General Mills announced Monday that it will acquire Annie’s, Inc, a leading U.S. producer of branded organic and natural food products with net sales of $204 million in its latest fiscal year (completed March 2014).
Annie’s, Inc. — which includes the Annie’s Homegrown line of snacks and meals, and the Annie’s Naturals line of salad dressings and condiments — will join General Mills’ U.S. natural and organic products portfolio, which includes the Cascadian Farm, Muir Glen, LÄRABAR and Food Should Taste Good brands. Net sales for these General Mills brands totaled approximately $330 million in its latest fiscal year (ended May 2014). Annie’s is known for creating healthy, organic products free from the artificial flavors, colors or preservatives used in many other conventional packaged foods (such as the ones General Mills is known for, as Brian Solomon pointed out in Forbes).
"We are excited about this strategic combination, which will enable Annie's to expand the reach and breadth of our high quality, great tasting organic and natural products, provide new opportunities for our employees, realize greater efficiencies in our operations, and maximize value for our stockholders," said Annie’s CEO John Foraker. "Powerful consumer shifts toward products with simple, organic and natural ingredients from companies that share consumers' core values show no signs of letting up. Partnering with a company of General Mills' scale and resources will strengthen our position at the forefront of this trend, enabling us to more rapidly and efficiently expand into new channels and product lines in a rapidly evolving industry environment.”
Jeff Harmening, General Mills’ EVP and COO of U.S. Retail, said, “This acquisition will significantly expand our presence in the U.S. branded organic and natural foods industry, where sales have been growing at a 12 percent compound rate over the last 10 years. Annie’s competes in a number of attractive food categories, with particular strength in convenient meals and snacks — two of General Mills’ priority platforms. Consumers know and trust Annie’s purpose-driven culture and authentic brand. We believe that combining the Annie’s product portfolio and go-to-market capabilities with General Mills’ supply chain, sales and marketing resources will accelerate the growth of our organic and natural foods business.”
The continued consumer paradigm shift to plant-based diets
Hear the latest on shifting consumer preferences toward more plant-based, planet-friendly foods from Daniel Vennard, Director of the World Resource Institute's Better Buying Lab — at SB'20 Long Beach.
"Annie's will remain dedicated to our mission: to cultivate a healthier and happier world by spreading goodness through nourishing foods, honest words and conduct that is considerate and forever kind to the planet. Authentic roots, great tasting products, high quality organic and natural ingredients, and sustainable business practices will continue to be the cornerstones of the Annie's brand," concluded Foraker.
Even so, early reactions to news of the acquisition have been mixed. Annie’s fans have expressed dismay through social media, noting that General Mills has opposed state-level efforts to label genetically modified foods, while Annie’s has pushed for tougher labeling requirements, as the New York Times pointed out. Still, General Mills committed in January to making Cheerios GMO-free, so perhaps there's more alignment there after all. Plus, as Plum Organics and Campbell Soup can attest, the right partnership can make a huge difference in the direction of an established corporation, as well as boosting the success and reach of a small, mission-driven brand.
Under terms of the agreement, General Mills will acquire Annie’s for $46 per share in cash, for an approximate aggregate value of $820 million. The Annie’s Board of Directors has unanimously recommended that Annie’s stockholders accept the General Mills offer. The transaction is expected to close later this year.