Better Brands Bring Better Returns

Here’s something about building brands that better the human condition which is often overlooked: They can better your pocketbook, too.

Certainly that’s true in the higher sales and margins enjoyed by most brands that aim to create sublime values, compared with the financial metrics of their commoditized counterparts. But a few recent developments also illustrate the value that elevated brands can realize in another way – when they’re sold.

Take Tom’s Shoes and Annie’s.

Tom’s Shoes has become an iconic brand just eight years after Blake Mycoskie launched the company with a simple, world-enhancing premise: For every pair of shoes it sold, it would give away a pair toward a true need. Since then, under its “One for One” donation concept, Tom’s Shoes has distributed 25 million shoes around the world. And in August, Mycoskie was rewarded with a buyout of Tom’s Shoes by Bain Capital for $625 million, in which the founder retained 50-percent ownership.

In addition to his big payday, Mycoskie benefits in other ways. Bain promised to help the company “expand the scale of our mission,” he said. And Mycoskie plans to give away “at least half” of the profits from the deal to establish a fund for social entrepreneurship and for other causes.

And just last week, Annie’s sold out to General Mills. One of the pioneers of the organic-food movement that is growing faster than any other segment of the American supermarket, Annie’s is known for its iconic macaroni-and-cheese line and bunny-shaped snacks – but also for its continual promotion of the organic-eating ethos and all of its benefits for holistic health.

General Mills was willing to pay a hefty 37-percent premium to Annie’s share price for the right to own the brand henceforth. In announcing its purchase of Annie’s, General Mills recognized not only the company’s huge business success but also the major achievement of Annie’s in creating a brand whose value stretches beyond its mere products.

“Annie’s competes in a number of attractive food categories, with particular strength in convenient meals and snacks—two of General Mills’ priority platforms,” Jeff Harmening, General Mills chief operating officer of US retail, said in a press release.

But he added, “Consumers know and trust Annie’s purpose-driven culture and authentic brand.”

And why do you think Annie’s sold for $821 million? The key is in the second reason, not the first.