Late last year, one of my favorite brands of organic products, Annie’s Homegrown was purchased by General Mills. The wildly popular producer of better-for-you mac n cheese, cheddar bunny crackers and organic fruit snacks along with their iconic bunny logo had grown to a scale where it became as irresistible to big CPG executives as its products are to children. The brand commanded a $820 million price tag.
Recently the Washington Post published a very insightful infographic that tracks the ownership of 92 organic food brands. You can view the graphic here:
What’s interesting to note is that while there are a number of these from 2013/14, many more took place years ago. I suspect the average consumer doesn’t even know many of these brands they consider small and principled are owned by companies they trust less. Many of the “independent” brands that consumers think they love are really owned by the same “Big Food” companies they think they hate. Our own studies have shown (as have many more) the organic and millennial consumers distrust of large corporations so it’s no wonder that this information is less publicized. And let’s face it. Many of these brands continue to delight consumers and have stayed true to their roots in spite of corporate ownership.
To Annie’s Homegrown, being a part of General Mills provides access to resources and scale that can accelerate growth and expansion. To General Mills, ownership of this better-for-you organic brand boosts their portfolio of natural foods, an area that has been expanding at a compounded rate of more than 10% per year for 12 years running. But what does it mean for the consumer? Judging from the reactions to the purchase on social media, many consumers are legitimately concerned that ownership of one of their favorite natural brands by big CPG will over time erode the quality, authenticity and ultimately cause them to lose their love for the brand. Victims of “strategic synergies”.Of course, the jury’s still out in many cases.
So what’s the big deal? It’s hard to argue with the money, resources and clout that some of these acquisitions bring. And sometimes, they actually get it right – keeping the brand independently intact – not messing with the secret sauce – not tearing away the culture too much.
What’s in it for the small to mid-size brand who declines the buyout? In the very simplest of terms: the power of freedom and legitimate authenticity. Looking at it on a longer-term scale, independent brands have more permission to be disruptive, to respond quickly to opportunities, to make more fearless business decisions that consider values or principles along with the bottom line. And they can actually think on a longer term scale. Their size can (and should) become their greatest competitive advantage once they come to realize the power they have over brands that cease to be true to themselves.