If you visit any supermarket or grocery store, then you will surely notice something new. Established packaged-food brands find it hard to compete with their healthy counterparts that are cashing in with double-digit growth. But even with this outstanding customer support, it is hard to keep up with healthy consumer nutrition demands.
Healthy Consumer Brands Sell Out For Growth
Products that are additive-free, organic and non-GMO are growing at specialty-food stores, even though these companies may lack the money, marketing knowledge, and distribution chain to compete with the traditional food brands in local supermarkets. The solution that most of these firms come up with is simply to sell out. The much-needed support comes through selling to larger brands and food conglomerates. Niman Ranch, a natural pork, beef and lamb producer sold its company to become a Perdue Farms division, Applegate Farms producer of natural deli meats sold its company for $755 million to Hormel Foods. Finally, a Berkeley, California-based organic packaged foods company named Annie’s Inc. sold its brand for $820 million to General Mills.
There is no doubt that these marriages are the ideal response to changes in customer preferences when it comes to eating healthy. Customers are getting smarter, and they do not trust huge food brands anymore. It’s also tough for these big brands to use the words “healthy” or “healthier” when they use a laundry list of ingredients that are hard to pronounce. Large companies, therefore, have one option, and that is to acquire these smaller but healthy consumer brands.
The Tale of Two Brands: Kashi and Annie’s
Kellogg Co. purchased La Jolla, California-based Kashi in 2000. The cereal company gave Kashi resources and allowed it to manage its products. For a decade, the healthy cereal alternative grew, however, after Kellogg merged Kashi into its manufacturing arm that is also responsible for Frosted Flakes, the growth stopped. Kellogg customers sued the company for using synthetic ingredients for cereals that were branded as all-natural. Kellogg paid out a $5 million settlement for this case and in 2013, Kashi lost its California office. Its sales have never recovered.
General Mills did the same thing when it acquired Annies. Annie’s offices remained in Berkeley, California. General Mills took a different route and improved its commitment to organic agriculture. It plans to double their organically-farmed facility to 10 million acres in the next ten years. Annie’s president John Foraker uses Kashi’s tale as a reminder. “Annie’s values are a guiding influence at General Mills,” he adds. “There is a lot of change at Big Food. If they want to remain relevant to healthy consumers, they have to change.”
Change needs to be real to convince customers. This vigilance to provide the best and the healthiest food options may just be the best brand protection to consider.
Inspired by Entrepreneur.com
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