A reader recently asked me what I thought about an acquisition that took place for a natural food and supplements brand. As it turns out, I had a lot to say on the subject and she suggested I write an article. So here we are :)
In order to be relevant to today’s consumer, companies must not only be socially responsible, they must focus on sustainability, transparency, sourcing quality non-toxic ingredients, paying their employees well and…just about everything else.
This is the new price tag for being a relevant business in 2018—and it goes without saying—many of us have been waiting for this for years.
So what happens when your favorite company, doing all of the things listed above, is bought by a giant multi-national company? This type of acquisition is a new normal in today’s economy, and I’m here to tell you that while some acquisitions are a bummer, it’s not all bad. So before you throw in the towel and ditch your favorite brand, consider the following.
Photo credit: Chelsea Prestin Photography
There is power in scale
For many companies, scaling sustainably is a real challenge and one that can be solved by being acquired by a larger company. In most cases, large multi-national companies have incredible sophisticated operations systems and teams (the people who can manage inventory, how much you need to buy of certain ingredients, work with suppliers, source ingredients etc). Many socially responsible companies, even as they grow in popularity, would take years or even decades to get to the operational level of giant companies. The operational benefits I’m talking about are not just about making the business “easier” to run, it’s about using large scale to reduce costs, increase access to different suppliers (often more boutique or sustainable), among other benefits.
So what happened when a company like Annie’s Organic was bought by General Mills? They integrated into their large supply chain, never compromising their formulas and ingredients, and now can offer MORE products to more people.
Increased scale can lower cost
Many people complain that responsible companies often have a higher price point. By scaling and using larger market leverage (as outlined above), many companies can reduce costs and transfer those savings to consumers. This helps alleviate the economic justice issues associated with buying safer, responsible products.
Reach the masses
Mass market brands have the ability to reach more people. Part of why we love the smaller (or even large) responsible brands is because they are serving a niche we enjoy being part of. But at the end of the day if we want responsible business to be the new normal, don’t we also want as many people to have access to these healthier products too?
Acquisitions aren’t like they were 10 years ago
I can rattle off a lot of acquisitions that were clearly just to “green” up a company, or make people forget about their wrongdoings. While this type of sale still takes place, many acquisitions are different than they were a decade ago.
Sales that have taken place recently have had clear guidelines that quality and safety assurances wouldn’t be changed. Annie’s Organic, Seventh Generation, and Epic are good examples of companies who maintain their product quality under new ownership. In other words, the multi-national didn’t try to dilute or weaken the products, but saw the inherent value in their current brand ethos. This must be a criteria for any responsible brand considering a sale to a large company.
Responsible companies can disrupt from within
Author, friend and activist Robyn O’Brien covered this well in her article about General Mills partnership with Organic Valley to help transition more dairy farmers to organic.
Robyn states, “The program with Wisconsin-based Organic Valley will drive more acres in the U.S. into the organic certification process and builds upon General Mills’ commitment to double the organic acreage from which it sources ingredients by 2019.
You can call it “The Annie’s Effect,” as the little bunny brand has become a compass inside of the bigger company. But it is also because of the leadership inside of Mills.”
This is just one of many examples of how the disruptive companies can help increase sustainability and sourcing efforts within the new company. It’s all about how enlightened the larger company is, in this case General Mills “gets it”.
Quality control & sustainability
It goes without saying that the number one concern for sustainable business enthusiasts is around the quality and sustainability efforts during an acquisition. This is a legit concern, as we’ve seen things go poorly in years past. For me, the biggest criteria to judge how a sale goes, is based on the terms of the deal, what both companies are saying about it, and the following 12 months.
I’ve been encouraged by recent sales, including Seventh Generations sale to Unilever where they continued their outspoken advocacy work on the groundbreaking Cleaning Products Right to Know Act legislation in California.
According to the news site NewCo, “Like Ben & Jerry’s before it, Seventh Generation negotiated an unusual clause in its deal that insured Unilever would maintain and protect Seventh Generation’s core mission and purpose.”
I truly believe there is a new day in business. So will all acquisitions be clean and perfect? Certainly not. But think twice about ditching your favorite brand when they are acquired.
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