Every year, young companies with standout products and strong natural shopper followings attract the attention of investors and before long are gobbled up by CPG companies. We're only halfway through 2012 and already we've seen a handful of impactful acquisitions in the natural products space.
Acquisitions are an inevitable part of the natural products industry, so why do we hate it when our favorite brands get bought by the big guys?
Just like when a small indie band suddenly has a song in a Ford commercial and begins topping the charts, we often view success as selling out. It's only a matter of time, we think, before slick music producers pounce, the lyrics stop making sense and the beats are a little too syncopated. Similarly, when a natural brand gets bought, we assume the acquisition will kill authenticity. Check out this anonymous retailer's reaction to the recent Udi's deal:
"Another good brand will be subjected to the whims of the mass market. I expect to hear from customers that they are reacting to the Udi's brand in the same way they did when the Pamela's line was reformulated for the mass market. Hopefully someone at Udi's will start a new company when this version inevitably fails."
Are all acquisitions evil?
But is failure, i.e. product reformulation with cheaper ingredients and fewer quality standards, really inevitable? CPG companies seem to be learning from past mistakes.
When P&G acquired New Chapter, the company assured shoppers that the purchase would not result in any significant changes to the brand. "Paul and Barbi Schulick, New Chapter's founders, also sent an impassioned letter to their employees emphasizing their belief that, along with fostering New Chapter's growth, P&G will actually enable the company to become even more dedicated to quality, innovation, and promoting natural health solutions," according to Nutrition Business Journal and the Sterling-Rice Group's just released NEXT Report.
Take Stonyfield for example. The company was able to grow dramatically after being acquired by Group Danone. The producer of organic dairy foods was able to positively influence the CPG in terms of sustainable business practices and embracing organic, said Bob Burke of The Natural Products Consulting Institute.
"When [acquisitions are] done well, you can argue that the whole growth of the natural and organic industry is going to grow at a higher rate because of all these additional resources," Burke adds.
Rather than working against CPG companies that may not embrace many natural products industry standards, why not work together and hope the partnership informs other areas of that company's business?
We can't overhaul production practices at Smithfield, or encourage Hershey to only use fair trade chocolate, but we can create products that adhere to a higher set of standards that draw these companies' attentions.
So, what's wrong with doing that and making a little money along the way? Leave a comment.