Big to small
The success that smaller cookie and cracker manufacturers are having in the periphery is prompting larger corporations to try getting in on the action. Many times, that involves buying smaller brands that are showing growth potential.
“It used to be, 10 years ago, the big push for us was to bring the big names new products and help them develop and get them out there, but they couldn’t get them on the shelf,” Mr. Van Laar said. “So what we’re seeing is almost the opposite. Somebody else is developing some space and then selling the brand to them, and then they execute it better and grow it.”
He added that many companies build their entire business model around capturing the attention of potential buyers.
“We’ll get 10 people that start a halfway decent production, one of them will flourish, they’ll get big enough to get recognition, and somebody will buy them,” he explained. “That’s their strategy.”
According to Mr. Sorensen, this business model has a few potential drawbacks — the biggest of which being product quality.
“Some new brands rely too much on marketing and the product isn’t quite up to snuff,” he said. “I feel like once someone tries our stuff, we have a repeat customer because it’s really good. It’s where we have an edge.”
The main innovation legwork for larger companies is often accomplished by smaller boutique brands seeking a larger consumer base, according to Mr. Van Laar.
“They want to be marketing companies, and they’re using many contract manufacturers to come up with the products for them,” he said. “They want to innovate, but the easiest way for them to do that is for them to buy something.”
