It’s quite possible your favorite new food item you thought was made by a small, independent startup actually comes from a very large CPG company. It’s easy to get fooled, as the label may not make any mention of the parent company. Plus, the brand name, the packaging design and brand story would lead you to believe it really comes from a small batch, artisan firm. But is it?

Just-Food’s columnist Victor Martino has coined a term for these new types of brands:  stealth small brands.

Unlike corporate acquisitions (think General Mills purchase of Annie’s Homegrown) stealth small brands by definition, are created and developed internally by large corporations, but marketed as if they come from a much smaller firm.

Some examples:

  • Maker™ Overnight Oats (breakfast entree) – owned by PepsiCo’s Quaker Oats
  • Wildscape (frozen entrees) – owned by Nestlé
  • Véa World Recipes World Crisps (snacks) owned by Mondelez International
  • Autumn’s Gold (granola products) – owned by General Mills
  • Joybol (smoothie bowls) – owned by Kellogg

Why is this happening?

According to IRI’s most recent New Product Pacesetters Report, more than a quarter of the top-performing food brands launched in the U.S. last year, came from smaller food manufacturers.

Who’s driving this?

Likely Millennials. They are driving the growth in healthier and more natural food products and are behind the jump in produce category sales in grocery stores in recent years. Millennials (ages 22 to 36) are now the largest segment of the workforce and smart companies are responding to their tastes and preferences.

Why not just acquire a small food company?

Acquisitions are still happening, but premium prices are being paid as you’re usually competing with other food giants with deep pockets. Angie’s, maker of BOOMCHICKAPOP kettle corn was purchased by ConAgra a year ago for $250 million. The snack company’s annual sales were less than $100 million.

 A grain of truth

The websites of these stealth brands do an excellent job of portraying the image of a small, folksy startup with messaging from the “owners”. E.g. “Jess & Barry” explain “The Maker Way” on the Maker Overnight (Quaker) Oats website and sign off with “Gotta dash”.

Web content on stealth food brand sites includes the healthy language you’d expect like natural, organic, gluten free, no GMO, etc. Some are even “Paleo Certified” – which means the product is grain-free, legume-free, dairy-free and additive-free. Paleo Certified, however, won’t indicate whether it is a stealth brand as is the case with Autumn’s Gold.

Plus, you’re not likely to find the parent company’s name on the stealth brands’ website or even a mention of the stealth brand on the parent company’s website. But these are healthy products and the ingredient labeling is accurate. So consumers are getting what they want.

The question is will customers care when find out their favorite new mom & pop food snack is actually made by a global food giant?

Stay tuned.

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