Big food’s need to nurture will make start-ups succeed

Posted on:
June 29, 2016
Julian Mellentin

Michel Augustin 2There’s an idea that many people have that “big food” – as the much-reviled large food companies of the world are often called – can’t manage and grow small entrepreneurial brands, and can’t respond fast enough to consumers’ desires for products that are natural and organic.

As one online new source put it: “Big US food groups are struggling to adapt”. However, as is often the case with popular wisdoms, this one isn’t exactly true.

In fact, in today’s viciously competitive supermarkets, start-ups without partnerships with entrepreneurially-minded big food groups might just disappear.

The relationship between organic food pioneer Annie’s Homegrown and General Mills shows just what’s possible when David and Goliath co-operate and gives a clue as to what might happen next now that dairy giant Danone has taken a 40% stake in Michel et Augustin, the best-known small entrepreneurial brand in France.

General Mills – the world’s 10th-biggest food company, with sales of $12.5 billion (€11 billion) – acquired Annie’s in 2014. Since then Annie’s has expanded far beyond its earlier constraints, growing to nearly $300 million (€265 million) a year in sales from about $200 million (€177 million) when General Mills bought the company in late 2014.

Annies – beloved by parents for its organic kids foods – is showing its new owners how to formulate better-for-you products, how to tap into enthusiastic consumer bases around organic foods, and is providing the larger company with a new growth engine.

General Mills has got Annie’s into new outlets such as schools and is enabling Annie’s to win more customers by extending its trusted brand to other segments beyond its core of macaroni and cheese and kids’ crackers. Annie’s has used the extra resource to double its number of new product launches.

“We got a lot of blowback from customers when the announcement came out that we’d sold,” Annie’s CEO John Foraker told New Nutrition Business.

“There were 20,000 posts on Facebook about it very quickly, and 99% of them were negative. It was less about hating GM and more about loving our brand and not wanting it to change. Once we were able to tell our story and reassure everyone that we were very much committed to our values—that we were going to stay in Berkeley [California] and most of the same people would continue to run Annie’s—the fear died down and we haven’t seen a negative impact on our business.

“And if anything, we’re bringing a larger number of Annie’s consumers into the fold.”

Foraker said that General Mills has stuck to its promises to let Annie’s run itself without compromise. “We haven’t been asked to compromise once on our products, what we stand for, what we message about—for example, we continue to be strong advocates for GMO labeling, and General Mills hasn’t tried to silence that at all,” he said.

For the parent company, Foraker added, acquiring Annie’s—to add to its lineup of organic brands that also includes Larabar, Cascadian Farms and a handful of others—“was a pretty significant signal that the company understands there have been really big shifts in consumers, and as a consumer-first organisation, they wanted to lead with consumers where they’re going.

“Also we bring a different culture—faster, more entrepreneurial, more willing to take risks.” Annie’s is helping General Mills with acquisitions of other better-for-you startups, such as the very recently purchased Epic Provisions, which makes meat bars (see NNB February 2016).

Foraker has stayed as president of his company since the acquisition and now also is in charge of General Mills’ “center of excellence” for organic and natural foods.

“We’re taking the best practices and our knowledge of the industry and how to stay relevant across channels and apply those best practices at [General Mills] brands and leveraging those across operating units to drive growth,” Foraker told New Nutrition Business.

Putting Epic, the meat-bar startup, under Annie’s and Foraker is another way that General Mills is capitalising on its ownership of Annie’s. “It’s a good example of a big company identifying a real cool brand that can do lots of cool stuff but which is very small,” he said.

“They want to incubate it and build it out like we did Annie’s. So they put it under us because we know how to operate brands like that. They see the opportunity to leverage best practices and acquire growth assets earlier in their development. It’s a big transition.”

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Coca-Cola planning to jump into non-dairy milk market?

Posted on:
June 2, 2016
Julian Mellentin

Ades 2South America’s biggest non-dairy drink brand is being sold to Coca-Cola for $575 million (€515 million), a move which makes Coca-Cola the biggest player in South America in non-dairy milks and provides it with a platform from which to enter other markets.

