The Business Side of Allergy Safe Brands

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stew potI’m going to let my marketing and business side out in this post. This is a topic I’ve been wanting to write about for several months, basically since Annie’s announced they had been purchased by General Mills. The amount of unhappy customers and comments to their Facebook page was crazy and the majority were not in favor of this merger. From a food allergy perspective I understand; General Mills is not known for making safe products or showing much concern for removing unhealthy ingredients from their food. From a marketing standpoint I also understand why Annie’s decided to sell to General Mills. It’s not necessarily a bad thing when you look at all the available information.

I have business in my blood; both of my grandfathers owned their own companies and were well respected in their communities. My father, uncle, and I all worked for my grandfather until the day he sold to a larger company. It did not end well. The large company did not want any of the family to remain in the new business despite our connections and knowledge of the community. This would not be last time I’d be a part of a business acquisition. I’ve been a part of four now and each has been different. Some turned out to be a positive, some ended very negative, and the last I’m still undecided on.

There is so much we don’t see when I company is sold or acquired. In my Grandfathers case he was ready to retire and my father and uncle weren’t in a position to purchase the company from him so selling was really the only option for him.

Lets take a look at General Mills and see what all the fuss is about with Annie’:

  • They aren’t strangers to a healthier diet either despite the GMO/non GMO debate. General Mills introduced an entire line of gluten free Chex cereals a while back. We unfortunately don’t buy these gluten free cereals in my home because they are made on shared equipment that also processes nuts, one of my husbands worst allergies, but it’s a step in the right direction for a company that is testing the waters of the gluten-free lifestyle market. A market expected to reach over $10B in sales in 2014 and projected to reach around $15B by 2016. What large food company wouldn’t want a portion of those sales, let alone a large chunk? And what goes with the gluten-free market more than the all-natural market.
  • General Mills owns other large health food brands like Larabar and Cascadian Farms. With Cascadian Farms they’ve mostly left them untouched so they could maintain their organic rating. We love their tater tots and other veggies because nothing is added to them like larger name brands that add wheat to tater tots for some odd reason. General Mills did make some changes to a Cascadian Farms cereal and the loyal fans noticed it pretty quickly. Thankfully it looks like General Mills hasn’t made any other drastic changes to the Cascadian Farms brand since then. Another lesson learned, hopefully? This also has me wondering why a company like General Mills that is trying so hard to hide GMO’s owns more than a few brands that are adamant at not using any GMO’s or unnatural ingredients.

What about Annies, why did they sell? And why did they sell to General Mills of all companies given their reputation.

  • From what I can tell Annie’s was succeeding in the all-natural and gluten-free market. They were growing, sales were up, and they had a growing loyal following. Then we get to the but; profits, margins, and costs. While business was great the cost of Annie’s all-natural ingredients was going up cutting into margins and profits. So how do you keep costs to the customer down while still providing the same great product without hurting your margins? One option is to sell to a larger company with connections and more experience in food markets who can help you; enter General Mills.

I still don’t understand why Annie’s chose General Mills. They may have made the best offer, or even the only offer. Either way I do understand why Annie’s sold. It’s hard to predict how many loyal customers will stay when you are forced to raise prices or start looking at layoffs and that’s where Annie’s was most likely at. There could be positives to this acquisition; we could see Annie’s product line expand with a larger research and development budget, we could see prices drop with General Mills experience in the food market, or General Mills could benefit from having one more all-natural brand and expand their other brands to include more healthy product offerings. Yes I know this last one is a long shot, but we can always hope. There are positives to this acquisition and we have to give Annie’s and General Mills time to adjust and decide where they want to go. If General Mills is smart they will see how passionate Annie’s customers are given the response to this merger and leave the ingredients untouched. Don’t give up on Annie’s just yet. There may still be great things to come from them.