Annie’s Keeps New Parent in Check

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

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6 thoughts on “Annie’s Keeps New Parent in Check

  1. Melissa October 2, 2015 / 8:26 pm

    Jane, I find this article to be very interesting. I did not know that Annie’s and General Mills have partnered. I always found Annie’s to be quite a natural, wholesome food. When I think of this particular brand, I think of the natural foods aisle in any supermarket. In comparison, when I think of General Mills branding, I think of more sugary substance cereals like Trix, Cinnamon Toast Crunch, Lucky Charms etc. I also think of Pillsbury, which gives me a lot of thoughts of more sugary substances. Although the brands represent different characteristics to me, I find the pairing of General Mills, and Annie’s to be a smart move. It seems as though the General Mills brand does not have anything completely organic to offer their customer base. The expansion of product category and offerings is a smart move on their part, I do agree. However, much like you, I do think that their top executives should become more familiar with the Annie’s brand in order to successfully position the brand. In order to successfully position, you need to know the brand and more importantly the consumer. Understanding the wants, needs and values (both emotional and functional) of the customer base of Annie’s will determine the success or failure of the partnership and positioning of the two brands.

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  2. Taylor Mason October 5, 2015 / 11:33 pm

    Jane, I found your presentation very intriguing. Prior to hearing the information you relayed I had not followed Annie’s brand at all. Everyone enjoys some Annie’s Mac & Cheese every once and a while. I thought the discussion that we had debating the similarities and differences between Kellogg’s and Kashi to be very interesting as well. Emphasizing what I had stated in class I believe that in many ways they brands do offer similar product lines. Although Kellogg’s does have many cereals aimed towards kids, they do provide the Special K brand as well which can be considered as more of a direct competition to Kashi’s. From what I have read about and done presentations on in previous classes, I have found partnerships and mergers more successful than not. By becoming partners with someone who produces a similar product you are able to utilize as many skills as possible at the highest possible levels. Going off what both you and Melissa have mentioned, I do believe that Annie’s should get to know their consumers a little better. In order to achieve and maintain the highest success rate possible it is necessary to determine consumers wants and needs. If this does not happen, then this partnership may not be as advantageous as originally planned.

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  3. Matthew E. Dulac December 3, 2015 / 10:16 pm

    I think it is very interesting and perplexing how Annie’s and General Mills have partnered but I also think this is exactly what Annie’s needs in order to move into different segments within the natural food market; this is something they have done quite a bit in the last five years. The relationship with General Mills will make it much easier and more cost-effective to partner with distributors that would be able to create products such as graham crackers, cookies, soups, and cereals. Another positive with this partnership is that General Mills will now have access to talent that is associated and has experience within the organic market and this may result in higher quality cereals in their products for the future. Even though the executives of General Mills will now have the final say, I feel that they will understand and listen to the advice that Annie’s executives give them as it is a company that has rapidly grown in a short period of time and they have experience in a segment that they are unbeknownst to. It will be interesting to see how this partnership evolves in the future and it will also be interesting to see the trajectories for each company as they move forward and try out new products for consumption.

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  4. Patrick Coskren December 5, 2015 / 11:08 pm

    For individuals who are trying to eat somewhat healthy, Annie’s macaroni and cheese is the way to go. It is often found stocked in my cabinets simply because it tastes amazing. When I first began to read this post I had not realized that Annie’s had partnered with General Mills. At first glance, this might seem odd considering the healthy and natural nature of Annie’s products and the seemingly opposite characteristics of General Mills. After reading Jane’s post on this article I believe that it was a smart business move to make, and ultimately both parties with benefit from this merger. I find myself in line with Jane and my other classmates that Annie’s will succeed in expanding their product line by using the unlimited resources that General Mills has to offer, while on the other side General Mills will be able to add natural and organic products to their line. Jane makes excellent points in analyzing how this article is helpful for marketers, especially how company leaders should spend time where the customers are if they truly want to succeed. Consumers of both Annie’s and General Mills’ products should be excited to see what comes next from these companies.

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  5. Michelle McNall December 7, 2015 / 9:21 pm

    Similar to what Pat mentions above, I had no idea that Annie’s Shells was now a part of General Mills. It is a unique kind of partnership since General Mills has a reputation of being mainstream and unhealthy but Annie’s has differentiated themselves from competitors such as Kraft and Velveeta as they are the “healthy, organic option” and most people’s go-to- parents and kids alike. Although it’s a strange kind of relationship, I do think that Annie’s can benefit from operating under their parent company because General Mills can really help propel the brand and help Annie’s tap into other markets as discussed in the article. One of the most valuable points from Jane’s presentation is that she acknowledges that, while taking a risk is never easy, there are many opportunities that could be presented thus making taking a risk worth while. I think that this is not only true for marketing but is true for life in general. With great risk can come great reward but we want to be selective where we take risks and want to ensure we have a well thought-out strategy before doing so. Fantastic job, Jane!

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  6. Melanie Barbarula December 8, 2015 / 3:57 am

    Jane your point about the risks of a partnership sparked my interested and I conducted some research of my own. I found this article that discuses further the risks and rewards of a corporate partnership. It was a risky move for Annie’s to join forces with General Mills for the fact that they are a specialized naturals and organics brand however, this opportunity gave them the ability to grow beyond the current confines of their brand position and establish new growth in the market. Another important factor to mention is that Annie’s is no longer solely liable for the success of their business and have the resources of a larger company for sustainability. One thing that they must maintain is their company values for the fact that if they stray to far from their original brand they will loose credibility with their customer base and loose market share. However, I think the strategic partnership with General Mills will be a beneficial union for both parties and they can leverage each of their core competencies to advance in the marketplace.
    http://www.nfib.com/article/the-risks-and-benefits-of-equity-partnerships-58519/

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