When Small, Healthy Food Companies Get Eaten Up

Jed Oelbaum

You slowly roll your shopping cart down the cereal aisle, a cardboard valley of blaring colors and obnoxious cartoon mascots hawking slightly different formulations of corn, rice, sugar, and oats. Your favorite, Cap’n Crunch, is on sale. Still, you hesitate, visions of all that sugar and pesticide-covered corn fields flashing ominously through your mind.

Then your eyes settle on a slightly smaller box down at the end of the aisle that doesn’t look like the rest of these clownish feedbags. The packaging is made from muted recycled paper and informs you that the four ingredients contained inside are organic, ethically produced, and of the highest quality. This cereal is probably called Uncle Lester’s Hand-Rolled Ancient Grains, or something like that. You picture a taciturn, rough-hewn man who retired to Oregon to live off his family farm and share the ancient grain secrets he learned as a child in simpler times. “Well, there’s no added sugar or preservatives,” you tell yourself. “It costs more, but I’d rather give my money to Lester than PepsiCo, anyway.”

But little do you know that odds are higher than ever that PepsiCo or another major multinational will be getting your money no matter which cereal you choose. And in this case, ignorance really is a sort of consumer bliss, because once you go down this rabbit hole—discovering that the small, independent companies you try to support keep getting swallowed by the very same corporate behemoths you’ve been trying to avoid—you may find yourself reading ingredient lists with a magnifying glass or googling the political leanings of every yogurt purveyor in the dairy aisle. Sure, you can keep switching brands forever, in a never-ending search for new foods from ever-smaller and more obscure makers. But until you find the next indie brand, consider what it really means to sell out in the food industry these days—in going corporate, some of your old faves may still be fighting the good food fight, just from the inside.

The world’s biggest food companies have long gobbled up small, successful contenders. If Uncle Lester actually existed, there’s a good chance he’d have long ago followed in the footsteps of Annie of Annie’s Homegrown or ice-cream iconoclasts Ben and Jerry, who sold off their beloved brands to General Mills and Unilever respectively. Sweet Earth, which makes vegan bowls, burritos, and sandwiches and aims to be “as natural, organic, and non-GMO as we can be,” was sold to Nestle in September. In addition to Annie’s, which it acquired in 2014, General Mills also owns Larabar and organic cereal maker Cascadian Farm. Horizon, Silk, and Earthbound Farm Organic are all part of WhiteWave, which was itself bought out by French multinational Danone in a deal that closed this April. Coca-Cola owns Honest Tea and Odwalla, Campbell’s owns Bolthouse Farms and Plum Organics, and organic meat purveyor Applegate was picked up by Spam-maker Hormel last year. (For a better picture of what this looks like, this 2016 chart from the Cornucopia Institute, already dated by new rounds of corporate buyouts and reshuffles, shows how the organic sector has been consolidating under the ownership of just a few dozen companies.)

Over the past five or so years, the race to accumulate independent, earthy producers—seen by a growing segment of consumers as more trustworthy or wholesome—has gotten even more intense, as growth slows for larger brands  and they try to capture the earnest appeal of smaller, scrappier outfits. “We are well aware of the mounting distrust of Big Food,” Campbell’s CEO Denise Morrison reportedly said in a 2015 company meeting. Speaking to a group of financial analysts, she acknowledged that “increasing numbers of consumers are seeking authentic, genuine food experiences, and we know that they are skeptical of the ability of large, long-established food companies to deliver them.”

Compared to older generations, millennials are much more likely to distrust large food manufacturers and make purchases based on companies’ political stances and ethical profiles. According to an industry research note issued by Goldman Sachs and Conde Nast earlier this year, millennials see corporate foods as “over-engineered.”

Indeed, Big Food’s legacy includes pushing processed, low-nutrition foods into our lives, wreaking environmental havoc, and turning everything we eat into some kind of science experiment. And even if there isn’t always evidence to support the hysteria over genetically engineered ingredients and unpronounceable chemicals, their presence in our pantries and fridges still freak out enough people to drive legislation and sales trends. So when a small, beloved brand is sold off, it makes sense for consumers to wonder if a major corporation’s shareholder priorities might result in lower quality or less responsibly produced foods.

