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Nutrition Capital Network Deal Download: October 2019

Deals in the CBD wellness category again dominated natural products transactions, followed by healthy snacking in the food category.

CBD deals

Opportunity in CBD wellness products motivated two sports nutrition deals in October, while Kraft Heinz took its first step into the quickly evolving cannabis space with a tech investment.

Flowhub, a retail management platform for cannabis dispensaries, raised $23 million led by the Kraft Heinz investment arm Evolv Ventures, e.ventures and Poseidon. Described as one of the largest Series A rounds in the cannabis tech industry, funds will be used to position Flowhub as the software model of choice for cannabis retailers.

Canadian cannabis company Canopy Growth purchased a majority stake in BioSteel Sports Nutrition Inc., laying the groundwork for cannabidiol-enhanced sports nutrition products. "The use and acceptance of CBD-based products in the professional sports landscape has changed. We have witnessed the negative effects of prescription painkillers and athletes are looking for healthier alternatives," said Michael Cammalleri, BioSteel’s co-founder and co-CEO.

The former pro-athlete founders of Beam, a wellness brand offering CBD oil, salve and protein bars, announced a $5 million funding led by Obvious Ventures. Beam works with multiple laboratories to ensure the purity and transparency of its products. "We identified Beam as a stand-out in a crowded landscape for their rigorous focus on quality and product innovation, ensuring zero THC content in those products," said Obvious Ventures co-founder James Joaquin.

Medicinal cannabis investment company World High Life announced an $11.2 million deal to buy the British cannabis brand Love Hemp, according to Reuters. Love Hemp products include CBD-infused water and CBD oil. The deal will help World High Life expand in the United Kingdom and Europe.

Natural, organic & better-for-you food deals

Healthy snacking dominated food deals tracked by the NCN Transaction Database.

Kind Healthy Snacks, best known for its clean label fruit and nut bars is acquiring Creative Snacks Co., maker of almond and coconut nut clusters, trail mixes, granolas and pretzels. This is Kind’s first acquisition and part of a strategy to broaden its brand portfolio. Family owned Creative Snacks had $55 million in revenues in 2018, according to Triad Business Journal. Forbes magazine pegged Kind at an estimated $800 million in sales in early 2019. Mars took a minority stake in Kind in 2017.

Velocity Snack Brands,—a new snacking platform of VMG Partners that will be led by Amit Pandhi, former president and CEO of Arctic Zero—made its debut by acquiring Popchips from majority owner Verlinvest. Velocity will own the Popchips brand in North America and international markets outside of the United Kingdom and Europe. Popchips was co-founded in 2007 by food entrepreneur Keith Belling, who recently launched RightRice.

Vestar Capital Partners is making a minority investment in Simple Mills, a clean-label baking mix, cracker and cookie brand. Vestar will help Simple Mills with new product development, brand-building and distribution expansion. Founded in 2012, Simple Mills’ products are free of gluten, grain, dairy, soy, GMOs, excessive sugar and artificial ingredients.

Hometown Food Company acquired the veteran organic food and organic confectionery brands Arrowhead Mills and SunSpire from The Hain Celestial Group Inc. for $15 million. Hometown is a wholly owned portfolio company of Brynwood Partners, a specialist in providing exits for "corporate-orphan brands."

Natural, organic & functional beverage deals

Deals in sparkling drinks, sugar-free beverages, kombucha and tea led the healthy beverage category last month.

New Age Beverages Corporation, which expanded its partnership with Nestlé, is re-launching an innovative natural and organic Nestea ready-to-drink assortment, including powdered tea products that generate $30 million in sales in the United States. The powdered tea segment in the U.S. is valued at $259 million for the latest 52-week period, according to Nielsen data cited by New Age. New Age intends to capture a significant share of the market by leveraging Nestea’s consumer loyalty and its own direct-store-distribution system, distributor network and footprint with major U.S. retailers.

