Why Big Food Is Feasting on ‘Natural’ Startups

Fortune writer Beth Kowitt reports on the packaged-food industry’s response to an existential crisis: Shoppers are seeking alternatives they deem healthier and more authentic than legacy brands.

In addition to selling fruit and veggie drinks, Bolthouse grows and packages fresh carrots—an old-fashioned, weather-sensitive farming business that Morrison suspected would be a turnoff for any packaged-goods company, including her own. True enough, Morrison’s board was skeptical at first. “Carrots, Denise? Really?” asked one director. But in the end, the numbers sold themselves. The so-called packaged-fresh sector, where Bolthouse was a standout, was already an $18.6 billion business—and one with promising growth.

Campbell paid $1.56 billion for the company in 2012. Today it has roughly half that amount (more than $800 million) in sales. The following year Morrison bought baby-food maker Plum Organics for $249 million. (It has over $90 million in sales.) Both of these new businesses are small in the context of the soup company’s total $8.3 billion in revenue, but they are transformational in their own way—giving Morrison some pastoral cred when she calls Campbell an “organic carrot farmer.”

The acquisitions have also, as intended, shifted Campbell’s center of gravity—moving it closer to what the food industry calls “the perimeter,” the outer ring of the supermarket where fresh foods are stocked. This is where the big growth is.

More important, Morrison didn’t just set out to buy Bolthouse, she went after Bolthouse’s DNA. Following a trend in the tech industry, legacy food companies are on an acqui-hiring spree, hoping to gobble up foodpreneurs, their more agile management operations—and their know-how in the natural food arena. Morrison made Jeff Dunn, who had been president of Bolthouse, the head of Campbell’s new “packaged fresh” division, where he is tasked with expanding the portfolio (though Dunn is cagey about what that might entail).

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