The cereal and snack giant acquired Annie’s for $820m earlier this month – a deal set to close by the end of 2014.
General Mills said the acquisition would drive it further into the natural and organic sector, adding another brand to its current portfolio including Cascadian Farm and Food Should Taste Good.
However, the purchase has generated a wave of criticism from consumers and anti-GMO activists concerned that Annie’s will lose its core values under the cereal and snack giant.
Lynn Dornblaser, director of innovation and insight at Mintel, said buying into natural and organic made sense for General Mills but undoubtedly came with drawbacks.
“There is a pitfall in buying in, especially for a company as big as General Mills: the general level of distrust they will encounter from dedicated organic and natural consumers. There is a built-in challenge there that is hard for many companies to overcome,” she told BakeryandSnacks.com.
There was a fear among consumers over small companies being “swallowed up by one of the big guys”, she said.
Take a page from Kellogg-Kashi…
However, Dornblaser said General Mills had an advantage as it already had a portfolio of health and wellness brands such as Nature Valley, Fiber One and Green Giant which would help it with credibility.
She said General Mills should use the Kellogg-Kashi buy as a reference point and learning curve to work against the backlash.
“They can take a page from Kellogg and Kashi - to do all it can to maintain what the brand is all about and communicate that to their core consumers…They have to maintain the personality and quirkiness of the Annie’s brand for them to be a success,” she said.
Retaining as much of Annie’s current management as possible would help this, she added.
Jerry Smiley, partner of business consultancy firm Strategic Growth Partners, agreed that General Mills would have to be careful in its organization and management of the new business. Like Dornblaser, he said the company could use the Kellogg-Kashi acquisition as a reference.
“Kellogg’s moved the Kashi business to Battle Creek [headquarters] a few years ago but they are now re-establishing it in California with some of the earlier management. Kellogg recognized that they made a mistake to move it and hope to recreate the magic from before,” he said.
General Mills said it would keep Annie’s CEO and co-founder John Foraker for at least one year to help the transition.
‘We’re not changing’
Bridget Christenson, global communications manager at General Mills, said the company had no intention of changing Annie’s.
“Annie’s products are not changing. We are committed to maintaining the same great tasting products Annie’s consumers love and trust, and to honoring the integrity of Annie’s – including [its] certified organic products and their made-with-organic products,” she said.