The pros and cons of natural product acquisitions by mainstream companies

We all know of legacy brands that were gobbled up by large mainstream brands.  While the story frequently ends in tragedy with the natural brand fading into obscurity, it can sometimes be a good thing.  So why is this and what makes one brand succeed and another fail?

The answer is simple.  They lose sight of their mission and their core shopper.

First, I think it is important to understand why mainstream brands are so interested in natural brands.  Committed natural consumers read labels carefully.  They frequently know more about the products they buy than the retailers who sell the products – even natural retailers.  They know exactly how the product will impact their nutritional goals and objectives.  This is the key because natural products remain close to their core consumers.

Mainstream brands tend to commoditize and take a very siloed approach to everything they do.  They love the one solution/strategy fits all approach to all they do because it simplifies and streamlines their workflow and processes.  They tend to pay more attention to Wall Street than Main Street.  This where creativity goes to die.

I did a project for one such brand and saw this first hand.  The mainstream manufacturer kept telling me that I was wrong to pay so much attention to the shopper and who would buy the product.  Needless to say, the product launch failed and the brand is now a small shadow of its former self.  It was one of the original legacy brands that helped to make “natural” a household term.

Natural brands need to remain lean, flexible, and agile to survive and grow.  If they don’t meet the needs of their consumers they disappear quickly and never scale.  This lesson gets baked into their very DNA as a result.  This is their greatest strength.

I buy natural organic products because of their commitment to integrity, quality, fair trade, local communities, sustainability, common missions, etc. The natural brands who succeed and grow don’t associate themselves with their mainstream owners.  They operate independent of their mainstream parent company and they never lose sight of their core shopper.  Their mainstream owners help them grow and expand their customer base, their distribution, and their reach.  This is a good thing as it makes our healthy way of life more accessible.  Simple supply and demand, if you increase demand then supply increases and prices decrease sustainably.  This is due to the brand’s ability to lower costs organically as they scale (buying more raw ingredients at a better price point, the efficiencies from improved manufacturing processes, etc).  Not the traditional pricing game you hear about so much in the trades.

I believe that the purpose or focus of the natural organic industry is to provide “better for you products” to improve our health; products that offer integrity, quality, sustainability, responsible products, etc.  If you believe this is true, then having a natural organic product exposed to a larger and even more mainstream audience is a win for the industry as well as the brand.

I also foresee a tremendous opportunity for natural retailers to grow and succeed.  Despite their best efforts, mainstream retailers and brands are struggling to understand the committed natural consumer and what makes them so incredibly loyal.  There is tremendous value in attracting better educated more savvy consumers.  Natural retailers and brands should capitalize on their strengths in this area, partnering whenever possible.

Natural retailers have an advantage in that they “do natural” far better than their mainstream counterparts.  Natural retailers know their customers far better than their mainstream competitors.  They need to become the local destination for healthy living through natural organic.  This can be easily accomplished through strategic merchandising, promotions, and effective marketing.  Natural retailers are more flexible in their product offerings and they can easily adapt and capitalize on new trends.   This all adds up to a win for the natural brands and retailers.

Any brand can stand up to the most sophisticated competitors with the right resources.