If you’re a fan of mac ‘n’ cheese, you’re probably familiar with Annie’s Homegrown and its iconic purple bunny-stamped boxes. But you may not realize that the Berkeley-based company, which was co-founded by Annie Withey and Andrew Martin in 1989, was acquired by consumer foods behemoth General Mills (GM) for $820 million in 2014. As a result, Annie’s bunny-emblazoned products are being stocked on the shelves of more and more grocery stores nationwide, and the products themselves are multiplying like, well, rabbits.
There was a fair amount of concern when the company went public, and even more once it was purchased. Time and again independent brands take a nosedive in one way or another once big brands take over. In response to the acquisition, grassroots public interest non-profit Organic Consumer Association called for a boycott on Annie’s products due to General Mills’ stance against GMO labeling laws. Still, three years after the buyout, Annie’s claims that the company is staying true to its mission to cultivate a healthier world, and attempting to do so by disrupting the pantry product world from the inside out.
Inside Annie’s
Annie’s headquarters is located at the intersection of Fifth Street and Cedar in West Berkeley, where it moved from Napa in 2011. Its bunny mascot Bernie looks down from the corner of the building. Bernie, named after Withey’s childhood pet rabbit, originated as a joke between Withey and her brother, who created the rabbit logo when she said she didn’t want her own face on her products. The bunny stamp of approval now appears on all Annie’s products, though what it actually stands for may be more fanciful than fact-based — it isn’t exactly easy to quantify the mission of “spreading goodness,” aside from an increase in sales.
Tiffany Tran, Nellie Boonman and Christina Karem are members of the Annie’s team who have weathered the GM acquisition and were ready to share that experience.
“It’s different when you work at a company where sustainability is ingrained in the DNA,” said Tran. “It’s a core part of who we are. It’s not [about] money for us, it’s just the right thing to do.”
While that may be the case, it’s impossible to deny that in the current consumer market — where environmental concern is on the rise — any effort toward sustainability is also an appeal to patronage and loyalty. The fact that Annie’s was already an environmentally-mindful company when it hit the market was undoubtedly one of the reasons that GM had its eye on the company in the first place. As an early advocate for organic ingredients and natural products, Annie’s carried the sort of “startup spirit” that Big Food corporations can’t create but still want to infuse into their branding.
“Annie’s is still very entrepreneurial in its approach to connecting with consumers and in the way that we operate our business,” said Boonman, a digital marketing manager who described Annie’s as a scrappy grassroots business that (thanks to GM) now has the resources of a larger company. Whereas Big Food will not usually launch a product for the sole purpose of supporting pollinators or making an April Fool’s Day joke, Annie’s will. It still thinks of itself as a startup — the sort of place where you live stream a Bunny Bowl on Facebook.
Annie’s Homegrown went public in 2012 and was traded on the New York stock exchange under the ticker symbol BNNY for two and a half years before GM came calling. Annie’s sold for $820 million dollars, which was no small chunk of change for GM to pay in order to gain a bigger presence in the organic market (they are now the third largest producer of natural and organic products). Owners of legacy brands Cheerios, Betty Crocker, Pillsbury, Totino’s, Yoplait and Old El Paso, the 151-year-old company got on the natural foods bandwagon relatively early in the game, with the acquisition of Small Planet Foods (owners of Cascadian and Muir Glen) in 1999. Now the organic and natural food division of GM, Small Planet absorbed Larabar in 2008 and Food Should Taste Good in 2012. Annie’s is GM’s most recent large-scale natural/organic acquisition, though they’ve been strategically investing in smaller food startups like Rhythm Super Foods and Kite Hill under a VC arm called 301 Inc since 2016. Founded in 2015, 301 Inc has invested in seven companies in the past 18 months, most likely with an eye for eventual purchase.
“At a certain point you can’t keep growing at that clip,” said Christina Karem, assistant manager of marketing communications, regarding the Annie’s acquisition. “The goal is to stay as independent as possible, and if you’re looking at corporate partners, [General Mills] is probably one of the best. They understood how special the Annie’s brand was and they wanted to make sure that they kept the brand special. If anything they were giving us more resources to help grow organic.”
There have been mixed feelings about this among consumers, particularly groups like the Organic Consumer Association (OCA); its 2012 boycott remains in full effect. “We don’t support consumers patronizing companies that are actively owned by [corporate] companies working to do the opposite of the interest,” said an OCA organizational representative. The OCA has denounced Annie’s for straying away from certified organic, though, according to Karem, all of Annie’s post-acquisition products have been certified organic. Still, the OCA is strongly opposed to any company that would associate with General Mills, which is a member of the world’s largest food industry group, the Grocery Manufacturers Association and has invested millions in combatting GMO-labeling over the years, though GM announced last March that it would implement new GMO labeling practices nationwide in response to a 2016 labeling law that passed in Vermont.
“Organic has always been true to our mission and we’ve never been asked to compromise our work in [it],” said Tran.
“Every single innovation since we’ve joined with General Mills has been certified organic,” said Karem. “Which is huge for us.”
Organic ingredients can be scarce and expensive, so in the past, Annie’s defaulted to creating “certified organic,” which is at least 95% organic content by weight (excluding water and salt), as well as a “made with organic” versions of their products, which must contain at least 70% organic ingredients, but may contain up to 30% non-organic. “We couldn’t afford to put out certified organic at a price point that most consumers could afford,” explained Karem. “Partnering with [GM] has allowed us to further our mission by going into the big part of the industry where Big Food lives.”
