How have things changed since we last spoke with Grove Collaborative?
In the past few years, Grove has evolved from origins as a subscription-based model mostly for third-party, sustainable home cleaning and personal care brands, really leaning into the home cleaning side. Three years ago, we began exploring a new space. At that point, we were just beginning to create products under our flagship Grove Co. brand, and we were at least thinking about building those from the ground up. But we were still largely a platform where [consumers] came and either discovered, or furthered their relationship with, third-party brands. Those brands really pioneered a lot of sustainable formats in the home cleaning space.
But since then, we’ve recognized a few things. First is, we’ve just gotten bigger and attracted and acquired more customers. We’ve been able to do that in a few different ways. One is through more sustainability messaging. On that front, we started an experiment when we launched Seedling, our line of tree-free home tissue (A), toilet paper, paper towels, tissue, etc. That was the first time we really started to talk to customers about ourselves as a sustainability player and consumer products company. We asked consumers to come to us for sustainable products, as opposed to asking them to come to us for exciting products from other brands they may know. Seedling was really an unlocking point for us. Customers came to us because they thought, “Hey, I should do better by the world when it comes to purchasing home tissue.” And that has evolved into much stronger sustainability messaging and positioning.
So, we have really come into our own when it comes to Grove’s own brand product development, and we’ve realized the value that that can have. That’s not only in building products that we want—so the products are exactly what we want them to be—but also in customer acquisition and retention of customers through those products. That led us to leaning into sustainability, and always evolving our site, and the app we launched in the past three years. Then, it was really about discovering ourselves and exposing customers to our platform through the strength in our owned brands and products. That led to this recently announced partnership with the Virgin Group, and I think we felt like it was time. We were ready to take the next big step in the long, what we hope is the multi-decade future of Grove.
That catches us up to now, and to the big news that Grove Collaborative just a few weeks ago, announced its plans to become a public company through a transaction with Virgin Group Acquisition Corp. II, a publicly traded special purpose acquisition company (SPAC) sponsored by Virgin Group. Tell us more.
Since we are going public through a SPAC, the mechanics are a little bit different than, say, an IPO. But the end result is the same—we are expected to become a public company with current timing slated for late Q1 or early Q2 of 2022.
We’ve always thought that a public offering was the most likely outcome for the company, or most likely a major step in our evolution, because we have obviously seen a number of our brand partners, like Seventh Generation, be acquired by large CPGs. And that’s how large CPGs are finding their way into the natural and sustainable space, largely through acquisition.
But Grove was not interested in being acquired. We have pioneered the space in ways that make us want to continue to control our destiny. We want to continue to lean into our Beyond Plastic initiative, which means no plastics in our product range by 2025, and to what we’re doing in the carbon neutrality space, and to extend that to the brands that we develop, like our refillable deodorant systems.
The way to control that destiny ourselves is through a public offering, much more so than any other option.
How will being publicly traded change the brand, to whom it’s beholden, and how it operates (if at all)?
We’ll be beholden to different people, of course, in public shareholders, but we’re already beholden to investors today. That investor makeup will change, and what we disclose, and the frequency in which we disclose it, of course changes as a public company. But what we’re here to do and our mission will remain the same.
We’re a Public Benefit Corporation (PBC). It’s in our charter as of spring of 2021, meaning we have a fiduciary responsibility to think well beyond just the bottom line, into what we are doing for people, the planet, and shareholders. Now, that’s who we were even before we were PBC. But being a PBC really puts it down in writing so that our board and our shareholders are aware of our multifaceted mission.
We will be able to continue to pursue our goals when we go public and beyond just as we pursue them today. It will not change who we are, and it won’t change the goals that we’ve set out for ourselves. We are and will continue to be fueled by a mission to transform the consumer products industry into a force for human and environmental good.
For your third-party brand partners, Grove is a platform. But you’ve mentioned coming into your own as a CPG brand of your own, within your own platform. How do you think about new product development?
When we started out, we were third party-only. We were asking people [consumers] to interact with a lot of products they didn’t know, to do it on a site they hadn’t heard of and do it within this flexible, soft subscription methodology or model. There was a lot of change. We didn’t want to layer onto all of that newness a new Grove brand that consumers totally never heard of. But at least some people had heard of Seventh Generation, or Tom’s of Maine, or Mrs. Meyers, or Burt’s Bees [third party brands that were early adopters of the Grove platform]. And so that’s obviously how we started out.
