General Mills & Annie's: One Year Later...

It’s now been a year since General Mills acquired Annie’s, the quirky Berkeley, CA based company I’ve been running for over a decade.  As I talk with consumers, customers, employees and industry observers, I get a lot of questions about how things have been going, whether our values have been preserved, and how I feel about the future of our business.  I posted some brief updates at the six-month mark, and now that a full year has passed it seems like a good time to update everyone more fully on how I see things today, and on our outlook as a combined company.

Soon after the acquisition closed, I got together with Steve Young, my counterpart at General Mills responsible for the overall integration of Annie’s, and we brainstormed language for an internal manifesto to capture what we thought we could do with Annie’s going forward.  We wanted a bold vision that could help explain to others inside General Mills what we saw as the impact potential and the promise of the Annie’s business, if we got this right.    Here’s the language we developed:

Food Values in America Have Changed. Annie’s is going to be at the forefront of that change for General Mills.

It’s right for consumers. It’s right for our business. It’s the right thing to do.

The change isn’t niche. It’s mainstream. It’s a change that starts now.

Our business focus is to take the same great products that Annie’s has always made, and make them available to more people in more places.

We are going to preserve and apply ALL of Annie’s goodness to everything we do.

And in doing so, we are going to make General Mills and all of its brands and people better.

We are going to help our company make food that matters to people.

Our manifesto signals bold ambition for growth, but also how we will deliver it: by making the same high quality products we’ve always made and not compromising on those or on any of the values embedded in our brand and culture.  I think Annie’s has the potential to be one of the industry’s first $1 billion dollar organic brands, and that this is the right philosophy to deliver it.

It’s been reassuring for me over this past year that we’ve not been asked to compromise the brand, our ingredients, our formulations, or our values even once.  NOT ONCE.  If you knew the people and leadership at General Mills, as I’ve come to know them, you’d not be surprised at all.  They get it.  While we certainly don’t agree on everything (GMO labeling being the biggest difference), our views and values are being respected and honored.  General Mills clearly understands shifting consumer food values and is working very hard to make positive changes in their business to adapt, deliver products consumers love, and ultimately win.  Annie’s is an important part of that effort, but only a part. 

What’s been the biggest surprise for me in the past year?  How much positive movement toward consumers and changing food trends there has been at General Mills, and how committed the company is to improving its’ sustainability footprint.  In just the past year, General Mills announced plans to remove all artificial colors and flavors from its’ kid focused cereals and fruit snacks.  At Annie’s this was something we’d long wanted big food companies to do so it was very gratifying to see.  And the desire to improve is not just about product either.  General Mills recently made a very public pledge to reduce its’ absolute greenhouse gas emissions across the entire value chain – from farm, to fork, to landfill – by 28% over the next 10 years.  This is a bold step that builds on extensive work the company has been doing to minimize its bunny footprint and operate more transparently.  There’s lots more being done behind the scenes and I’ve been encouraging General Mills to talk more openly about it with consumers, employees, and industry.  The work behind these moves was underway long before Annie’s joined the company, but I think that having Annie’s in the portfolio is helping the company act more boldly and confidently in these endeavors.  My personal goal is for Annie’s to be so wildly successful inside General Mills that we help inspire ever more positive change in transparency, sustainability, and environmental impact. The opportunity to drive scaled impact on the things I care about was a key reason I decided to stick around and continue to run Annie’s from our Berkeley headquarters past the one year anniversary of the closing.

So what have we been doing over the past year?  Here are a few highlights:

•  Expanding Distribution & Access: Increasing distribution and access represents one of the largest growth opportunities for Annie’s. With the strength of General Mills U.S. Retail sales force in traditional channels, we think we can capture a lot of that growth in coming years.  In addition, we will begin selling Annie’s certified organic snack products into K-12 public schools in January.  This is something we’ve dreamed of for years.  And while we are doing all of this we’ve also launched some fantastic new Annie’s products (like gluten free &organic vegan mac & cheese) to keep the natural channel cool and relevant for years to come.  Keeping the tip of the spear sharp is important and a key focus for us with the brand.      
• Driving Innovation & Category Expansion: Working with our Berkeley team and key collaborators all over General Mills, we plan to ship >50 new items in the coming fiscal year, which is more than double compared to the previous year, and >50% more than in a typical year before the acquisition. Even better, 26 of those items will be certified organic—nearly twice the amount of organic items we produced on average annually before the acquisition.  General Mills has significant category experience and supply chain capabilities that are helping us move faster into new spaces.  In just the past few months we’ve expanded into certified organic kid-focused soups, and we also launched into refrigerated baked goods with favorites like chocolate chip cookies, biscuits, and my favorite: yummy cinnamon rolls.  In early 2016, we will take the Annie’s brand into Certified Organic kids Yogurt in a unique and differentiated way.  There’s a lot more than that coming over the next few years, stay tuned. The combination of distribution gains, category expansion and continued innovation promise to drive accelerated growth from Annie’s over the coming years.
• Expanding Our Social Impact: We’ve doubled our financial support for Food Corps, as well as support for our own Grants for Gardens and Sustainable Agriculture Scholarship programs. With the support of the General Mills Foundation we’ve made significant new contributions to important programs in our local community, including City Slicker Farms, and the Berkeley Unified School District School gardening program. 
• Expanding our Supply Chain Impact: In order to grow our own business, and for the industry to continue to expand, we are going to need to increase the number of acres farmed organically in this country.  Presently there are about 5 million acres farmed organically in the US, and we’d like to see that number double to more than 10 million acres.  Doing this will be complex and difficult.  We are working on plans to do our part, at scale, to play a leadership role in making this happen over the coming years.  Very exciting to have an impact in this area because organic farming is so aligned with Annie’s values to drive a more sustainable farm economy, and to reduce the amount of toxic chemicals and pesticides in our environment.  I believe the power of big that General Mills can bring will make a big impact.         

So in summary, we’ve had a very good first year.  Our culture remains very strong, our people are excited to make a difference, and we’ve laid a strong foundation for success in the years ahead.  But let’ not kid ourselves, it’s still very early as these things tend to play out over many years.  Lots of hard work remains, and we need to remain vigilant to drive success at Annie’s and General Mills in the years to come. 

Many people say that when it comes to food, “Big is bad.”  In the context of rapidly changing food values and in light of mistakes made in the acquisition and integration of other natural & organic food businesses elsewhere in our industry over the past decade, it’s been a defensible argument.  However, I really believe that “Big can be good” too.  In order to truly change the food system in ways we want, we need big companies like General Mills and others to adapt, evolve, and to bring their immense scale, resources, and capabilities to bear in order to be part of the broader solution.  I believe General Mills has the purpose, leadership, and values to be the leading “bigger and better” food company that can fundamentally change this narrative in the years to come.  Annie’ is not perfect, nor is General Mills.  We can always improve. I see great progress in this direction, and Annie’s is simply doing its part along this journey.  I am proud of that and look forward to seeing how things go in the years ahead.

As I often say to consumers: “please listen to what we say, but more importantly, watch what we do!” 

Still Weird...and loud and proud from the People's Republic of Berkeley

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