Annie's Goes Public, Proctor Gamble Buys New Chapter

Annie’s Goes Public

On Tuesday, Annie’s (NYSE: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 companies like Whole Foods (WFM), United Natural (UNFI) and HainCelestial (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 private-equity firm Solera Capital who invested $20 million in the company. The IPO raised $95 million and the shares, priced at $19, have so far risen 70%. Solera now owns about 53%.

Annie’s products are available in both mainstream supermarkets and natural channels, and wants to expand further into mass merchandiser channels, while continuing to innovate and grow sales in natural retailer outlets, says its S-1 filing.

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’s 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.

P&G Buys New Chapter

Yet another organic brand has sold to big business – this time it’s supplement manufacturer New Chapter.

As of March 15, it’s owned by Procter & Gamble (NYSE: PG), the largest consumer products company in the world. P&G makes products like Cascade dishwashing detergent, Duracell batteries and Iams brand pet food.

New Chapter makes organic whole food supplements grown from herbs on a biodynamic farm in Costa Rica. You can’t get much more "core organic" than that. It’s a relatively small company (180 employees) that’s been in business since 1982.

A match made in heaven?

CEO and master herbalist Paul Schulick says he’s confident the brand will remain the same and separately managed from its mainstream owner. Like most similar brands that have gone this route, including Stonyfield Farms, he looks forward to the influx of money for R&D and accelerated growth into global markets.

"Of utmost importance to us as founders is the assurance we have received from Procter & Gamble that New Chapter will be a wholly owned subsidiary with headquarters remaining in Brattleboro," says Schulick in a memo to employees. "They have also assured us that no significant changes in jobs, compensation, benefits or business processes are planned. So let me repeat that: jobs remain the same and we are a standalone entity," Natural Foods Merchandiser reports.

P&G says it wants to get into the supplement business and has no interest in messing with New Chapter’s brand or business model. Every major consumer products company needs a presence in healthy living, they say.

Who knows what will happen, but New Chapter is known for its loyalty to natural channels – what if it starts popping up in drug stores and mass supermarkets? How would organic retailers react to that?

Read about the legacy problem for socially responsible businesses.

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