Since joining General Mills, Annie's has expanded into several new categories, including cereal, soup, refrigerated dough, baking mixes and yogurt.

BOSTON — The growth of Annie’s has accelerated since General Mills, Inc. acquired the natural and organic brand two years ago. Net sales are expected to double since 2014 to reach $400 million in the current fiscal year, said John Foraker, president of Annie’s.

Executives expressed optimism about the business in spite of a skeptical investment community. The company’s shares have dropped by as much as 7% after the company revealed on Sept. 7 first-quarter adjusted net sales growth would be below guidance.

John Foraker, president of Annie’s

“The No. 1 question I get about Annie’s today is, ‘Now that you’re owned by General Mills, does this brand still resonate with consumers in the way it did when you were independent?’” Mr. Foraker said during a Sept. 7 presentation at the Barclays Global Consumer Staples Conference in Boston. “The answer is, absolutely. In fact, Annie’s brand love is stronger than it’s ever been. We continue to lead, and we’ve not compromised our standards one bit.”

When Mr. Foraker joined Annie’s in 1999, 10 years after its founding, the company sold macaroni and cheese and generated about $7 million in sales. Today, Annie’s operates in 17 product categories, serving consumers nationwide in retail and food service.

In 1999, Annie's sold only macaroni and cheese.

“That $7 million business I joined in 1999 had grown to $100 million in net sales by 2010, and over the next four years, we doubled the business again, reaching $200 million in net sales in 2014,” Mr. Foraker said. “In October of that year, Annie’s joined General Mills, and I’m happy to tell you that we’re not just maintaining our growth rate, we’re actually accelerating it.”

In the last fiscal year, Annie’s increased its household penetration by 34%, or more than 4 million new households, over the prior year, he said.

“Acquiring businesses, especially in the natural and organic segment, is very difficult, so what makes this partnership work?” Mr. Foraker said. “I think a large part of that answer is that we found the right balance in the integration of Annie’s. From the outset, Jeff (Harmening, president and chief operating officer of General Mills) and I agreed that maintaining a certain autonomy would be very critical for Annie’s to preserve our unique culture and entrepreneurial spirit. We kept the headquarters in Berkeley, we retain our decision rights over innovation and category expansion, and we also maintain control of ingredient standards, brand marketing, messaging, and consumer engagement.

In the last fiscal year, Annie’s increased its household penetration by 34%.

“At the same time, we’ve fully integrated our selling organization and systems so that we can access the top-ranked sales team in the country. This has been central to our ability to expand distribution more rapidly in mainstream channels. We’ve tapped into the General Mills R.&D. platforms, giving Annie’s access to categories we could only dream about as an independent company. And we’ve integrated our sourcing, manufacturing, and logistics teams as well, giving us best-in-class capabilities to allow us to operate effectively and efficiently.”

In the first two months of the current fiscal year, distribution of Annie’s established products is up 13% in measured channels, and retail sales are up 18%. The brand has unveiled dozens of new products this year, too; since January, Annie’s has launched into cereal, yogurt, refrigerated dough and baking mixes and is relaunching Annie’s granola bars. All products are certified organic.

“Every one of the category expansions started with the consumer, not with an assessment of what we could make with General Mills’ capabilities,” Mr. Foraker said. “Back in the mid-2000s when we were an independent company, we started asking consumers which categories they wanted Annie’s to enter. And since then, we’ve been refreshing that work almost every year. All of the big categories that we’ve recently entered have been very high on that list for years.

Annie's recently expanded into the yogurt category.

“In fact, yogurt was always at the very top of the list; we just never had the capabilities to get it done the right way until General Mills came into the picture.”

Looking ahead, Mr. Foraker is confident in capturing even more growth for Annie’s and General Mills.

“First, we have plenty of distribution upside,” he said. “Average distribution for the top Annie’s products is less than half of General Mills’ top s.k.u.s (stock-keeping units), and we’re very focused on closing that gap. We’re also continuing to drive placement for our best items in the main-line section of the store, where velocities are higher and where we can present consumers with clear choice versus competitive conventional brands.

In the first two months of the current fiscal year, distribution of Annie’s established products is up 13% in measured channels.

“We’re having a lot of success leveraging General Mills’ category management and selling capabilities to get after these opportunities. Additionally, we believe that there continues to be an opportunity to bring Annie’s all-family natural and organic food products to new categories. We still maintain a list of our top opportunities for new categories, and this list is long enough to keep our teams busy for quite some time.

“Finally, we think there’s room for Annie’s to play beyond our borders as well with (General) Mills. We recently expanded in Canada in a very serious way, and I have high hopes that we’ll be successful in that market, where the proportion of natural and organic consumers is much higher than in the U.S., and we’re also investigating opportunities to take Annie’s to other markets as well.”

General Mills’ strategy with Annie’s extends to other brands in its natural and organic portfolio, including Larabar, Liberte and Epic Provisions.

General Mills’ strategy with Annie’s extends to other brands in its natural and organic portfolio, including Larabar, Liberte and Epic Provisions.

“In January, Larabar launched its first-ever TV campaign and supported that news with strong in-store merchandising execution,” Mr. Foraker said. “The business has responded extremely well. Retail sales are up close to 40% in Nielsen-measured channels in the past six months, and the brand remains very relevant to consumers in the natural channel, where Larabar is the No. 1 selling bar.”

Epic Provisions, the meat snack brand General Mills acquired in January, also is benefitting from the Minneapolis-based company’s capabilities while retaining its team and its Austin, Texas, headquarters.