We recognize that those brands have done so much when it comes to evolving what’s inside the bottle. And we wanted to take it a step further by asking, “what is the form of the bottle or package?”
Why is that?
If you’re thinking about all your revenue through the lens of major retailers, you think, ‘bigger is better’ to consumers. But because Grove is natively digital, we didn’t think about it that way. That, to us, meant bigger footprint, more shipping costs, more movement of water, and more carbon wasted unnecessarily.
When we started to build brands, we thought small, concentrated, durable, reusable, all the while thinking about what consumers do at a product’s end-of-life. That really drove us to the creation of owned brands. We found that we could do that effectively with Grove Co. cleaning concentrates, which was the first really different and innovative product we launched in 2017. We had a [durable] glass bottle, a one-ounce tube [of concentrated cleaner, and that was mixed] with 15 ounces of water that comes out of your faucet at home (B).
We kept going from there with dish soaps and hand soaps, laundry detergents, inter-usable vessels, and back then, pouches that have evolved into glass and aluminum bottles. We realized we didn’t need to just stop with home care, we could do these things in other categories. When we launched HONU, which is vitamins, minerals, and supplements in glass bottles, they had plastic caps that we will move to non-plastic. We went into personal care with Peach not Plastic, starting with hair care and body care in the bar format with recyclable paperboard packaging, and then the all-aluminum and refillable aluminum deodorant and body lotion. Superbloom, a beauty brand, is in glass packaging. There are a couple little plastics and some droppers that we’ll phase out. We didn’t want to restrict ourselves just to the home care space.
We also found that through our website and digital platform, we could tell stories to consumers and educate them to try things that they probably wouldn’t buy in the retail environment. That’s because you don’t have that interaction with retail associates in many of those occasions. We wanted to know how broad of a space could we play with the same goals in mind: sustainable packaging, moving towards zero plastic, and ingredients that are the best in the industry. When we realized that we could create products that are the purest manifestation of our mission, we wanted to do that.
To be clear, we don’t do it in all cases. There are categories where we don’t feel like we can be differentiated. So, we don’t [develop our own brand] in all cases. But where we feel like we can make a difference, and we can hit the trifecta on performance, sustainability, and consumer experience, we do it.
For your own brand, do you manufacture your own products yourself, or do you work with co-manufacturers and co-packers?
We are not first-party manufacturers; we don’t own factories in production. There are days I wake up and say, “I just wish we had a factory that did that,” especially since supply chains have been tight lately, it’d be great to own that stuff, but that’s not a distinct goal of ours. So, we work with a select group of contract manufacturers and contract packagers, and because of the standards that we have established for ourselves, and won’t compromise on, a lot of [co-man/co-pack organizations] don’t apply.
We can’t use folks who tell us, “Look, if you want me to make candles, I’m going to use certain amount of paraffin in the wax,” or “If you want me to make hand soaps and dish soaps, this is the way I do it.” We build all our own formulas. So it’s not as if we just go and say, ‘Give us your dish soap and we’re going to add lavender to it.’ But some of those co-packer folks tell us that they don’t fill into aluminum bottles today. “I fill into virgin or PCR plastic bottles so, sorry, I’m not going to do that for you.” That restricts [which co-man/ co-pack] you can use but by default. The people that you find to partner with you, they’re folks who are like-minded and you build something together, you learn from one another.
Are there benefits for co-man/co-pack organizations in partnering with you, even though your model or expectations might be outside of their comfort zone?
With some of our current partners, I think that there was some hesitation in the beginning. They’d say to themselves, ‘I don’t work with some of those ingredients, some of those ingredient suppliers, or with some of that packaging.’ But they were still incredibly excited about the business and the partnership that we have, how the business has grown, and just being on the leading edge.
I’m quite certain they are now going out to some of their potential customers and saying, ‘Hey, we are at the forefront of some of the newest sustainable products in this space, look at the partnership that we have with Grove or one of Grove’s brands.’
Also, a number of these [co-man/co-pack] folks know that they need to evolve because the industry and all the players involved have to move toward sustainability. They ask themselves, ‘what does our customer base look like? How protected are we against the evolution of consumer sentiment?’ For instance, if you polled a lot of manufacturers by asking them, ‘How different will your product base, customer base, and ingredient base need to look in 20 years’ time?’ I think nearly all of them would say, ‘It needs to look pretty different.’
