BOCA RATON, FLA. — Nine years ago, Annie’s took a swing at the cereal category and missed, discontinuing the product five years later market after missing its consumer target and failing to deliver on taste. Now, with a new manager in place in Minneapolis-based General Mills, Inc., the company is stepping back up to the plate.
In a presentation Feb. 16 at the Consumer Analyst Group of New York meeting in Boca Raton, Jeff Harmening, executive vice-president and chief operating officer of U.S. Retail at General Mills, said the time is right for Annie’s to bring its innovation to the cereal aisle.
“Increasing consumer interest in natural and organic is driving high-single-digit retail sales growth for our Cascadian Farm cereal brand, and we think the trusted Annie’s brand will resonate with that growing group of consumers,” Mr. Harmening said. “This launch consists of three great tasting varieties that are all certified organic with no artificial flavors or colors and no high-fructose corn syrup.
“We are so encouraged by the improvement we are seeing in the cereal category and by our early returns on our ‘Consumer First’ investments. As we look ahead we continue to believe that cereal will be a source for growth for U.S. Retail as we prioritize driving more from the core with renovation, innovation and investment in our brands.”
The new cereals will be available in three varieties: Berry Bunnies, Frosted Oat Flakes and Cocoa Bunnies. The cereals will debut in Whole Foods Market stores in early April and spread to other retailers nationally by mid-summer at a suggested retail price of $3.99 to $4.99.
John Foraker, president of Annie’s, discussed the trials and tribulations of the brand’s journey in the cereal category in a Feb. 16 blog posting.
“The products taste amazing and are made with the bunny magic that Annie’s consumers trust, including lots of whole grains and no artificial anything,” Mr. Foraker wrote. “I’m really proud of these products that our teams in Berkeley (Calif.) and Minneapolis have been working so hard on for the last 12 months. These cereals represent the very high level of quality we’ve always wanted to bring to this huge category, and now with the incredible cereal product development, organic and fair trade sourcing, and manufacturing capabilities of General Mills behind us, the dream is now coming true, and we are getting after it! This launch is a great example of how Annie’s and General Mills are better together.”
In 2007, Annie’s also launched three flavors of cereal: Bunny Love, Honey Bunnies and Cinna Bunnies. While initial consumer interest was strong, Mr. Foraker said the product failed to take off because Annie’s “missed the mark on the product and consumer.” The product was discontinued in 2012, but Mr. Foraker said the attempt and fail was “one of the best things that ever happened to Annie’s.” The company learned several important lessons, he said, including:
• Know your most important consumer targets: “Before we launched cereal in 2007, we generally tested with just our ‘core’ consumers and we did a pretty good job nailing their needs,” Mr. Foraker wrote. “However, in this category there was another big group we needed to talk with as well, more mainstream consumers that we now refer to as ‘prime prospects.’ Core consumers tend to be more into organic and simple ingredients. In cereal, prime consumers cared about these, too, but with a bigger emphasis on mainstream taste while being more price sensitive. Since 2007, all of our new items have been developed with a keen eye on the similarities and dissimilarities of both groups. We want products to appeal to and work for both, and we meticulously manage our items and channel strategies to accomplish this objective. Big evolution in our sophistication around our consumer targets.”
• Good taste is not enough; great taste is needed: “We need to be as good or better tasting than the mainstream category leaders,” Mr. Foraker wrote. “When we launched in 2007, we were small and had limited manufacturing choices, resulting in taste and texture that was not quite where it needed to be to win. Consumers liked the product, but they didn’t love it as much as they needed to. In hindsight we probably should have waited until we could have developed a better initial product before launching. Knowing when not to launch is just as important as knowing when to pull the trigger.”
• Learn quickly and fail faster: “We made many changes to the initial items over the 4 years post the 2007 launch, and none really hit the mark,” Mr. Foraker wrote. “I now understand what a huge suck of resources and attention that was for the broader organization and holding on that long was a mistake. We needed to be faster to make changes when we saw mediocre results, and we needed to exit faster in order to re-allocate resources to flow into other opportunities. Innovate fast, and if warranted, fail fast. Great learning for any small business.”
