WASHINGTON — A field of vegetables glistening in the sun, happy cows grazing in green pastures and pure, whole grains blowing in the wind? Not so fast: Organic food isn’t exactly what it used to be.
Earlier this month, food conglomerate General Mills purchased Annie’s Homegrown — a popular natural and organic brand known for its kid-friendly boxes of macaroni and cheese and “bunny” snacks.
Shortly after the announcement, The Deal reported the maker of the natural snack Boomchickapop is on the auction block and could be sold to Campbell Soup Co., the same big food company that bought the all-natural baby food brand Plum Organics last year.
These recent announcements are part of an increasing trend in the food industry: Food giants are taking advantage of the skyrocketing demand for organic and are buying up the smaller and independent companies.
“Traditional categories of more processed foods and cereal have really been stagnant, so the larger food conglomerates are seeking out this growth and making acquisitions in this space in order to cater to that growing consumer demand,” says Richard Collings, senior writer at The Deal.
Annie’s, Boomchickapop and Plum Organics are just a few independent companies that have shifted to “big organic”; many preceded them. According to The New York Times, organic cereal brands Bear Naked and Kashi belong to Kellogg, while Naked Juice is owned by PepsiCo.
For many, the idea of a company such as General Mills, the maker of Lucky Charms and Cinnamon Toast Crunch, manufacturing a brand such as Annie’s, whose slogan is “real food tastes better,” is ironic — and enough to make loyal organic shoppers boycott a brand. But Collings says losing a few loyal customers is sometimes worth the trade.
“They’re almost trading a more niche consumer for a larger market,” he says. “I imagine there are definitely people who quit buying those products, but then I guess they’re hoping that then they’ll get introduced to new consumers via Wal-Mart or Kroger or these kinds of more mass retailers.”
And while the packaging on these natural and organic brands usually remain the same after deals go through with the big food companies, there’s no guarantee the product inside the package will. “Pure, locally produced ingredients from small family farms? Not so much anymore,” The Times writes.
Collings says once a company grows its consumer base, sourcing becomes more unpredictable.
“The truth is any company, as it grows rapidly and becomes bigger and bigger, has to constantly find an increasing supply of ingredients to make those products,” he says. “So the supplier you start off with may be local and the ingredients may be locally sourced, but then as you get really big, you need bigger and bigger suppliers. Those are challenges, and it becomes more and more difficult to guarantee where those ingredients are coming from.”
This is especially a problem for consumers who demand food containing genetically modified ingredients (GMOs) be labeled as such. According to The Star Tribune, Annie’s has been an advocate of GMO labeling; General Mills has opposed such efforts.
However, some argue that the trend of big companies scooping up the organic market makes organic food more accessible to those who don’t have access to specialty grocery stores and markets.
“Wal-Mart’s getting into the category; it’s not just Whole Foods anymore. There are a number of new entrances into this space,” Collings says.
That’s not to say small companies dedicated to producing local and sustainable food won’t survive in today’s food industry. Collings says there’s still space — and demand — for these products.
“I don’t think you have to necessarily get bigger to stay competitive, particularly if you can guarantee to your customer that this product is locally-sourced,” he says. “There continues to be demand for locally-sourced products, and there’s going to be an audience for that.”
However, Collings says the shift toward “big organic” is far from over. He says WhiteWave Foods (a plant-based food company whose brands include Silk, Horizon Organic and Earthbound Farm Organic) is an attractive target for the bigger companies, as is Noosa Yoghurt and Enjoy Life Natural Brands.
“There are plenty of potential deals in the pipeline in this space.”
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