Food Conglomerates That Take In Organic Brands Have Learned To Leave Them Alone

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Big players in the packaged food industry have used a tactic of “if you can’t beat ’em, acquire ’em” when it comes to brands in the natural and organic foods sector. Yet what initially seemed like perfect corporate marriages of convenience may not be working out as well as anyone had originally planned.

Large food players like General Mills, Hormel, and Campbell Soup seemed to assume that taking in small companies with reputations for sustainable behavior and healthy products would result in a halo effect for them, making the food conglomerate seem less evil.

Instead, consumers who prefer natural, small, and local brands or who are deeply concerned about the issue of labeling food that contains genetically modified organisms or who don’t want to be customers of the brand’s new parent company simply drop or avoid the brands. “I would assume that when a smaller company is being bought by a larger company, they usually have to modify their products to meet the needs of a larger amount of people,” one shopper at a natural foods co-op told Reuters.

The new corporate overlords, however, have found that isn’t really the case. They usually leave current leaders in place at their new acquisitions instead of absorbing them into the corporate fold. While mergers and acquisitions are usually about combining staff, resources, and supply chains, that doesn’t really work when you’re the company that sells both Cascadian Farm and Count Chocula.

That means acquiring a natural brand isn’t really about extracting more profits from the new acquisition: Hormel can’t just slap Applegate Organics labels on products that come from its regular suppliers and processing plants without destroying the brand. The head marketer at Applegate told Reuters that he emphasizes to customers that the same farmers still supply the companies, and they are ultimately supporting those farmers and the cause of organic meat.

What these acquisitions do is bring larger food companies, which consumers are starting to mistrust, into the natural food market by selling brands that are already established. Natural foods are the fastest-growing segment in the industry, and the big players want to be part of that as existing brands grow.

Big Food’s natural brand acquisitions prosper best when left alone [Reuters]