In the back of Annie’s HQ are shelves and shelves of brightly-packaged product. In addition to bunny-shaped fruit snacks and boxes of classic shells and white cheddar, the shelves also hold condiments, cookies, canned cinnamon rolls and frozen pizza snacks. Since partnering with GM, Annie’s has released over 30 new products.
“Basically what we’re looking at are areas where there isn’t an organic version,” said Boonman. “Kids want [the product] and parents want to give it to [them], but it doesn’t meet [parental] standards.”
What seems incongruous, maybe even out of character, for a company that started with a woman pedaling a single product from her car trunk, makes more sense when held up next to the GM portfolio of products and line of legacy brands. Annie’s is GM’s leading natural/organic brand, and thanks to the rapid release of new products, is now represented in each of GM’s six key product platforms: cereal, snacks, yogurt, mixes, biscuits and frozen meals. This might suggest that Annie’s is indeed injecting its mission into Big Food, or it could confirm the consumer fear that when GM bought the brand it was mostly as a move to acquire Annie’s fan-base.
While Annie’s may credit itself as an inside influencer perhaps partially responsible for some of GM’s recent “health-conscious” choices, like the 2015 removal of artificial flavors from Cheerios among other products, Annie’s expansion into GM’s otherwise flagging product platforms leaves one to question who is influencing whom?
After the acquisition
One correlation is clear: the GM buyout led to significant growth for the Annie’s brand (which is seeing a double-digit increase in sales and is expected to bring in over $1 billion this year, according to General Mills president and C.E.O. Jeff Harmening). Due to the acquisition, Annie’s now has more access to ingredients at lower price points, a more sophisticated supply chain and additional tools to help toward new innovations. According to a 2016 Nielsen data panel, Annie’s is the fastest-growing natural/organic food brand in the country.
“We’ve been able to grow at a faster rate with more quality than we would have been able to otherwise,” said Karem.
As a result of that growth, you can now find Annie’s products popping up in more stores, providing organic options to customers who have never before had that choice. Typical Annie’s buyers are millennial moms between the ages of 27 and 38.
Annie’s has recently seen a bump in purchases from low-income households. The company counts this as a testament to power of organic, which was previously less accessible to the general consumer due to both price and availability. It’s easier to go for the box of bunnies when it’s in the middle of your neighborhood Target or Safeway and not half-way across town at a Whole Foods.
“Five years ago we didn’t have anywhere near the level of distribution that we have now,” said Boonman. “That’s been really important from a visibility standpoint and an accessibility standpoint.”
Growing organic
Beyond creating new products Annie’s mission is “grow organic” has led to the company investing in consumer education and funding pet projects. Each year, Annie’s invests more than $900,000 sponsoring fellows from FoodCorps, a non-profit organization that connects kids to food through nutrition-based education and hands-on experience; doling out agricultural scholarships to sustainable producers and supporting a Grants for Gardens program that provides funding for school gardens in over 400 schools across the country.
Annie’s hopes to educate its consumers on what organic means through its external communication, consumer engagement (via social media, phone and email) labeling and publication of consumer-facing reports and information.
“Most people just see organic and think, ‘Oh that’s a better option’,” said Boonman, “but there’s so much that goes into it.”
Annie’s value of investment is something they’re sharing with GM and is one of the ways they hope to impact from the inside.
Case in point, Annie’s has partnered with independent farm cooperative Organic Valley since 2008, six years before the acquisition. In June 2016, GM announced that it will grow Organic Valley’s dairy production by 20 farms and 3,000 acres over the next three years, which will nearly double the number of organic acres from which the company sources its ingredients. “There’s so little [organic acreage] out there and the demand keeps going up,” said Tran. Who knows if GM would have done that without us?”
The OCA argues that, ultimately, this is a loss, as the yield from all of this new organic acreage still feeds into a company that relies on and supports industrial agriculture, but an overall increase in the number of organic acres is a positive impact from Annie’s perspective.
Office space
Another part of the Annie’s mission is environmental consciousness, which is most clearly addressed in its sustainability measures. The Berkeley headquarters (which was purchased from Clif Bar in 2010) has recently been transformed into the epitome of energy-efficiency. Decorated in blue, green, harvest wheat and golden yellow, the color palette of the interior reflects nature and the four seasons, and includes an indoor hedge of potted plants, recycled carpet, repurposed furniture and lots of natural light.
“We’re always looking for ways to be more sustainable and to walk our talk,” said Tran as she highlighted Annie’s upgraded HVAC, wireless thermostats, and energy-efficient lighting. New efforts toward efficiency saved Annie’s over $20,000 last year, a feat that won them the 2016 National Net Impact Climate Disruptors Award.
The company also received the 2015 Bay Area Business Environmental Award, has maintained both LEED Gold and Bay Area Green Business Certifications since 2013, and has made a commitment to become a zero waste office, diverting up to 90% of waste away from landfill.
“Anything that comes in and out of this office in regards to sustainability we track,” said Tran.
Where’s Annie?
And where, you might wonder, is Annie, the elusive company co-founder these days?
“This is going to sound like a joke,” said Boonman, “But Annie is an organic farmer full-time now. She grows potatoes and hay, I think.”
It seemed fitting for a woman who set out to spread goodness and cultivate health by nourishing consumers with goods from her own kitchen. The company has outgrown several offices and is now spilling into the world of Big Food, where it makes big money for one of the industry’s largest, but it still claims to retain the values of the woman who gave Annie’s its start. You won’t find her signing checks or walking the halls of the Berkeley HQ, but you may see her pop up at her local farmers market. There’s even a chance she’ll have a bunny in tow.
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