Expo West panel
(From left) Justin Gold of Justin's, Koel Thomae of Noosa Yoghurt, John Foraker of Annie's

ANAHEIM, CALIF. — When Justin Gold sold his namesake nut butter business to Hormel Foods Corp. for $286 million in 2016, he encountered blowback from the brand’s loyal consumer base and within the vibrant food start-up community in his home of Boulder, Colo.

“I’m a vegetarian, and I sold my business to a meat company,” he said. “When you’re acquired, people have an expectation that everything you do moving forward is going to be a diluted version.”

It is a sentiment many consumers and companies within the natural and organic food category share – a distrust of “Big Food” and the fear of “selling out” when a small brand becomes a part of a multinational corporation. Executives discussed and dispelled the notion during a panel presentation on March 10 at Natural Products Expo West, held 10-12 in Anaheim.

“I really believe that Hormel is buying into Justin’s and that Justin’s is not selling out,” Mr. Gold said. “We’ve already had a lot of consumers who have said, ‘You know, I was really skeptical’… and people have showed up and have been really excited to see Justin’s is continuing to do the things we said we would do.”

Justin's products, Hormel


Paving the way for such a successful partnership, he said, was General Mills’ $820 million acquisition of Annie’s in 2014.  That deal demonstrated the potential of a small natural brand retaining autonomy and culture while benefitting from the resources and expertise of a 150-year-old company. In the past two years, Annie’s has doubled its sales to $400 million and has more than doubled its reach to 15 million households. Moreover, nearly 70% of the brand’s portfolio will be certified organic by the end of the year, up from about 35% when it sold, said John Foraker, president of Annie’s.

Prior to the transaction, Mr. Foraker met with General Mills executives to discuss terms, he said.

“We had a very candid discussion about, ‘If you buy this business, we’re not going to compromise, we’re not going to change our public policy positions, we’re going to keep our independence and autonomy to the greatest extent we can,’” Mr. Foraker recalled. “I expected ‘Oh, no, that will never happen,” but they said, ‘We totally get that.’ Because companies that have done it wrong in acquisitions have not really understood it’s the culture and people and vibe that keeps it growing.”

Since then, he added, “We’ve been able to forge a new era and show we can do it right.”

Annie's products, General Mills


But when the deal was initially announced, Mr. Foraker said, “the internet puked.” He responded to hundreds of messages from concerned consumers who feared their beloved brand would compromise its values under the new ownership.

Koel Thomae, co-founder of Noosa Yoghurt, experienced a similar reaction after selling her Australian-style yogurt brand to a private equity firm in 2014.

“There was a lot of chatter in social media, and it takes a little bit of time for that to settle down, but it’s ultimately that time that proves to consumers that nothing is changing,” she said. “If anything we’re going to come out and make even more delicious products that will blow your mind.”

She said prior to the sale, “we were running the business so leanly that it was almost detrimental to the health of the business… Ultimately, we needed to protect the investment we had made in blood, sweat and tears, time, money, all of those things. We were already on the path to over $100 million in sales, and I think a lot of entrepreneurs don’t quite know when to get out of their own way.”

For Mr. Gold, a “healthy sense of paranoia” ultimately led to the decision to sell Justin’s.

Noosa Yoghurt


“If you’re a start-up or even an established company, a food recall can be devastating,” he said. “We got to a point where the stakes were so high for our investors and for myself, I wanted to find someone who could let us still run the front side the business but help us on the back side of the business, which is making high quality, safe, highly consistent food products. If I could find someone who can allow us to keep doing that, it would be a big win in my book… Ten years ago, that would be a tall ask.”

More recently, as industry stalwarts struggle to keep pace with changing consumer expectations, acquiring better-for-you brands has become an important growth strategy and is expected to continue, Mr. Foraker said.

 “Big C.P.G. companies are looking at acquisitions like this as a way to reinvent their portfolio for the future,” Mr. Foraker said. “That’s why I think you’re going to see over the next decade a wave of these.

“I’m hoping companies like ours can show you actually can do it, you can build the brand values, you can drive the impact at scale, which is the reason I got into this business. I want to change the world for the better. If I can do 10,000 times as much positive impact for the environment, for reduction of greenhouse gases, for carbon sequestration … I need the big companies of the world to get on board.”