Annie’s Homegrown aims to grow organic into profit

Annie's CEO John Foraker talks about the history and philosophy of the company at their headquarters in Berkeley, California, Monday, April 30, 2012. The company's share price has doubled since going public at $19 this year. (Kristopher Skinner/Oakland Tribune/MCT)
Annie's CEO John Foraker talks about the history and philosophy of the company at their headquarters in Berkeley, California, Monday, April 30, 2012. The company's share price has doubled since going public at $19 this year. (Kristopher Skinner/Oakland Tribune/MCT)

— The night in March before Berkeley, Calif.-based Annie’s Homegrown began trading its stock for the first time, Chief Executive Officer John Foraker saw something that told him the natural foods company he heads had really arrived.

A huge image of Bernie the Rabbit, Annie’s mascot, was hanging outside the New York Stock Exchange, where Annie’s management was to ring the opening bell in an initial public offering that raised $95 million.

“I thought to myself, ‘Wow, organic really is mainstream,’” Foraker recalled. “The whole thing was a little surreal. The most surreal thing was to see the big logo.”

Foraker encountered the company in 1999 during ameeting in Massachusetts between Ann Withey, who cofounded the company in 1989 as an organic farm in Connecticut and an investment group that included Foraker. Annie’s then had $7 million in annual sales.

“I was enraptured by the bunny,” Foraker said. “I thought it was cute and clever.”

But what cemented Foraker’s interest in the companywas his belief that organic foods could become mainstream.

He recalls a day in 1989, soon after his first son wasborn, when his wife came home with a carton of organic milk. “I asked my wife, ‘What’s this?’ when I saw the carton,” he said. “She told me, ‘It maycost more than regular milk, but I don’t care.’ She said, ‘It’s not for you, it’s for our son.’ She said she didn’t want any synthetic growth hormones for our baby.”

Foraker brought a Wall Street and banking background to Annie’s when he took over as CEO in 2004, although he had always wanted to be a farmer after spending his youth on the family almond and rice farm in Chico, Calif. After earning degrees from the University of California-Berkeley and University of California-Davis, he joined Bank of America, where he managed client relations with wineries. That sparked an interest in branding.

Withey and Foraker hit it off from the start, with Withey saying the collaboration with Foraker has worked because “he gets it.”

“I feel so good about having the company in his hands,” she said. “He has pulled everything together in the operations and carrying out the core values. He hired a sustainability director. He has the right vision.”

As a public company, Annie’s now faces the challenge ofbalancing its idealistic mission with the hard-nosed demands of shareholders.

“It’s enormously challenging to balance profits with idealism. We have to hope Annie’s stays true to its values,” noted Michael Pollan, a Berkeleybased author and university professor who writes and blogs about food issues.

Through early last week, Annie’s was the second-best performing IPO in the San Francisco Bay Area among companies that went public this year and the third-best in the nation. Since going public March 27, its shares have nearly doubled in value.

Last year, Annie’s earned $12.8 million on sales of $134.9 million. That marked the third straight year in which it turned a profit. And its annual sales have risen for at least five straight years.

The company’s early offerings primarily focused on a healthful version of macaroni and cheese, but it has broadened its product mix to include items such as fruit snacks, soups and, most recently, frozen pizzas.

Business, Pages 60 on 06/24/2012

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