By: Jane Paradise
This article in The Wall Street Journal talks about Annie’s, the macaroni & cheese company, and what is has experienced in its first year under the ownership of General Mills Inc. Already, Annie’s has dealt with some beneficial and detrimental aspects of being associated with General Mills.
One of the advantages is that General Mills has helped Annie’s expand into brand-new product categories, things it has never considered before – like soup!. (i.e., General Mills’ Progresso soups business). Also Annie’s is planning on introducing organic yogurts (i.e., General Mills’ Yoplait group). These main products will be sold soon in stores like Target + Whole Foods Market. Usually it would take time, even years, for a company to launch products in brand-new categories, but General Mills’ access to this production equipment and supply purchasing has condensed the whole timeframe. Annie’s even would like to try expanding its product line into cereals! (Which they have tried and failed before). Annie’s knows where they would like to go – and General Mills Inc. has the tools and resources to get them there.
General Mills is now addressing growing customer preferences for products that have simpler ingredients and no artificial flavorings. This segment – the natural-foods segment – is now one of the few areas of packaged-foods that is taking off quickly!
However, integrating a natural-and-organics brand with a company that reflects the industry as a whole is difficult. The main fear that Annie’s and General Mills executives have is the rivalry between Kashi + Kellogg’s.
Annie’s pays a lot of attention to the details, even those of the ingredients listed on packaged pasta products. The article mentions a type of yeast extract and whether or not it should even be listed on the box. This company approaches that type of business move very carefully, while General Mills was all set to omit this ingredient right away. This main difference between the two is “the biggest learning curve, because it’s in our DNA, and it’s not necessarily in theirs”.[i] Conversely, General Mills has learned how to market organic food brands to the mainstream consumer. “We realized we were losing touch with the organic consumer, so we reversed course”.[ii]
I think that this article is very helpful for marketers, because it shows people that taking a risk (such as ownership / partnership) can be unnerving at first, but can often lead to good things – like trying new product lines that were never before possible! I also noticed a common thread of the branding aspect that our readings dealt with this week. Executives often think that if they build the brand strong, the consumers will follow – not necessarily so. They need to remember that the consumer’s tastes and preferences lead the way to understanding the ‘community’ (in this case the organic food consumer). And once the leaders understand the community better, and actually spend some time dealing with customers themselves, then the brand will begin to fall into place with the proper research, etc. General Mills mentions it appoints one of its senior employees to Annie’s, and when asked her opinions about Whole Foods, (Annie’s largest customer), she said she had never been to one! If the marketing leaders within these different brands want to truly work well together, some time must be spent where the consumers are (if they really want to get to know their community better).
[i] Quote from Bob Kaake, Annie’s head of product innovation
[ii] Ken Powell, General Mills’ Chief Executive