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Can Established Food Brands Stomach a Change in Customer Demands?

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This story appears in the December 2015 issue of Entrepreneur. Subscribe »

While sales of legacy brands are stalling at America’s leading packaged-foods companies, mission-driven “healthy” brands are boasting double-digit growth. But keeping up with soaring consumer demand is harder than it looks. While additive-free, non-GMO, organic brands are killing it at specialty-foods stores, these innovative companies often lack the financing, marketing muscle and global distribution to go head to head with traditional brands in supermarkets.

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Increasingly, the solution is to sell out. Smaller brands are finding the support they need by forming what used to be considered unholy marriages with food conglomerates. In September, Niman Ranch, a natural pork, beef and lamb producer, became a division of poultry giant Perdue Farms. That followed the $775 million sale of Applegate Farms, a producer of “natural” deli meats, to Hormel Foods. A year ago, Berkeley, Calif.- based organic packaged-foods high-flyer Annie’s Inc. sold for $820 million to General Mills.

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