Better Know a Deal: A First for Benefit Corporations

By Anthony Tagliente

The relationship between baby food company Plum Organics, a Public Benefit Corporation, and parent company Campbell Soup breaks ground and raises legal questions.

What will be the next public Benefit Corporation? This spring Etsy went from private B Corporation to public (not to be confused with a Benefit Corporation; see the difference here). Now there’s talk of global consumer packaged goods giant Unilever taking the plunge into B Corp status.

Whichever firm it is will benefit from the experience of Plum Organics, a B Corp purchased in 2013 by Campbell Soup Co. Since then we have seen a Campbell stock value higher than before the acquisition, and consumer preferences shifting away from “Big Foods” toward organic, less-processed products and companies like Plum Organics. This is apparent in many other acquisitions of organic and sustainability-focused producers by major food companies in the past few years.

Plum Organics co-founder Neil Grimmer wanted to create a company that provides high-quality nutritious foods to children, with a special focus on those who chronically miss meals, while emphasizing environmental sustainability in the production line. Plum identifies the first three years of life as being critical to child development and one 1 of 5 children as being food insecure. This roughly matches the number of children living in families below the poverty line, according to the National Center for Child Poverty.

To reinforce its mission-minded founding, Plum Organics, became a Public Benefit Corporation. What makes Plum unique among other Benefit Corporations is that just weeks before its reincorporation, the company was purchased by Campbell Soup Co., a publicly-traded industry giant. This made Plum the first Benefit Corporation to be wholly-owned by a public company in the United States.

Grimmer’s notion of placing mission at the forefront of his business, innovative modeling and a genuine commitment to the company's values gave the organic food company a solid consumer base that pushed it to the top three baby food producers in about five years, behind Gerber and Beechnut. Plum's success allowed it to launch The Full Effect campaign, donating its super smoothies, designed for children who routinely miss meals, to those in need.

Campbell Soup has a history of well-developed corporate social responsibility (CSR) and sustainability programs earning it a spot in The Civic Fifty in 2013. The company outlined its main goals of “nourishing” consumers, neighbors, employees and the planet. Much like The Full Effect, Campbell Soup ran a campaign in Camden, New Jersey, to produce over 40,000 jars of peach salsa for a local food bank. The city Campbell calls home has suffered from high levels of unemployment, poverty and violent crime in recent decades, and the company used locally-grown rescued peaches and donated jars to create the nutritious salsa, generating $100,000 for local food banks facing government cutbacks.

So, when Campbell came to Grimmer in 2013 with an offer to buy Plum Organics, Grimmer saw this as an opportunity to expand the reach and mission impact of Plum by teaming up with an iconic brand with global access points. Cynics may immediately assume that when a mission-driven business is bought by a public corporation, it is the end of being accountable to social values and the beginning of accountability to shareholders only. However, Campbell allowed Plum to retain its management team and core values, as well as operate as a standalone business inside of Campbell.

Not long after the deal was complete, Delaware began to legally recognize Public Benefit Corporations which, according to a SFGate article, Grimmer wanted to bring this up in his very first meeting with Campbell executives. In theory, if Plum were to become a Public Benefit Corporation and then fail to act in the interest of both financial and social performance, it could potentially be sued by its shareholders. As Plum was now a subsidiary of Campbell, it was unclear what would happen to Campbell in such an unprecedented situation:

“The problems we’re trying to tackle from a social and environmental standpoint are so big that a small brand like Plum can’t do it alone, and quite frankly, a big company can’t do it alone," Grimmer said. "It’s actually about collaboration and partnership to get to where we need to go.”

It seems that since then the symbiotic relationship has worked out as both parties originally intended. Plum Organics continues to adhere to its core values with access to Campbell’s supply chain, product development team and market entry points. This has strengthened the company's ability to address child hunger in the United States. Likewise, Plum has helped Campbell by sharing its experiences and approaches to just about all aspects of the business.

Image credit: Plum Organics

Anthony Tagliente is an associate content editor for the F.B. Heron Foundation. The FB Heron Foundation mission is to help people & communities help themselves prosper, especially those that are economically disadvantaged. Read more of our Better Know A Deal series that offer opportunities to think about impacting society through different types of investments.