The Ades brand was first launched back in 1988 and acquired by Unilever in 1998. A soy-based non-dairy drink, it has a more than 30% share of the Brazilian market, where it is sold in a wide range of formats. Its most successful variant is a blend of soy milk with fruit juice. The brand is also sold in Argentina, Mexico and five other South American countries.

Unilever, which is selling the brand to Coca-Cola, says that Ades generated net sales of $284 million (€254 million) in 2015. Other sources have claimed that the real sales number is higher – more than €300 million.

After an abortive attempt to launch Ades in Europe about ten years ago, Ades seems to have marked time under Unilever’s ownership.

Undoubtedly, with the surge in sales of non-dairy milks – led by almond milk – that is taking place in Europe, the US and Australia, Coca-Cola sees an opportunity to take an established non-dairy milk brand and take it to new markets and add new types – such as almond and other nut milks. Ades also has the potential benefit of a “cool factor” from its Brazilian identity.

In the US, non-dairy milks already account for 12% of the liquid milk market, despite selling at a 100% premium to regular cows’ milk and despite falling short on nutritional values (unless the products are heavily fortified). US sales grew 30% in 2015. Even in Germany and the UK, sales of non-dairy milks were up by 30% in 2015 and it’s a similar story in Australia.

Companies around the world are watching the “non-dairy dairy” market’s phenomenal growth and the surging sales not only of non-dairy milks, but non-dairy yoghurts and desserts, and wondering how they can take part. With a payment of $575 million, Coca-Cola may have just bought a seat at the table.


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“Healthy” can mean fat

Posted on:
May 11, 2016
Julian Mellentin

Toaster pastry 2It’s another blow against the out-of-date science that meant that nuts, avocado and salmon couldn’t be described as “healthy”.

The US Food & Drug Administration (FDA) has announced that it will re-think its definition of the word “healthy”.

Since 1994, FDA regulations have required that the term “healthy” is used only to describe foods, with the exception of fish and meat, that contain 3g or less of total fat and 1g or less of saturated fat per serving.

Fish and meat were required to have 5g or less of total fat and 2g or less of saturated fat per serving.

What that meant was that salmon could never claim on the label or in advertising to be “healthy” – as it contains 22g of total fat per serving and 4g of saturated fat.

Yet the fat in salmon – omega-3s – is one that is deficient in most people’s diets and has health benefits supported by a mountain of scientific evidence. Salmon is also a source of high-quality, easily-digestible protein.

However, the same regulation allows items like fat-free chocolate pudding, some sugary cereals and low-fat toaster pastries to carry the designation “healthy”.

It’s just one of the many disastrous results from the last 40 years’ obsession with reducing fat in foods – an obsession which we now know was misplaced and based on faulty science.

This old regulation came into the spotlight in March 2015, when the FDA sent a warning letter to snack bar maker Kind, telling the company that at least four of its Kind bars were in violation of labeling rules. Kind uses nuts as one of its main ingredients and had made the mistake of imagining that it could thus describe its products as healthy (after all, nuts are proven to have a beneficial effect in reducing your risk of cardiovascular disease).

Kind changed its labels, but also petitioned the FDA to update its rules about the term healthy to reflect the latest science.

Having reviewed the evidence, the FDA has reversed its original decision and Kind can start to say “healthy” again.

America might be moving on, but in most of Europe dietary guidelines and health professionals remain locked in a the low-fat-is-best dark ages – where a fisherman still couldn’t sell his salmon as “healthy”.

The point of science is that it as it changes it enables us to improve our understanding of the world and change our views on what we should and shouldn’t be doing.

The rising tide of overweight in Europe won’t be turned by more labeling, by healthy eating campaigns or taxes on the food industry (these have all been tried and failed again and again). The biggest step will be when we start to give people science-based, realistic information about healthy food and when Europe’s health professionals and academics have as much courage as the FDA to admit that, “the evidence has changed, so what I believe must change”.

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