Can Established Food Brands Stomach a Change in Customer Demands?
“Voting with your fork” is often a euphemism invoked to rally consumers to make food choices that impact a larger shift in the cultural paradigm of how our food is produced and marketed. What may have seemed like a lofty goal in the beginning — to effectively change the food system through our eating and purchasing habits — has caused numerous ripples in what were previously stagnant waters. Larger food brands are feeling the heat, while smaller, mission-driven brands with a focus on “health” are steadily reaching double-digit growth.
There is, however, one looming caveat to this growth.
While mission-driven companies — such as Niman Ranch, a “natural” pork, beef, and lamb producer — have historically been successful in smaller, specialty markets, they lack the infrastructure, financing, marketing, and distribution channels to continue to grow.
As Entrepreneur reports, the desire to grow usually comes with the decision to sell out. Niman Ranch was sold to Perdue Farms in September 2014, right on the heels on Hormel Foods purchasing “natural” deli meats brand, Applegate Farms. Sales of this nature have been troublesome in the past, with the 2000 marriage of Kellogg Co. and Kashi serving as the instructions for what not to do.
For 10 years Kashi continued to prosper under Kellogg’s ownership, but they were mainly operating as they had before, just with a larger budget. When General Mills integrated the marketing and manufacturing with existing cereal brands like Frosted Flakes, the mission of Kashi was compromised and consumer trust was lost. The result was a $5 million settlement after customers sued over the misrepresentation of the “all-natural” label.
The latest chapter in this story is the sale of Annie’s Inc., the beloved makers of Annie’s Macaroni and Cheese to General Mills for $820 million in September 2014. The Annie’s story has begun just like Kashi’s: They have maintained their headquarters in Berkeley, California, and as of now, maintain control over their brand expression and ingredients.
“Annie’s values are a guiding influence at General Mills,” say John Foraker, president of Annie’s Inc.
Perhaps the cautionary tale of Kashi will serve as example of what not to do.
What are your thoughts on larger food brands purchasing smaller speciality companies? Does that impact what you purchase? Share your thoughts in the comments below.
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