Annie’s GMO conundrum

Annie’s GMO conundrum

In September 2014, cereal king General Mills Inc. (GM) announced it was acquiring Annie’s Homegrown Inc. for approximately $820 million. Known for its macaroni and cheese and its bunny logo, Annie’s is a well-known natural and organic food producer, and very much conveys the feeling of a small environmentally-oriented company even with $204 million in sales reported for fiscal year 2013, according to Natural and Organic Foods and Beverages in Canada by Packaged Facts.

The deal saw General Mills offering $46 per share for Annie’s stock, a 37% premium over its market price. The acquisition will almost double the revenue of General mills’ natural and organic Small Planet Foods division-consisting of Cascadian Farm, Muir Glen, Larabar, Food Should Taste Good and other brands-which posted sales of $303 million in 2013.

There have been the usual derogatory cries from avid Annie’s lovers saying the deal is nothing less than Annie’s selling out to a major corporation, a situation that occurs every time a corporate giant acquires a smaller, more environmentally focused company. However, there is one aspect of this negative response that is going to get more press down the road-the respective company’s stances on genetically modified organisms (GMO) in food products. For many of the current (and vocal) Annie’s customers, this is seen as nothing less than Annie’s selling out on an extremely important problem.

Annie’s is heavily against GMOs. The company provided $60,000 in funding to Proposition 37 in California, a state bill trying to enact mandatory labeling of GMO in products, as well as funding a campaign for a national GMO labeling law. The company is also a partner in the Just Label It campaign, which seeks mandatory GMO labeling for foods. On the other side, GM gave over $1.2 million to defeat Proposition 37 in California, and GMOs are used in the vast majority of the products it sells

Here’s the thing. Annie’s CEO John Foraker said on Facebook following the acquisition announcement “I want you all to know that our mission, culture, and values and the things we stand for will remain the same. We’ll continue to make the same great products, more of them actually, using ingredients we are proud of, business practices that are respectful of the environment, and that make our planet a better place.” No mention of GMOs, but many of the comments after the post asked how Annie’s could reconcile the above with GM’s pro-GMO stance. Will Annie’s continue to provide funding for GMO labeling initiatives when it knows that the much deeper pockets of its corporate parent will overshadow any contribution it can make? This is like someone carefully picking up all the garbage in a vacant lot just before bulldozers come in to excavate the property to put up a strip mall.

The attitudes and the values that these two actions show are dissimilar enough that there is almost bound to be conflict. Some companies like Ben & Jerry’s have managed this uneasy truce, continuing to support GMO labeling while corporate parent Unilever funds campaigns to prevent it. However, the truce is uneasy and one-sided, in place only so long as the parent allows it. Annie’s can maintain its stance on GMOs only as long as it is economically better for GM to have it so.

This may sound far too negative towards GM, but that is not what I’m trying to convey. My personal stance on GMOs is quite agnostic, although my stance for anything is that more information is always better. However, it is important to recognize that GM’s corporate responsibility is to provide profit to its shareholders, and GMO crops are inherently cheaper ingredients because of economies of scale. As long as Annie’s remains profitable with its message of natural and organic health, GM will be happy as well; but it also means that it is very unlikely that Annie’s worldview will infect GM’s way of thinking, and much more likely that any concessions made on things like GMO stance will have to come from Annie’s management team.

This blog is based on research featured in Packaged Facts’Natural and Organic Foods and Beverages in Canada.  Add this report to your own intelligence library and receive a 5% discount during our promotional period effective through December 15, 2014. Use code PF2014CANADAFOOD.

- By Norman Deschamps