While reading the article on Burt’s Bees (the all-natural maker of lip balms and other skin care products) and how it is now owned by Clorox (best known for being the maker of bleach), I couldn’t help but think of something similar going on in the world. What I thought of was General Mills’ recent purchase of Annie’s Homegrown.
Annie’s – known for its organic food and boxed macaroni and cheese – has established itself as a prime player in the organic food market. Just as Clorox felt that Burt’s Bees was worth upward of $800 million ($925 million, to be exact), General Mills thought the same of Annie’s ($820 million).
In regard to the deal, General Mills CEO Ken Powell has stated that “We’ve learned a tremendous amount from these various natural and organic companies we have acquired and we have been very good about leaving them alone, letting them do their thing” (Kennedy, Sept. 17, 2014). Powell went on to say that the company has built a strong brand. The same can be noted for Clorox. As I looked through the Burt’s Bees website, I could find no mention of Clorox whatsoever. At least on the surface, it appears both conglomerates are content with letting the companies continue business as usual.
The Annie’s/General Mills deal brings up an interesting question in the role of the internet and brands. General Mills has fought requirements regarding the labeling of GMO food, which has raised the concern of loyal Annie’s consumers (Northrup, 2014). The allure of Annie’s to many consumers is exactly that – the all-organic food.
Theoretically, General Mills could simply remove any mention of “organic” or whatever language to comply with FDA requirements, and manufacture the food for Annie’s as it saw fit. In the past, they may have been entirely possible. A comprehensive media campaign would possibly be able to minimize consumer loss. However, that is not as simple now.
The role of the internet and the intense brand loyalty would command immense attention. With the activity of consumers on social media, the value of the brand ($820 million, according to General Mills) would become far less valuable were word to spread that General Mills was changing the procedures. So therefore, the most profitable venture is to not change Annie’s means of operations in any way, thereby maintaining the value of the brand.
In this day and age, a valuable organic food brand takes years to be built, but can be destroyed in a matter of days. The hardest part of this deal is saying enough to quell the concerns of organic food consumers who know about the acquisition, without alerting consumers who have not heard. Same as Clorox does not advertise that it owns Burt’s Bees, it would seem logical that General Mills does not want to advertise to the organic food consumer base that it has taken over Annie’s. It want’s to maintain the brand: the image of the Berkeley-based, tie-dyed box of mac and cheese that it paid quite a bit of cash to acquire. General Foods knows this. It also knows that the organic and natural food market has been growing at a 12 percent compound rate since 2004 (Soloman, 2014), which is why the company probably knows to follow the old adage, “If it ain’t broke, don’t fix it.”
References
Kennedy, C. September 17, 2014. General Mills CEO: We’ll Let Annie’s Homegrown ‘Do Their Thing’. Minneapolis/St. Paul Business Journal. Retrieved from http://www.bizjournals.com/twincities/news/2014/09/17/general-mills-well-let-annies-homegrown-do-their.html?page=all
Northrup, L. September 26, 2014. Customers Petition General Mills To Keep Annie’s Products Organic. Consumerist. Retrieved from http://consumerist.com/2014/09/26/customers-petition-general-mills-to-keep-annies-products-organic/
Soloman, B. September 9, 2014. Buying Organic: General Mills Swallows Annie’s for $820 Million. Forbes. Retrieved from http://www.forbes.com/sites/briansolomon/2014/09/08/buying-organic-general-mills-swallows-annies-for-820-million/
Whitfill, A. March 16, 2009. Burt’s Bees, Tom’s of Maine, Naked Juice: Your Favorite Brands? Take Another Look — They May Not Be What They Seem. AlterNet. Retrieved from http://www.alternet.org/story/131910/burt%27s_bees%2C_tom%27s_of_maine%2C_naked_juice%3A_your_favorite_brands_take_another_look_–_they_may_not_be_what_they_seem
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