OAKLAND, Calif. – On the night in March before Berkeley, Calif.-based Annie’s Homegrown began trading its stock for the first time, CEO 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 the next morning in an IPO that raised $95 million.
“I thought to myself, ‘Wow, organic really is mainstream,’” Foraker said in a recent interview. “The whole thing was a little surreal. The most surreal thing was to see the big logo.”
Foraker encountered the company in 1999 during a meeting in Massachusetts between Ann Withey, who co-founded the company in 1989 as an organic farm in Connecticut, and an investment group that included Foraker. At that time, Annie’s 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 company was his belief that organic foods would be popular.
He recalls a day in 1989, soon after his first son was born, 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 may cost 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.
Withey, interviewed from her farm in Connecticut, said 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 of balancing its idealistic mission with the demands of shareholders.
“Companies often are founded with a great deal of idealism,” said Michael Pollan, a Berkeley-based author and university professor who writes about food issues. “It’s enormously challenging to balance profits with idealism. We have to hope Annie’s stays true to its values.”
Through Monday, Annie’s was the third-best performing IPO the nation. Since going public March 27, its shares have nearly doubled. 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.
“Annie’s is one of the handful of organic and natural food companies that has made it beyond the specialty stores and the back of the aisles,” said Linda Killian, a principal executive with Renaissance Capital, a Connecticut-based investment and research firm. “They are now on the main supermarket aisles.”
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.
Robyn O’Brien, a former financial analyst who heads the Colorado-based AllergyKids Foundation, praised Foraker, whose total pay is $606,000 per year, for preserving Annie’s original mission while beefing up its revenues.
“Annie’s is not a fad,” O’Brien said. “It is not going away.”