When it comes to soups, cereals, and crackers, U.S. consumers may choose among dozens of retail products. Most chain grocers stock big-name brands, such as Kraft, Kellogg’s, and Campbell’s. So, how does a smaller brand, such as Annie’s, compete?
Since its founding in 1989, Annie’s has focused on selling healthful versions of popular foods — macaroni and cheese, pretzels, graham crackers, and more — containing as many natural and organic ingredients as possible. In its first decade, Annie’s grew to about $5 million in revenue, CEO John Foraker says. The company now makes more than $100 million in revenue and employs about 80 people at its headquarters in Berkeley, Calif. Its products can be found in mainstream stores, such as Target and Safeway. It plans to go public later this year on the New York Stock Exchange.
Before the company’s filing to go public, the Intuit Small Business Blog interviewed Foraker to talk about how the company’s choices and other factors have helped its brand succeed. Here are three of his tips for business success.
- Be in the right place at the right time. When Annie’s launched, consumers weren’t as focused on healthy eating as they are today — and organic and natural foods had a reputation for tasting bad. Annie’s products were either poorly displayed in large stores or sold in small natural foods markets. Since then, the nation’s obesity epidemic and increased interest in organic goods have turned the tide and made eating healthy much more popular. These trends have helped Annie’s tremendously. “Consumers are increasingly interested in healthier eating,” Foraker says. “We’ve had the wind at our back for a number of years.”
- Spend money where it counts. Annie’s can’t outspend larger competitors in marketing campaigns, so its marketing budget is focused. Early on, Annie’s co-founder Annie Withey promoted the company’s products outside local grocery stores and put her personal phone number on each box for customer feedback. Now the company relies on social media (in lieu of more expensive and less interactive advertising channels, such as TV commercials). Consumers can “like” the Annie’s Facebook page, where staffers post recipes and news, and follow Foraker on Twitter (@anniesCEO). Meanwhile, the company has also chosen to spend more on certain ingredients, Foraker says. A few years ago, it began sourcing all of its cheese from a Midwest co-op of organic dairy farms. The move cost the company more money than before, but the company saw it as an investment in sustainable agriculture and its brand.
- Set and maintain high standards. The Annie’s brand is built on its dedication to using natural and organic ingredients. It has an “Annie’s no-no list,” a long list of ingredients, such as synthetic growth hormones, that the company won’t use. That means that Annie’s can’t do business with many food suppliers, and it has put rigorous quality-control and other processes in place to make sure that the ones it does use meet its standards. “The primary asset that we have when you boil it all down is trust,” Foraker said.