Will Big Brands Acquire Zero-Waste & Circular Economy Startups?

Early February 2020, Cosmetic giant Beiersdorf announced it was acquiring Hamburg-based startup Stop The Water While Using Me

This startup was founded in 2011 with a social entrepreneurship mindset: they want to solve a social and environmental issue with fair and sustainable business practices rather than applying the traditional shareholders´ profit maximisation goal. They produce cosmetic products while trying to tick all the right boxes of a sustainable approach: natural ingredients, no chemicals, no animal testing, green shipping. Besides, they aim for zero-waste by marketing cosmetics that reduce packaging and water waste such as solid shampoo bars and soaps with refillable containers. However, they have a more niche and premium positioning than the high volume Nivea shower gels in one-way bottles sold in retail for some euros (actually, Beiersdorf might be piloting an empty bottle collection project as I saw Nivea-branded collection containers in the Budni retail chain in Hamburg recently...)

The originality of the Stop The Water While Using Me business model is also that they donate 1% of their turnover to water projects around the world. Also, their storytelling is based on the message that people should turn off the tap when using their products to save water. And obviously they do all what they can to avoid water wastage in their production process.

This acquisition is a very positive signal for the circular economy philosophy and ecosystem. It should trigger similar moves by competitors if they have not yet made a circular acquisition. It shows that circular approaches start to gain a wider appeal with citizens and consumers to which brands must adapt to survive.

Sustainability strategies of FMCG brands are usually based on several pillars:

1. Improve their sustainability KPI's in production and supply chain, e.g reduce water and energy consumption in production processes, reduce waste production by increasing quality controls, select freight modes that generate less CO2, reduce packaging use, etc.

2. Adopt more circular business models by designing durable and recyclable products. Set up more circular and resource-efficient business models such as empty packaging collection, on-demand production, bulk refill station in retail.

3. Acquire companies that grew through their circular products and business models. Besides, these companies tend to generate high brand engagement with their customer base.

There are a number of other cosmetic companies in Europe which focus on circular product design, packaging avoidance and natural ingredients such as the well-established UK-based Lush and French startup Umaï.

I am convinced that other big brands will acquire circular companies, wether in cosmetics or in other industries; as investments and pension funds are starting to make sustainability a key criteria for their portfolios...let´s stay posted!