Tom's of Maine Sells Out to Animal Testing Giant Colgate-Palmolive: Another One Bites the Dust

Compromises Their Supposed Ethics By Selling Out to a Company Without Ethics in Regard to Animals.

Disgusting how these things work. I guess Tom’s of Maine wasn’t happy enough with $50 million in sales a year. They just had to sell out in order to retire early I guess.

They join a long line of other sell outs. Notably, White Wave, Celestial Seasonings, Boca, Ben and Jerry’s, the Body Shop, and numerous others. In fact, I wrote about the Body Shop’s sell out here: http://geari.blogspot.com/2006/03/once-animal-friendly-company-body-shop_17.html.

They too went to an animal testing company – L’Oreal.

So, all to animal testing companies. Who would have known that if you buy Boca you support Altria, or, what was once known as Philip Morris. Or when you buy Ben and Jerry’s you support Unilever. Sad state of affairs.

The article below discusses this issue. Well worth reading. By the way, PETA supports the sell out. I hope they’re right in their reasoning. Regardless, Tom’s of Maine will now go down as compromising their supposed ethics by selling out to a company without ethics in regard to animals.

So, the old argument arises: if you support a product that itself is not tested on animals but made by a company that tests on animals are you supporting animal testing?

As you’ll see in the list of companies that test on animals, Colgate-Palmolive, Unilever and Altria still test on animals - http://www.caringconsumer.com/page/CompaniesDo.pdf.

Article:

Tom's Deal With the Devil

By Adrian Rush (TMF Adrian) March 22, 2006

Is socially responsible investing possible ?The perennial question comes to the fore once again with news that Colgate-Palmolive (NYSE: CL) has purchased a controlling stake in little Tom's of Maine, a brand known as much for its personal-care products as for its social conscience.

Tom's brand is a mainstay in our house. We've made a deliberate decision to use the company's toothpaste and deodorant products because, as ethically based vegetarians, we know that Tom's neither uses animal-derived ingredients in its products nor tests on animals. Yes, my wife and I are a couple of those odd birds who stand in the aisles at the grocery store and read the ingredients on the side of the box to make sure that what we're buying didn't cause any little beasties to suffer. Hey, we all make our choices in life, and this has been one of ours.

And now we, and probably many other Tom's of Maine fans, have mixed feelings about the Colgate purchase and are left with a dilemma on our hands ... and our teeth, and our underarms.It's not the first time something like this has happened.

In the food space, Kraft (NYSE: KFT) has swallowed up Boca, famous for its veggie burgers. And perhaps most famously, Ben & Jerry's sold itself out to Unilever (NYSE: UL).

I can hear you already: "And this is a problem, why?" Well, purely from an investing standpoint, there are winners all around. Small, niche companies get to expand their reach and ensure their continued existence with the weight of megacorporations behind them. And the conglomerates snag a piece of the increasingly popular natural-products market.

In Colgate's case, the purchase of Tom's was a no-brainer. Tom's generates only about $50 million in sales a year -- a pittance next to Colgate's $11.4 billion in sales in 2005 -- but Tom's profit margins are 10 percentage points higher than Colgate's. Plus, Colgate gets to tap in to the market for natural personal-care products, a market that Colgate itself places at $3 billion and growing at a 15% annual clip. Tom's, on the other hand, wins because it can use Colgate's massive marketing and distribution network to work its way into more chain markets -- though it's already well known at places such as Whole Foods (Nasdaq: WFMI) -- and can thereby gain more visibility and, ultimately, more sales.But what does such a move cost in terms of integrity and social responsibility?

Here's where things get tricky for the socially responsible investor. When you buy a Boca burger, you support Kraft. And when you do that, you support tobacco king Altria (NYSE: MO), which owns 85% of Kraft.

Likewise, when you buy a pint of Ben & Jerry's Chunky Monkey ice cream, you're sending money to Unilever, which gets a decidedly mixed review from SRI watchdog groups.

And now when you buy a Tom's of Maine product, you'll be backing Colgate, which tests its oral-care products on animals -- tests that ultimately involve the demise of those animals. Now, in Colgate's defense, it's only following the Food and Drug Administration's standard monograph for testing anti-cavity substances. But these are the types of concerns that investors must grapple with when their consciences tell them that "due diligence" means more than just examining the numbers.

For what it's worth, Mary Beth Sweetland, senior vice president for research and investigations at People for the Ethical Treatment of Animals, told me in an email that PETA is "quite excited" by the Colgate buyout -- and that's saying something when you consider how tenacious PETA can be when a company is doing something it doesn't like. Turns out PETA has been in talks with Colgate since 1997, and the company in response has maintained a moratorium on animal testing in its line of adult personal-care products -- excluding oral care. What's more, Sweetland wrote, "We have faith that Colgate will do the right thing and follow Tom's lead on the animal-testing issue." Meanwhile, Tom's, the first company to win FDA approval of its fluoride toothpastes without involving the testing of animals, will maintain its commitment to making 100% critter-friendly products and, just as importantly, will continue its philanthropic endeavors.

So, to answer the opening question -- is socially responsible investing possible? -- it seems that the answer is probably different for everybody. Chances are very good that somewhere amidst the interconnected webs of publicly traded companies, you're going to find something that leaves your conscience a little bit unsettled, whether it's an issue with animal testing, labor practices, environmental sustainability, or something else.

For example, we use Silk soy milk in our house, even though Silk's parent company, White Wave, is a subsidiary of Dean Foods (NYSE: DF). And by indirectly supporting Dean, we're also supporting the dairy industry, which in turn keeps the veal industry in business. And that's a dilemma for any lover of animals.

We all make our deals with the devil. It's just a question of how much we're willing to concede. And that's a question that all investors have to answer for themselves.