Ask industry observers to pinpoint the secret behind soon-to-go-public Annie’s Inc.’s success and they tend to agree: It all traces back to Annie.
“The company was founded by a mom who wanted the convenience of feeding her kids macaroni and cheese without all the junk, and they have honored that mission throughout all these years,” says Robyn O’Brien, health advocate and former financial analyst. “Their target audience is still moms, and if you look at who is still running the organization today, it’s parents who conduct their business with that same sense of responsibility.”
On December 1, 2011, the 23-year-old natural and organic food company announced its intention to go public. The date, number of shares to be offered, and price range had yet to be disclosed at press time, and company officials declined to be interviewed due to a media “quiet period” following the initial public offering announcement. But, according to the S-1 form filed with the Securities & Exchange Commission, Annie’s intends to raise as much as $100 million to grow its distribution and product line, currently at 125 SKUs in 25,000 retail locations. In FY 2011, the company—which now sells pasta, snack crackers, fruit snacks and graham crackers—posted $117.6 million in net sales, up from $65.6 million in 2007. Over the same period, its income from operations increased from a loss of $3.9 million to a gain of $15.1 million.
Over the years, its matriarch, Ann Withey, has sold the bulk of her interest in the company and handed the day-to-day operations over to CEO John Foraker, a father of four, who joined the company in 1989, and vice president of marketing Sarah Bird. But both still refer to Withey as the “conscience” of the company and say her goal—to build an environmentally sustainable, socially responsible food company—is still “part of its DNA.” Withey’s living legacy, in the hands of a genuinely committed and savvy management team, has been key, experts say.
“When you think about the companies that have been really successful in the natural channel, a lot of them have a real person, a back-story, a creation myth behind them. It resonates with consumers and helps them make an emotional connection,” says natural products consultant Bob Burke, who worked with Annie’s in the late ‘90s.
Annie’s creation myth begins not with a macaroni and cheese recipe, but with another natural foods blockbuster: Smartfood. When Withey was just 21, she and then-husband Andrew Martin came up with the idea of a healthier, all natural, white-cheddar popcorn in their Boston kitchen. They grew the company into a profitable success before selling it to Frito-Lay for $15 million in the late ‘80s. According to press reports, Withey walked away with a cool million and was soon at it again, whipping that natural white cheddar into a sauce for a healthier macaroni and cheese that the mother of two could feed to her kids in good conscience.
“We had no budget for advertising so we wrote right on the boxes—‘please tell your family and friends about us,’ ” recalls Withey in a company video. The purple, recycled cardboard boxes also featured a cartoonish drawing of Bernie the Bunny (Withey’s gray-and-white Dutch rabbit) on the front, and her home phone number and address on the back. Soon letters started flooding in, and Withey personally wrote back.
When Annie’s began to outgrow its resources in 1996, it opted against an initial public offering (geared toward larger corporations) and went instead with a more intimate direct public offering, selling roughly $3.6 million in shares to its customers in 11 states by placing notices in macaroni boxes, and ads in publications like Mother Jones. In 2002, Solera Capital LLC—a firm with an all-female staff and a reputation for being forward-thinking—took a majority stake in the company with a $20 million investment. Today it owns 90.5%, and CEO Molly Ashby is the chair of Annie’s board of directors.
“Annie’s has been more successful than most, largely due to its professional management and private-equity ownership,” says Grant Ferrier, CEO of Nutrition Capital Network. “Having external majority owners provides ready access to capital of course, but also a greater accountability in the management and operations team of the company.”
Another key to success, he says, has been “the retention of its family feel.” Aside from Foraker and Bird, other key players in the management team include Kelly Kennedy, CFO and mother of twin boys; Bob Kaake, chief innovation officer; Mark Mortimer, vice president of sales; and Larry Waldman, vice president of supply chain & operations. The company still relates directly with consumers daily, via Foraker’s frequent tweets, web-chats sponsored by O’Brien, a 40,000-subscriber e-newsletter, and personal correspondences with an “expert panel” of 4,500 consumers who offer feedback on things like taste and packaging of products in the works.
Will Annie’s be able to retain that folksy, family feel once its decisions are scrutinized by a broader range of shareholders? That remains to be seen. But even going into its IPO, the company seems to be paying tribute to its founder, her spirit, and her beloved pet rabbit. Its planned ticker symbol on the New York Stock Exchange: BNNY.