Healthy Company

Our 11% sales growth in 2010 was marked by our pursuit of opportunities to make our green products affordable and accessible to more consumers. We expanded our distribution base by working with new retailers such as Safeway and Walmart and expanding our offerings at Target Corporation (Target) and others. Some of our smaller retail partners who specialize in selling natural products were vocally dismayed by our expansion in the mass merchandising and grocery realms. But for us to succeed in becoming the most trusted brand in our industry, we need to expand our ability to reach mainstream consumers.

Selling at Walmart: The decision to work with Walmart, the world’s largest retailer, was surprising to many people given the retailer’s controversial past on sustainability issues. (Read more about the decision and the reaction to it here.) We have watched closely as Walmart transformed itself into a leader in supply chain sustainability and welcome the opportunity to access their consumers and work with them on sustainability initiatives. In addition to offering our best-selling products at 1500 Walmart stores and on Walmart.com, we are participating in a Walmart-led effort to improve the safety of chemical-intensive products. Selling at Walmart also provides an opportunity for us to connect with consumers we have not yet reached. Our engagement efforts are starting with a program to help inform Walmart shoppers about the benefits of environmentally friendly products. Look for a sustainability report update on these engagement efforts in the near future.

Selling at Walmart also offers us access to their deep analytic capabilities and has already provided us with insight into where we are succeeding and how right-pricing affects sales. Early on in our partnership, the Coralville, Iowa Walmart store offered valuable lessons that are changing our shelving strategies. That store’s manager integrated our products throughout the store rather than in a natural products area and our products have been flying off the shelves. In 2011, we will be focusing our efforts on right-pricing, product integration, and increased analytics for all of our accounts.

National Advertising Campaign

With a goal of increasing our brand recognition and reaching 5% of American households, we launched our very first national television advertising campaign, “Protecting Planet Home.” It was an extensive effort for us and while it did increase the percentage of households using the Seventh Generation brand to 3.5% and more than doubled awareness of our brand in unaided tests to 17%, the campaign fell short of our goal of 5% household penetration. As John Murphy, Senior VP for Sales, remarked, “This was a reminder that we are a grass roots organization that builds community, creates knowledge, and connects with our consumers. We compete with the big CPG brands but not like them.”