Choice Organic Teas was acquired by Yogi Tea, according to World Tea News. The first exclusively organic tea line in the U.S., Choice celebrated its 30th anniversary this year. Yogi was founded in 1984 by Yogi Bhajan and is a top-selling herbal tea brand in the natural food channel. Choice joins Yogi Products as a subsidiary of East West Tea Company.

Natural sparkling water brand Waterloo closed a $5 million revolving line of credit with Dwight Funding. Waterloo anticipates closing the year 200% up over last year and says it is differentiating its brand by delivering a richer, more authentic taste than other sparkling waters.

Ugly Drinks, an unsweetened, fruit-infused sparkling water, completed a multi-million-dollar financing round with investors including Pentland Ventures and Steadman Partners. Ugly Drinks was launched in the United Kingdom in 2016 by two former Vita Coco managers. The company name stands for "the Ugly Truth" that too many products promise health, but don’t deliver.

Also in the U.K., Clearly Drinks invested in the sugar-free flavored water brand Revolution Waves for an undisclosed sum, according to North East Times Magazine. Revolution Waves was co-founded by a former international rugby player in 2017. The investment comes as Clearly Drinks expands its portfolio following private equity firm NorthEdge Capital’s investment in 2017.

Clean Cause announced $7 million in a Series A round to grow its sparkling yerba mate drinks brand, according to Bevnet. Individual investors from the Austin, Texas, area participated. According to founder and CEO Wes Hurt, the brand’s social mission was a key driver in securing financing. The company donates 50% of profits to sober-living scholarships.

Plant-based deals

Forager Project, a producer of organic plant-based food and beverages that have cashews as a core ingredient, received a minority investment from Danone Manifesto Ventures. Founded in 2013, Forager is a family-owned company offering vegan versions of dairy products, in addition to protein and probiotic shakes. Danone says the acquisition is aligned with its ambition to develop a global "best-in-class platform" to serve consumers who eat plant-based diets.

Planted Foods AG announced a seed financing of 7 million Swiss francs (US$7.1 million on Oct. 23) with Blue Horizon, Good Seed Ventures and others participating. A spin-off from the Swiss ETH Zurich Foundation, Planted Foods uses technology to turn pea protein, pea fiber, sunflower oil and water into meat facsimiles. It will use capital to scale up and expand beyond its home market.

Upfield Europe BV in The Netherlands is acquiring Arivia SA of Greece, a maker of plant-based cheeses and owner of the Violife brand. Violife is the No. 1 plant-based cheese brand in the United Kingdom and Arivia has a fast-growing presence in the United States, according to Upfield. Arivia’s products are made primarily with coconut oil and affordably priced. It joins other Upfield brands like Proactive, Flora, Country Crock and Blue Band.

Ingredient & raw material deals

Innophos Holdings Inc. is being acquired by One Rock Capital Partners in a transaction valued at approximately $932 million, including the assumption of debt. One of the investor’s goals is to maximize Innophos’ growth potential by expanding its presence in high-growth food, health and nutrition markets. Innophos announced preliminary Q3 2019 revenues of approximately $190 million and net income of $6 million-$7 million.

Cargill is investing $35 million in Europe to add soluble fibers to its portfolio. Cargill says the new ingredients will enable sugar reduction up to 30%, as well as calorie reduction and fiber enrichment in a range of foods. Innova market research indicates an average increase in European product launches with fiber claims of 23% and an increase in products with sugar-reduced claims of 16% over the past five years, Cargill reported.

Perfume and flavors giant Firmenich is acquiring a 17% stake in Robertet from First Eagle Investment Management, boosting its natural products portfolio. Founded in 1850, France headquartered Robertet specializes in natural raw flavor and fragrance materials. The Robertet Group had revenues of €525 million (US$601.7 million on Jan. 2) in 2018.

SweeGen Inc., a stevia-based sweetener company, received an additional strategic investment led by Sumitomo Chemical of Japan and Outlook Investment Group to support an additional manufacturing site in Europe. The global sweetener market is valued at approximately $100 billion, according to Sweegen, which said non-GMO stevia sweeteners have led the way as a sugar replacement.

