Paul and Barbi Schulick, who founded New Chapter back in 1982, had continued to lead the brand following its acquisition by P&G in 2012. They announced yesterday that they had stopped working with the brand at the beginning of this month.
P&G acquired New Chapter in 2012 and while specifics of that deal were not announced, it was widely reported at the time that New Chapter had grown from its humble beginnings as an outgrowth of the health food store the Schulicks were operating in Brattleboro, VT, to a company with $100 million in annual sales.
Typical M&A multiples are one times to three times a top line revenue number.
Example for industry
For a long time after the deal was announced it was held up as an example of how to continue to harvest the golden eggs without killing the goose.
Many in the industry worried aloud that subsuming New Chapter, widely seen as one of the foundational brands in the herbal products business and at one time its biggest brand, into a huge multinational company would destroy its mission. But early indications were that the relationship started out without a hiccup.
In speaking with NutraIngredients-USA the Schulicks emphasized they do not want to demonize P&G. In fact, they said the reason they stayed on for much longer than entrepreneurial founders typically do after an acquisition is that the relationship was so good for so long.
“As a founder of the company, my goal was always to bring herbal healing to as many people as possible. I had a health food store in 1979 and was one of the early members of this movement,” Paul Schulick told NutraIngredients-USA.
Paul Schulick said the P&G deal offered New Chapter a reach that it would most likely never have been able to achieve on its own. It was a way to take his mission of herbal healing and put it on a global platform, he said.
“When P&G came knocking on the door, they were among the few suitors that I thought really honored our mission. They touched around 3 billion people around the world every day with their products. For an old hippie from the 60s, it was a dream come true,” he said.
Pressure on profits
But P&G started to struggle with falling sales shortly after the New Chapter deal was concluded. According to the company’s 2017 annual report, top line revenue was $74.4 billion in 2013, the last year of growth. Since then, revenues have steadily declined. The company reported $70.7 billion in revenue in 2015, $65.3 billion in 2016 and $65.1 billion in 2017.
The company is scheduled to report year end fiscal 2018 revenues at the end of this month. The consensus among analysts is that the company’s top line revenue will come in at about $67 billion, representing a return to modest annual growth, although fallout from President Trump's trade wars could undermine that.
“There were a lot of inspired leaders from P&G that came to us after the acquisition. For quite a while we felt very good about the relationship,” Barbi Schulick said.
“We do have empathy for what they are up against. I think they understand our view as well,” she said.
Heather A. Huff, senior communications manager in P&G’s Global Health Care Communications unit, had this to say about the Schulicks’ departure: “While I can’t comment on personnel changes or our strategic plans, I can confirm that New Chapter remains an important part of the P&G Personal Health Care portfolio. We will continue our mission of delivering the wisdom of nature through quality products our consumers expect and enjoy.”
Paul Schulick said the pressure on profits meant that he could foresee a time when New Chapter’s products would lose their innovative edge and distinctiveness.
“I still feel that herbal medicine has a major role to play in the arena of modern health care. This is understood more in other parts of the world, like Japan or Europe. The reason I stayed around so long was that I felt like we were getting close to fulfilling that dream,” he said.
“Our vow was to always make an optimal and truly innovative contribution to the marketplace. We weren't interested in being a redundant brand,” he said.
Doing more from outside
Paul Schulick said he turned down a consultancy offer with P&G because he wanted to be free to speak his mind about the importance of and the strength of the science behind some of New Chapter’s signature products.
Among those he mentioned where Zyflamend, for prostate health, LifeShield Mind Force, a mushroom blend for mental clarity and focus, and the new Golden Black Seed, a combination of organic black seed (Nigella) and organic turmeric to support health blood pressure and health blood sugar levels.
Paul Schulick has long advocated for the point of view the Dietary Supplement Health and Education Act saved the dietary supplement industry while at the same time painting it into a corner. There is a lot of what he considers to be excellent science behind herbal products that at best can be whispered about behind closed doors.
“I think in a lot of ways I can do more for New Chapter now being outside of the brand than within it. I’m definitely not going to retire. I am busy at work creating our next venture. It is going to have a strong basis in education,” he said.
Barbi Schulick said her message to New Chapter devotees is to keep the pressure on P&G to maintain the standards of the brand.
“We do want New Chapter to succeed. Our call is now to the consumers and stakeholders and anyone who cares about New Chapter to ask the P&G management about them. When new products come to market, we want them to ask if they are formulated in a way to provide the most optimum healing,” she said.