Company: Annie's Homegrown
Location: Napa, California
Industry: Consumer packaged goods (B2C)
Annual revenue: Confidential
Number of employees: 65

Quick Read:

This case study outlines how Annie's Homegrown used grassroots marketing to propel itself from a home-based startup selling a commodity food item—packaged macaroni-and-cheese—in small mom-and-pop natural food stores to a business with products that are sold by supermarkets in all 50 states.

The keys to the success of Annie's Homegrown?

• Grassroots marketing to build consumer demand
• Great Web site marketing
• A commitment to natural and organic foods and green packaging;
• Promotion of social causes valued by its target demographic.

Challenge:

To stand out in a commodity business and achieve market penetration without compromising social values—and without the benefit of a fat marketing budget.

Campaign:

It's difficult to build a business on a commodity product, but savvy marketing that taps into consumers' deeply held values can make it happen. Annie's Homegrown is a case in point.

The company was founded by a woman with a vision: Annie Withey wanted to offer parents concerned about the environment and committed to feeding their children natural foods a convenient, child-friendly food in "green" packaging. The first product brought out by Annie's Homegrown was Annie's Shells & White Cheddar, in 1989.

The company started as most entrepreneurial companies do, on a shoestring budget, and so could not hope to compete with Kraft Foods and other mainstream consumer-product giants. Annie's didn't have—and still doesn't have—much of a budget for TV, radio, and print advertising, or fancy marketing initiatives. What the company does have is a unique story, an environmental "cause," great packaging, and all-natural cheese and organic durum semolina pasta.

Starting slowly, Annie's added a few more core products to its line, seeking maximum distribution in natural food stores, before seeking penetration in mainstream supermarkets. In recent years, Annie's has made significant progress in securing distribution in the nation's leading supermarket chains. How? Customer demand and the realization among mainstream food marketers that the little line was garnering respectable sales figures and profits.

Annie's marketing efforts, particularly online, included the following:

• Annie's used its broker network to educate natural retail grocery personnel about the ingredients used in the products—how they are sourced, whether natural or certified organic.
  
  
• Annie's understood that the consumer as much as retail personnel needed to have the kind of information about the product ingredients and how they are sourced. Accordingly, the company's Web site was updated to offer more detailed information about its products. Consumers could also email questions via the site and get online coupons that encouraged them to try Annie's products.
  
  
• Tastings and demonstrations at many natural-product stores early on allowed consumers to see for themselves that healthy "fast food" could also be delicious. In the past, many consumers had tried natural easy-to-prepare foods but found them long on nutrition, short on flavor.
  
  
• Annie's blog, dubbed "Bernie's Blog & Guest Book," enables consumers to post their observations about Annie's products. The sign-in page also gives consumers a toll-free customer service number.
  
  
• Consumers can use the store locator guide on the Web site to find retailers in there area that stock Annie's products; consumers can also order products directly from Annie's.
  
  
• Annie's Web site profiles the company's seven principal executives, making them human and approachable to the consumer.
  
  
• Annie's Web site profiles the organic farm families the company works closely with to source its grains for its products.
  
  
• Annie's Web site outlines the many programs the company supports—for example, organic and green causes, environmental studies and recycling. Annie's strives for environmental sustainability, and promotes this way of life to its business associates and consumers.

Bottom Line Results:

That shelf-stable natural and organic grocery products are enjoying industry sales growth of 20% per annum, while traditional grocery product sales are flat, hasn't hurt the little company "that could," either.