Seafood producer Thai Union Group PCL is investing in Flying Spark, enabling the Israeli startup to move ahead with its insect growing and processing business in Thailand. From larvae of the Mediterranean fruit fly, Flying Spark produces 70% protein powder that offers a mild taste but is extremely rich in iron, calcium, fibers and more. According to the company, its low-cost cultivation and processing and nearly zero waste give it an edge over other protein sources.

Pipeline Foods LLC, a supply chain company focused on organic, non-GMO and regenerative food and feed, is acquiring the ancient grains and specialty products business of Organic Ventures. The acquisition adds ancient grains to Pipeline’s offerings and boosts its presence in organic corn products.

Alternative medicine deals

Modern Acupuncture, an acupuncture franchise with the motto "Let’s Tingle" announced a minority investment from Strand Equity. Modern Acupuncture operates 49 locations in 16 states and plans 11 additional locations by the end of 2019. The company offers affordable memberships encouraging patients to include acupuncture in their health and beauty routines. The company says it plans to double in size in 2020.

Holistic medicine provider Parsley Health announced a Series B round of $26 million led by White Star Capital. Parsley Health’s focus is to reverse chronic illness and optimize patients’ health by prioritizing nutrition, wellness and prevention while making care smarter and more data-driven.

Foodtech deals

Ingka Group, a strategic partner of IKEA, led a Series B round in food waste company Winnow, which uses AI technology to help commercial kitchens manage food waste. Winnow’s intelligent camera identifies waste food, calculates its value and offers insights into inventory management. According to Winnow, food waste costs the hospitality industry over $100 billion annually.

TruTag Technologies, a manufacturer of microscopic, edible barcodes received investment from Pangaea Ventures Ltd. and Happiness Capital Limited. TruTags can be applied directly to products or packaging to facilitate quality control, recalls and product identity, as well as to combat counterfeiting in food and pharmaceuticals. The microtags are made of high quality nano-porous silica.

Fresh-food restaurant chain Sweetgreen closed a $150 million financing round, co-led by Lone Pine Capital and D1 Capital Partners and valuing the company at $1.6 billion. Some of the capital will invested in emerging technologies and new models, including Outpost for free office delivery. Sweetgreen has 97 restaurants and more than 4,000 employees.

Agtech deals

Vertical Future announced a £4 million (US$5.1 million on Oct. 17) seed round led by impact investor Earthworm. Funds will be used to increase crop production capacity as Vertical Future aims to increase its B2B restaurant business and expand its DTC business under the MiniCrops brand of microgreens and veggies.

Crop protection company Provivi completed an $85 million Series C financing co-led by Pontifax Global Food and Agriculture Fund and a global investment fund. Provivi is developing a family of crop protection products based on pheromones as a foundation for integrated pest management.

Public offerings

BellRing Brands Inc., a holding company for Post Holdings’ Active Nutrition business, received net proceeds of approximately $516.4 million from an October IPO. BellRing had net sales of $827.5 million in fiscal 2018, with sales led by Premier Protein RTD shakes generating 77% of sales; Dymatize protein powders, 13%; and PowerBar, 7%. Upon completion of the offering, Post owns approximately 71% of BellRing.

Reed’s Inc., a maker of natural carbonated beverages best known for craft ginger beer, announced a public offering of common stock estimated to generate net proceeds of $6.5 million-7.5 million. While the company is operating at a net loss, net sales grew 1% in the second quarter ending June 30 to $9.5 million—the company’s first volume growth in almost two years. A wellness ginger beer with hemp extract is in development.

The Simply Good Foods Company, a marketer of nutritional foods and snacks, announced an offering of common stock. Net proceeds will be used to pay for a portion of its $1 billion acquisition of the protein products brand Quest Nutrition LLC announced in August. Simply Good Foods makes nutrition bars, RTD shakes, snacks and confectionery under the Atkins and SimplyProtein brands.

Disclaimer: NCN does not warrant the accuracy, reliability, or timeliness of any NCN news item. Before relying on any NCN News item the information should be independently verified.

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