Progressive Investor Sample Article
Solar Boom & Bust; Annie's, Whole Foods Update; Green & Hydropower; Green Portfolio Update
Issue 91: May 2012
Investing in Macaroni and Cheese
by Rona Fried, Ph.D., Contributing Editor
Annie's Goes Public
In March, Annie's Inc. (BNNY), which makes popular organic and natural packaged foods like Cheddar Bunnies snacks and gluten-free macaroni and cheese, went public.
It's the first "healthy foods" company to enter the public markets in a long time, joining a few other companies like Whole Foods Market, Inc. (WFM), United Natural Foods, Inc. (UNFI) and The Hain Celestial Group, Inc. (HAIN).
Many companies in the industry, who place food integrity and environmental values as a top priority, have stayed away from public markets because of incessant investor demands for rising quarterly profits.
Based in Berkeley, California, Annie's was 90% owned by New York-based private equity firm Solera Capital which invested $80 million in the company since 2002 and got most of it back by selling 3.67 million shares in the offering. The IPO raised $95 million and the shares, priced at $19, have since more than doubled to around $40. After the IPO, Solera still owns 10.5 million shares which are worth over $400 million of Annie's, about 63% of the company. Pretty impressive return!
Annie's products, which can be found in some 25,000 outlets in both mainstream supermarkets and natural channels, wants to expand further into mass merchandiser markets, while continuing to innovate and grow sales in natural retailer outlets, they say.
Solera has been shopping for a buyer like Kellogg's for a few years, but they didn't find the right match. Annie's earned profits of over $20 million in 2011 on more than $118 million in sales, up 22% from 2010. Still, it has maintained the company's family feeling and balances profitability with social and environmental values.
The natural/organic food category grew at a compound annual rate of 12% from 2000-2010, according to the Natural Business Journal.
Whole Foods Opens in Detroit
Meanwhile, Whole Foods Market, Inc. (WFM), the Austin, TX-based owner of natural and organic food supermarkets is opening a new store in an unlikely place - Detroit. The high unemployment, high crime rate and shrinking population don't fit Whole Foods' typical high income demographic.
But it's breaking ground on a 20,000-square-foot supermarket in midtown Detroit this May, saying it's committed to making healthy food accessible everywhere. It's the first time Whole Foods has opened in a distressed urban area.
Although there are lots of vacant buildings, it's near Wayne State University, Detroit Medical Center, the Detroit Institute of Arts and Orchestra Hall - and it will be the only supermarket chain in the city.
Since Whole Foods made the announcement, businesses are already showing an interest in locating nearby, Olga Stella, vice president of business development for the Detroit Economic Growth Corporation, told Natural Foods Merchandiser.
WFM will also give the community a boost by buying from local farmers and other vendors, who struggle to get their products into larger stores. And it will primarily stock healthy staples rather than the gourmet, high-end foods it's known for.
Whole Foods plans to open about 25 new stores this year and as many as 32 next year.
Rona Fried, Ph.D. is CEO of SustainableBusiness.com, which published Progressive Investor for eight years before merging with The Green Investor in November 2010.