- It's been about a year since General Mills announced it would be purchasing natural and organic foods maker Annie's Inc. Looking back, Annie's has seen both high and low points in its new form of corporate organization.
- Annie's sales and distribution have grown in the past year, by 9.4% and 11% respectively, and the company introduced 54 new product varieties, compared to 29 the year before. Some of those new products leveraged General Mills' experience and expertise from other brands, such as Annie's new children's soup line in conjunction with Progresso and a new yogurt line in conjunction with Yoplait.
- But Annie's new ownership has had its drawbacks as well, such as the backlash from consumers over the acquisition itself as well as more specific details, such as the use of yeast extract in Annie's products, which General Mills at first did not feel was necessary to replace.
General Mills and Annie's need only look at the relationship between Kellogg and Kashi to see what the high points and low points of a partnership between a major corporation and smaller natural and organic company might look like. In the first eight years, Kashi's sales grew 42% annually on a compound basis. But after Kellogg took over various operations and competition increased, those numbers began to change, and Kashi's sales fell 35% between 2010 and 2014.
General Mills has moved in on some operations, such as merging its sales team with Annie's, which Kellogg did with Kashi and may have hurt Kashi's sales, according to people at the company. However, General Mills has been relatively hands-off with Annie's, allowing the company to work on its own terms.
"They’ve been successful. Why would we mess with that?" General Mills CEO Ken Powell told The Wall Street Journal.
After its acquisition of Cascadian Farms in 2000, General Mills felt it was losing touch with the natural and organic foods consumer. Natural and organic foods are one of the fast-growing bright spots in the processed foods industry, so Annie's became General Mills' next target for growth.
"[Annie's knows] what they want to do and where they want to go. And we’ve got the capabilities to help them do that faster," Powell told The Wall Street Journal.