Cleaning up with Seventh Generation

Being green wasn’t always easy. How Seventh Generation transformed the way we think about cleaning up.

By Carlye Adler
May 3, 2010

Not long ago, cleaning the kitchen meant picking up a bottle of Fantastik or Formula 409. Such products were synonymous with clean to many Americans. But not to ecominded entrepreneur Jeffery Hollender. When he started Seventh Generation in 1988, nontoxic cleaners and recycled paper products were a rarity in retail.

What a difference two decades makes. Today, 75 percent of adults in the U.S. now feel a personal obligation to be environmentally responsible, and 65 percent believe companies should help them in that goal, according to a 2009 Experian Simmons consumer survey. Greener sentiments translated into about $140 million in revenue for Vermont-based Seventh Generation last year, with Hollender expecting growth of 20 percent for 2010.

That’s not the only thing growing. Once a standout on store shelves for its 100 percent–recycled paper towels, chlorine-free diapers, phosphate-free laundry detergent, and nontoxic dish soap, Seventh Generation is dealing with newly green competitors. Last year, S.C. Johnson, maker of Windex and Scrubbing Bubbles, rolled out Nature’s Source, products incorporating biodegradable plant-based ingredients and packaged in recyclable bottles. Kimberly-Clark inched into Seventh Generation’s biggest businesses with Scott Naturals paper towels and toilet paper. Most significantly, in 2008 Clorox launched Green Works, a line of natural household cleaners that bears the EPA’s seal, and became the No. 1 green cleaning products brand in the U.S.

“Seventh Generation set the standard for all of the companies competing in this space,” says Patrick Rea, publisher of Nutrition Business Journal in Boulder, Colo. “The big guys followed their lead.” In the last couple of years, the green household products industry has tripled in size, to $1.6 billion in 2009 according to market-research company Packaged Facts. Hollender, who admits Seventh Generation was “totally unprepared” for the competition, says that it has helped raise eco awareness and broadened everyone’s customer base. When Clorox spends a reported $40 million telling the public that “green works,” it helps us too, he says.

Becoming the godfather of the greener cleaner movement wasn’t something Hollender set out to do. The son of a conservative ad executive—his father was the President of Grey International Advertising and coached Dwight D. Eisenhower for his first television appearances—he grew up on Park Avenue and attended elite private schools, but always had a bent to do things differently. At 17, wrought with “guilt” about the affluence around him he moved to California, learned to surf, and lived out of his car. Later, he dropped out of college and started a nonprofit continuing adult-education program in Toronto. (It was successful, but he got arrested and put in jail for not having filed Canadian work papers.) However, it planted the seeds for his next venture, a New York–based education company that offered classes and cassettes on topics such as “How to Get Invited to the Right Parties,” “How to Marry Money,”and “What to Do in August When Your Therapist Is Away.”

Hollender sold a piece of that business in 1985 for a lucrative and undisclosed sum to Warner Publishing, and longed to do something else. “I ended up feeling pretty bad that I had gotten off the track that I was on earlier in my life to try to make money.” As a reaction, he wrote How to Make the World a Better Place: A Beginner’s Guide.Despite one odd summer job as a sustainable ginseng farmer, Hollender was not yet an environmentalist. But when he came across a nearly defunct catalog of ecoproducts, he saw an opportunity “to have a business that made a positive contribution through the products it sold.” He and a partner took over the catalog, called it Seventh Generation (named for the Native American proverb, “In our every deliberation, we must consider the impact of our decisions on the next seven generations”) and started hawking $26 compact florescent light bulbs and water-saving devices for sinks and toilets. In 1995, Hollender made a pivotal move to sell the catalog and focus on the wholesale products business. It was a bold decision to revamp a line of products that even Hollender admits didn’t work very well. “If you wanted to pay double and walk around in dirty clothes you loved Seventh Generation,” he jokes. But the company invested in improving its formulas and gained a cultlike following of environmentalists.

Still, Seventh Generation didn’t turn a profit for 13 years. That changed in 2000 when the company started growing 30 percent a year on average. The reason? Whole Foods, one of Seventh Generation’s first major retailers, showcased Seventh Generation to a growing audience. The line was picked up by traditional grocery stores like A&P, Gristedes, and Food Emporium, and in 2005, Target. Hollender had gone mainstream.

For now, Seventh Generation has remained independent. True to its founding values, the company still gives 10 percent of its profits to nonprofit groups, and takes a counterintuitive approach to sales (encouraging consumers to line-dry their clothes instead of machine drying them, even though the company sells dryer sheets).
Seventh Generation, however, hasn’t been able to resist getting more corporate minded. Last year Hollender stepped aside as CEO and tapped Chuck Maniscalco, who previously ran a $10 billion products division at PepsiCo, to replace him. Hollender says Maniscalco can do what he can’t: grow the business to exceed $500 million in the next five years. “They were the pioneers in the industry and a whole bunch of players redefined it, and did greenwashing,” says Chris Haack, a senior market analyst at Mintel. “Seventh Generation is the bedrock of this market and a watchdog; now they are saying it’s time to take a look at us again. What they are doing seems very smart.”

Hollender remains the executive chairman and retains the title of “chief inspired protagonist.” He doesn’t seem to be stepping aside as a green evangelist; he speaks constantly about his latest book, The Responsibility Revolution, and aggressively lobbies for progressive change through the newly formed American Sustainable Business Council. He’s also returning to his desire to transform education, this time with the launch of the Sustainability Institute, an online educational program with Kaplan [NEWSWEEK and Kaplan are both owned by The Washington Post Company.] Sound unusual? For now, maybe. But given Hollender’s track record, it’s likely others will follow his lead eventually.

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