And then if you asked to those same people, ‘How much change you’re going to make in 2021? They’d say, ‘None.’ ‘What about in 2022?’ They’d say, ‘Well, I don’t know, probably not much.’ And if you keep going through the years, they realize they need to make change. But when is that change going to happen? It’s hard to plan that into your business.
When someone like Grove comes knocking, we are legitimate, our volumes are sizable. We’re not going to be as big as some multinational customers that are out there, but [co-man/co-packers] understand the mission and what we’re trying to do. And we’re a good group of people with the right frame of mind. That’s often the incentive or the impetus that co-man/co-pack partners need to say, ‘Okay, I didn’t know when I was going to do this, but now I know. Now is the time to definitively move in that direction and change the customer base and the ingredient base and the packaging materials that come into my factory. That way I am doing the right thing, but also, I can say I’m doing the right thing.’
Because that’s a part of it for everybody. How can you advertise and communicate to folks that you’re doing the right thing? We plan to be plastic-free by 2025, and we’re not keeping it a secret. We’re talking about it. The ability to communicate this applies to several of the contract packagers and manufacturers we work with.
Your primary packaging is designed with sustainability in mind. But on the secondary packaging side, there’s historically been a tension between the D2C/e-comm space and sustainability. One fallout of the pandemic has been consumers that are hyper-cognizant of the amount of packaging that comes with shipping, say, a single toothbrush. How does Grove think about secondary packaging and GHG as it relates shipping?
It’s a challenge that continues to persist and will for a number of years. I don’t think anyone’s totally cracked that nut, but there are few things that we are doing. One is that we’re not just D2C, we’re now omnichannel. We’re in Target and we’ll continue to push into omnichannel, so that delivery takes a different path. There are more efficiencies when you can move pallets and cases around, as opposed to moving individual Kroger boxes.
But within the D2C space, Grove is not intended to be a single item purchase service. You can do that if you want, but our customers don’t. They interact with us because they know our shipments are all carbon neutral. We buy RECs (renewable energy certificates) and carbon offsets on the carbon from shipping, and work with USPS and other carbon offset facilitators. We buy mostly U.S.-based RECs where the work shows up in U.S.
We don’t use any plastic at all [in secondary packaging] now and haven’t for all of 2021. There’s no plastic in the boxes, there’s no air pillows, there’s no peanuts, there’s no bubble. We do use kraft, and we are evolving our recyclable content in our boxes (C).
Importantly, the average shipper that goes out from Grove has eight to nine items in it. And that’s great. The average Amazon box doesn’t. Plus, everything that you order from Grove ships from the same fulfillment center, we don’t have some of it shipped from a third-party drop ship, and then some ship from here and some from there. And we are very intentional about that.
People think about us as their flexible monthly shopping service when it comes to home and personal care. Our customers don’t order in onesie-twosies, and we like that because there is just a great deal of efficiency in how much corrugated is there. We’re thinking about how to continue to drive down the single-use or the linear nature on that shipment.
Down the road, there are few concepts out there, but it’s a tough one to figure out. There’s reusability, or you can use Amazon locker models with your centralized locker and drop off locations, micro-fulfillment centers, all of which we look at. But right now, we don’t think it’s the right customer experience. We’ll continue to encourage consumers to be efficient with their orders and shipments so we’re using as little carbon as possible to get it to their door.
You mentioned that Grove is carbon neutral, and the RECs and offsets you use to get there. The carbon offset market, with sustainable forests, wind farms, and carbon sequestration, is pretty established, so no need to expound. But you also say you are ‘plastic neutral.’ I’ve never heard that phrase, can you explain?
‘Plastic neutral’ is a new term that we were proud to bring to the market. It simply means we know how much plastic—to the gram—is in every single product that we sell across the board. That includes our own products, third-party, everything. So, when we ship a box, since we know which products are in it, we know the exact number of grams of plastic are in that box. We total up all the boxes we ship, and we work with two plastic offset providers, telling them how much plastic we shipped in a given time frame. Maybe in December we’ll ship 50,000 kg of plastic. Through the various markets in which they work, these organizations create offsets against that 50,000 kg.
These are typically markets where there is a lot of plastic that is headed toward the ocean. This is not ocean plastic—the notion of collecting plastic in the ocean is one that we don’t think is scalable. We mean plastic that is in rivers, streams, and waterways that are going to eventually get to the ocean. We have local organizations who are collecting that plastic, to the tune of that same 50,000 kilograms we shipped. We pay those companies to do that for us.