More than a decade after its sale to Kellogg’s, Kashi’s grain-based products were found to no longer meet the company’s “all natural” claims; a class-action lawsuit won angry consumers a $5 million payout and forced the company to change its packaging. An employee at Ben & Jerry’s I spoke to last year for a story referred to the period after its acquisition by Unilever as “the dark years,” when the future of its values, ingredient quality, and quirky culture looked grim. (The company has since worked to restore its image and mission.) As with many of these independent brands that have found places in devoted consumers’ homes and routines, when Annie’s was sold to General Mills, fans of the bunny-eared brand were outraged and feared the giant company would ruin Annie’s organic offerings.

The good news is that these days when a small food brand gets bought out, that doesn’t necessarily mean the products, or the way they’re made, will change. Companies like Kraft and Coca-Cola know you’re sick of pasteurized prepared cheese product and snacks made from pressed peanut sweepings—that’s exactly why they’re buying up every hippy-dippy indie food company in sight. Knowing which side their (organic) bread is buttered on, lately corporate buyers of small brands are usually smart enough to preserve, or even enhance, the tentpole features of those brands’ identities and foods, making the new subsidiaries more affordable, and distributing their products to more consumers.

Take Annie’s for example. Discussing its acquisition, Christina Karem, a spokesperson for the company, told local California news site Berkeleyside in June that General Mills “wanted to make sure that they kept the brand special. If anything they were giving us more resources to help grow organic.” When Annie’s was independent, some of their products were only made with around 70 percent organic ingredients, in order to keep prices affordable. But since the sale, “every single innovation … has been certified organic,” meaning at least 95 percent of ingredients grown to USDA organic standards, said Karem.

In fact, in its broader efforts to reach crunchy customers, General Mills has become one of the top five buyers of organic produce in the world. In the food sector generally, over the last few years the “clean label” movement has seized on consumer demands for simpler foods with fewer artificial ingredients, leading to an explosion of new products and a top-down overhaul of several huge legacy food items. Kraft removed artificial ingredients, preservatives, and colors from its iconic macaroni and cheese dinners, Campbell’s reformulated its soup recipes, and Nestle has even tried to spruce up the Hot Pockets brand by cutting out chemicals.

For the most part, subsidiaries coming into major corporations have been able to hang onto organic and fair trade certifications and other signs of a virtuous business model, like B-corp status.

“Some companies may feel like they need to do it because they’re getting pressured by consumers, but for whatever reason they’re doing it, it makes me happy,” Ben & Jerry’s co-founder Jerry Greenfield told the BBC, regarding corporate sustainability efforts by companies like Unilever in recent years. “I don’t care if they’re doing it to look good. … It’s a good thing.”

Even if you take Greenfield’s view, it’s still fair to see these moves toward environmental awareness, simple ingredients, or ethical production as essentially PR campaigns or pandering. After all, Big Food companies still have sticky fingers from all sorts of ethical nightmares, from the scourge of palm oil production—linked to violence and environmental catastrophe—to predatorily advertising unhealthy foods to children, to every shade of labor rights outrage.

And that’s ultimately why all the head-scratching in the grocery store may still be worthwhile. Those frozen veggie patties you love are still made with fair trade chickpeas, but that doesn’t mean that their new corporate overlord isn’t responsible for misdeeds in producing completely unrelated items. Buying a Sweet Earth “borderless enchilada” bowl is also, in some part, supporting Nestle, which is still contending with slave labor and child labor in its wider supply chains. Even major food producers that move to curb their carbon footprints or hold suppliers to higher ethical standards are working from a troubling baseline toward incremental improvements—mission-driven, independent brands include their values from the beginning, and spur economic growth in their communities, to boot.

But shoppers are often at the mercy of whatever their supermarket or corner store stocks, and independent, truly sustainable labels aren’t always available. Supporting a bought-out brand that does its own small part to change the problematic whole is still a choice we should be glad to have. So even if Uncle Lester put his ancient grains aside for a solar yacht bought with megacorp money, his sellout status may ultimately help nudge the whole industry toward a more sustainable path. Plus, it’s nice to walk into any Ralph’s or Reeser’s or Randall’s in the nation and find a homely bag of minimally processed grains nestled near the Cocoa Puffs. But if you can find an even scruffier box of cereal made with even fewer, even purer ingredients by an even older Uncle so-and-so, try to get to it before PepsiCo or Nabisco does.

Display image by Mike Mozart via Flickr