Can General Mills overcome the Annie’s acquisition backlash?

By Kacey Culliney contact

- Last updated on GMT

General Mills paid $820m for Annie's: 'There is a pitfall in buying in, especially for a company as big as General Mills,' says Mintel
General Mills paid $820m for Annie's: 'There is a pitfall in buying in, especially for a company as big as General Mills,' says Mintel

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General Mills has defended the future of Annie’s natural and organic snacks under its ownership, but two experts say the company will have to work hard to beat the critics.

The cereal and snack giant acquired Annie’s for $820m earlier this month​ – a deal set to close by the end of 2014.

General Mills said the acquisition would drive it further into the natural and organic sector, adding another brand to its current portfolio including Cascadian Farm and Food Should Taste Good.

However, the purchase has generated a wave of criticism from consumers and anti-GMO activists concerned that Annie’s will lose its core values under the cereal and snack giant.  

Lynn Dornblaser, director of innovation and insight at Mintel, said buying into natural and organic made sense for General Mills but undoubtedly came with drawbacks.

“There is a pitfall in buying in, especially for a company as big as General Mills: the general level of distrust they will encounter from dedicated organic and natural consumers. There is a built-in challenge there that is hard for many companies to overcome,”​ she told BakeryandSnacks.com.

There was a fear among consumers over small companies being “swallowed up by one of the big guys”,​ she said. 

Take a page from Kellogg-Kashi…

However, Dornblaser said General Mills had an advantage as it already had a portfolio of health and wellness brands such as Nature Valley, Fiber One and Green Giant which would help it with credibility.

Kellogg acquired Kashi back in 2000
Kellogg acquired Kashi back in 2000

She said General Mills should use the Kellogg-Kashi buy as a reference point and learning curve to work against the backlash.

“They can take a page from Kellogg and Kashi - to do all it can to maintain what the brand is all about and communicate that to their core consumers…They have to maintain the personality and quirkiness of the Annie’s brand for them to be a success,” ​she said.

Retaining as much of Annie’s current management as possible would help this, she added.

Jerry Smiley, partner of business consultancy firm Strategic Growth Partners, agreed that General Mills would have to be careful in its organization and management of the new business. Like Dornblaser, he said the company could use the Kellogg-Kashi acquisition as a reference.

“Kellogg’s moved the Kashi business to Battle Creek [headquarters] a few years ago but they are now re-establishing it in California with some of the earlier management. Kellogg recognized that they made a mistake to move it and hope to recreate the magic from before,”​ he said.

General Mills said it would keep Annie’s CEO and co-founder John Foraker for at least one year to help the transition. 

‘We’re not changing’

Bridget Christenson, global communications manager at General Mills, said the company had no intention of changing Annie’s.

“Annie’s products are not changing. We are committed to maintaining the same great tasting products Annie’s consumers love and trust, and to honoring the integrity of Annie’s – including [its] certified organic products and their made-with-organic products,”​ she said.

The CEO of Annie’s John Foraker also took to Twitter last week to defend the future of the company under its new ownership. 

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3 comments

Just to put Kurt's comment into perspective:

Posted by Kem,

GMOs are banned in most developed countries. The major corporations that sell food in the EU already have the resources and infrastructure to meet strict EU labeling requirements. General Mills and the like have been following these strict regulations for many years, providing Europeans with GMO-free and appropriately-labeled food during that time.

It's not unreasonable for Americans to demand the same standards that the rest of the developed world enjoys.

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Big Food does not equal a big mistake for Annie's

Posted by Kurt,

For those questioning General Mill's purchase of Annie's, you should do some thoughtful research before jumping to conclusions. 1) They are a well respected company frequently lauded for their ethics and support of social justice topics. They bought Annie's because they respect the company, formulation, and brands....they will not dilute that equity by straying from Annie's core mission. 2) Big companies have much more stringent requirements on product testing related to food safety. When they label something organic or gluten free, you can trust that it actually is. If you haven't ever researched the actual composition of some products from smaller companies, you'd be surprised at how loose they are on the labeling. 3) Really look at their stance on GMOs....they spend "millions" not in supporting GMOs but in preventing a state by state implementation of laws that would actually drive incremental cost directly to the consumer due to the complexity of compliance. They are fully supportive of federal regulation, much like organic labeling, that would allow GMO Free products to label themselves as such. This would provide full transparancy to consumers and allow them to make thoughtful choices. 4) Whether we like it or not, and I personally eat Natural and Organic for the majority of my food, the GMO genie is out of the bottle. Simply requiring products to be labeled "Contains GMOs" would apply that label to over 90% of products in current stores. Consumers would tune this message out given it's prevelance. And before anyone says that labeling would force big food companies to move to less of their products containing GMOs, please study the agriculture landscape and understand that the supply of non GMO ingredients is not large enough to support any significant shift. And supply won't be increasing as GMO ingredients are widely accepted across the globe. As such, a profitable market exists for these products and there's no incentive for farmers to switch.
5) As a consumer, I am fortunate to have the income to choose Organic and all Natural. For a vast section of American's this is not the case. While you may not like every General Mills product, they fill a basic need for relatively healthy products at reasonable prices and in the process, ensure that families have food they can eat each night. I volunteer at an inner city school and work with kids that only eat one meal a day and it needs to be as nutritious and as affordable as possible.
5) So what's General Mills business model? They sell food. It's that simple. If there's a market they wil meet the need and do so safely while providing consumers choices....whether it be cost or ingredients. Some may disagree and I'd love to keep the conversation going with anyone who is capable of having a constructive dialogue!

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GMO support

Posted by Carrie,

The problem is that General Mills is spending millions of dollars supporting GMO and not to label GMOs. That is the real problem. It is not that they bought out an organic company. Trust from a consumer is won by showing that you truly care about the foods you produce which does not include GMOs. You will never gain the trust of the consumer while you try to be an organic and GMO company. So what is your business model Genersl Mills?!

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