This not only prevents that plastic from going to the ocean, it also provides wages and jobs for people in South East Asia and Brazil, our primary markets for offsets today. Every gram of plastic we ship, we make sure we collect that same amount of plastic. And then, depending on what it is, the plastic gets used again, and sold to people that are using post-consumer cycle plastic in a variety of different cases.
You’ve established that you’re doubling down on your own brand since you’re often best suited (or the only willing) to match your own expectations and requirements around sustainable ingredients and packaging. Are you still acquiring new third-party brand partners?
Without a doubt we are, and I think we’ve done some great work here. Our goal is not to be a ‘Grove-owned brands only’ platform. There’s too much going on in the world that’s great, too many good products in good packaging.
Obviously, over the next four years until the end of 2025, we are and will be communicating and holding people to the plastic-free by 2025 standard. That’s our Beyond Plastic pledge and initiative, and we’re not compromising. But there are some intermediate milestones on these brands’ journeys, and we know complete and wholesale changes can’t happen from one day to the next. One of the greatest things we’ve done as part of the Beyond Plastic initiative is creating what we call our third-party working group. Danielle Jezienicki and Alex Bede, who are on our sustainability team at Grove, they created this and lead quarterly meetings.
We lead a Plastic Working Group comprised of about 75 brand members—companies that are brands, small and large, that participate in sharing and solving problems. We have speakers that come in and present on how to solve some common packaging issues that arise. A brand will ask, ‘Hey, I’ve got this issue. Can somebody put me in touch with somebody who might be able to solve it?’ Or another brand chiming in, ‘Here’s how I’ve solved it.’ So we’ve got resources because we want all of [member brands] to come with us on the Beyond Plastic journey and evolve your packaging so that you’re all still here with us on our site.
So, you’re growing on the third-party brand partner side, too, and onboarding new members? What does that process look like?
The goal is definitely not to pare back with having other brands on Grove. The goal is to grow and be inclusive. But we encourage [brands] to evolve their packaging and to know that, if you make that evolution Beyond Plastic, or if you are already plastic-free in your packaging, Grove is the place to go.
Now, that doesn’t mean everybody who comes to us with plastic-free packaging is just automatically permitted on the site. Product performance is just as important. We ask about the efficacy of the product, what categories it covers, what’s the performance, what’s the quality of the ingredients, etc. we continue to onboard new brands all the time that have found innovations that are plastic-free or that are evolving to plastic-free.
A new brand may say, ‘Hey, we have this thing now, but we’re going to roll out plastic-free packaging a year from now.’ We think that’s great, and we’re going to bring you on board, demonstrate what’s working on the site and what’s not. And we will be there to tell your story when you go plastic-free.
Packaging World recently featured one of Grove’s latest durably packaged refillable products, the Peach not Plastic line of deodorant (read more here). How’s that project going, and what’s next for Grove Collaborative?
When it comes to our Peach not Plastic (D) refill deodorant lotion, the only problem we’ve had is we haven’t been able to stay in-stock. It has done really well. And it’s in aluminum, and that supply chain as you can imagine includes several different components, parts, and locations. That can be challenging. We are always working to streamline it and just to get in a better in-stock position, because it has done better than we expected.
It’s not a surprise, but we’re finding that sales initially were people buying that full set, buying the forever case along with one or more refills. Now, a lot of people are coming back and just buying refills. They have a case already, so it’s working.
But we also launched a seasonal rose gold case for holidays, so some people are buying that so they have two color options. We’ll continue to evolve and roll out other scents and forms that play into that model. We love it. Its plastic-free, it’s reusable, and it redefines what’s going on. There are paper-based deodorants that are push up pops, and we’ve tried every one in the market—it’s not a great consumer experience. [The Peach] format works so well. It’s incredibly effective and the fragrances are wonderful. And Peach not Plastic, it’s kind of a playground for us in terms of asking ourselves, ‘how can we look at different forms and redefine the personal care experience for customers?’
Also, we just launched a pet care brand called Good Fur (E) last week, with pet shampoos and conditioners. Incredibly, the sales have been amazing the first seven days out of the gate, using all-aluminum packaging and aluminum caps. No one else is doing that in the market. There are just so many spaces to continue to explore. We’re in Target today with Grove Co. We hope consumers will see more of our products in more retailers down the road, because there’s just a lot of great work to do. We’ll just keep pushing really hard.