, with media planning and buying by Curiosity. Tipping point No single point in time led to an explosion in Native’s growth, which was strong before and after P&G closed the deal. But it’s unlikely Native could have grown as quickly without the financial and retail distribution muscle the acquisition brought. Many startups in the DTC personal care space, such as Dollar Shave Club, have slowed down or topped out in the $200 million to $300 million sales range. Terence Kawaja, CEO and founder of investment banking firm LUMA Partners, noted as much in a 2018 speech at the Association of National Advertisers Masters of Marketing Conference, two years after Unilever acquired that brand and growth appeared to be slowing. But Native blew through that ceiling last year and continues to post high double-digit sales gains at retail. What others are saying “I think when P&G acquired Native, it was pretty early in the company’s life cycle, which was really smart and great for P&G,” said Craig Dubitsky, a veteran of many consumer product startups, most recently Happy Coffee, co-founded with Robert Downey Jr. That came after he sold his prior brand, Hello, to Colgate-Palmolive in 2020 and stayed on to work on the transition. Also read: How Happy is marketing the drink’s emotional benefits Keeping the original team in place to “maintain the soul of the company” is easier with nine people than with 100 or 1,000, he said. The onset of COVID-19 just a couple of years after the Native deal may have “helped amplify the fact that you could be at a little distance and it works out just fine,” Dubistky said. That was the case with Colgate’s acquisition of Hello just before the pandemic. Check out the latest Ad Age events and award programs Native’s success appears to have been noted by rival Unilever, too, if obliquely. Speaking on that company’s February earnings call, Chief Financial Officer Fernando Fernandez said: “Despite the strong financial performance of our personal care business, we are disappointed with the erosion of competitiveness in the U.S., where we have been too slow in responding to the consumer shift to an emerging premium segment. We are taking decisive action to address this issue, but it will not be a quick fix.” What’s next While competitors clearly have noted Native’s success and will try to duplicate it, that’s not a bad thing for P&G, or for retailer, Bharucha contended. “We’re not fighting for the same pie,” he said. “We’re growing the pie as a whole. I think that’s a winning strategy.” Check out the latest Ad Age events and award programs Product-wise, one of Native’s key focus areas currently is in whole-body deodorants, a segment with several startup players that’s also getting new attention from P&G’s Secret. And Native will keep working to “surprise and delight” consumers with new scents, Bharucha said, following a long line of everything from Rose wine and Pumpkin Spice Latte scents to the Girls Scout Cookies lineup. What big brands can learn The first key to successfully integrating Native was “having humility to keep listening and learning what was the secret sauce that delighted consumers,” which came from keeping the Native organization in place, Bharucha said. “It was truly a strategically incremental part of our portfolio.” That included keeping the DTC part of the business growing, learning from it, and continuing to invest in it, he said. The second part was bringing in P&G competitive advantages in terms of technology and retail distribution, “and in a very deliberate and constructive step-by-step way expanding into a second or third category,” he said. “We actually found it relatively smooth because we approached it as retaining that culture and organization, respecting them, learning from them, having a curiosity and a mindset of humility.” Brands on the rise A look at up-and-coming brands disrupting their categories Read more here

Behind P&G’s Native strategy—and what’s next

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