5@5: FDA to close livestock antibiotic loophole | The end of wild-caught Alaskan salmon?

5@5: FDA to close livestock antibiotic loophole | The end of wild-caught Alaskan salmon?

FDA proposes to close loophole on antibiotics for food-producing animals

A new proposal from FDA would ban the over-the-counter sale of any remaining antibiotics intended for use on livestock. Smaller rural farmers, however, are taking issue with the fact that they may not have easy access to a licensed veterinarian as much as needed under the new rule—especially in comparison to larger operations that have the means to hire onsite vets. Read more at Modern Farmer

The strange, uncertain fate of one of the world’s most valuable salmon habitats

Alaska’s Bristol Bay is the source of most wild-grown salmon fillets on grocery store shelves today, but climate change and the threat of a new mine advocated for by the Trump administration could destroy the once-thriving habitat altogether. Alaskans are torn between the potential economic benefits of the mine versus it’s likely destructive effect on the state’s natural resources. Read more at The Nation

Cotton on: The staggering potential of switching to organic clothes

A new report shows that buying a certified organic t-shirt over a conventional one saves roughly 2,457 liters of water. The cotton plant requires an enormous amount of water to thrive, and water scarcity has been identified as one of the top 10 global risks to society over the next decade by the World Economic Forum. Read more at The Guardian

Dr. Bronner’s Magic Soap Company supports the 2020 legalize psilocybin initiative

CEO David Bronner recently pledged his company to match a contribution of up to $150,000 for the Oregon Psilocybin Service Initiative. This initiative aims to help pass the Oregon Psilocybin Services Act, which would legalize psilocybin in a therapeutic setting. However, under this bill there would be no cannabis-style branding and marketing of psilocybin-containing products. Read more at Forbes

Where’s the beef? The business behind the faux meat boom

Big companies are stampeding to get in on the plant-based meat hype after months of the space being dominated by startups like Beyond Meat and Impossible Foods. Cell-based meat startups are also garnering support from big food and meat companies, most notably Tyson Foods. The massive growth in the meat alternative space has been largely attributed to flexitarians looking to moderate their meat intake as opposed to vegans or vegetarians. Read more at U.S. Chamber of Commerce

Natural Products Expo

Why record-breaking singer-songwriter Katy Perry invested in this 100-year old natural brand

Patricia Bragg, the 90-year-old matriarch and 65-year CEO behind the well-known Bragg apple cider vinegar brand bought Katy Perry her very first guitar. Little did Patricia know that many years later, Katy would go on to have a successful music and media career, and that the singer-songwriter would pay it back by becoming a part investor in the Bragg Live Foods brand.

Katy’s family (her real last name is Hudson) and the Bragg family grew up going to the same church in Santa Barbara, California where Katy’s parents were pastors. After reading Patricia’s wellness book on fasting, Katy’s mom Mary became a devoted Bragg’s fan, giving Katy little glasses of apple cider vinegar to help maintain healthy vocal cords and digestion. The two families hit it off, and have been closely connected over the years.

So close was that connection that in late June 2019 Katy and her fiancé, Orlando Bloom, acquired the legendary ACV brand along with three other investors. As the first female artist to produce an album with five #1 songs in the U.S. (and second only to Michael Jackson's album Bad) and as a judge on American Idol, Katy knows how to spot a winner. Both Patricia and Katy believe her star power can help extend the 106-year-old wellness brand into new households. Some of Katy's favorite Bragg products are the Nutritional Yeast Seasoning and the Organic Apple Cider Vinegar All Natural Drink blends.

Watch our interview with Katy, taped at Natural Products Expo East 2019, to learn more about why she believes her involvement with the company can help Bragg products reach even more people, how she uses apple cider vinegar herself, and her take on some of the top natural product trends of the year.

Natural Products Expo

Unboxed: Snacking done right at Natural Products Expo East 2019

Touring the show floor at Natural Products Expo East 2019 is synonymous with snacking, or at least with the temptation to taste each and every product that is on display. And while there is always a wide range of types of products on which to feast—both literally and metaphorically—one of the fastest growing categories is undoubtedly the convenience and grab-and-go snacks that keep us moving in between meals and which, more and more, offer nutritional and functional benefits that go beyond merely satisfying hunger.

Let’s take a look at some of the types and brands of snacks that caught our eye recently at Expo East, some of which are snackable versions of and innovations on some of our favorite natural product pantry staples.

Nutrition Capital Network Deal Download: September 2019

Organic baby food deals

Organic ingredients and other nutritional attributes were the focus of investment and acquisitions in the baby food category in September.

Chinese dairy giant Mengniu Dairy made a AU$1.5 billion (US$1 billion) cash offer for the Australian infant formula brand Bellamy’s Organic. The Chinese government’s desire for self-sufficiency in the baby food market and consumer preference for premium, foreign-brand nutritional products provided a backdrop for the deal.

In the United States, sales of 70%-plus organic shelf stable baby food through natural, specialty and conventional channels totaled $624.2 million for the 52 weeks ending Aug. 11, up 8% over the prior year period, compared to flat growth for non-organic baby food, according to SPINS, a wellness-focused data technology company.

With organic ingredients a given, baby food start-ups are now differentiating their brands based on specific health goals—from better digestion to brain development, baby-led weaning and allergy prevention.

Cerebelly raised $6.7 million in funding for its organic baby food formulated to support brain development, according to Fortune. Investors include Imaginary Ventures. Cerebelly products are founded on a patent-pending technology that “maps key developmental windows” for each part of the brain and their “corresponding nutritional needs.”

NurturMe, a portfolio company of Advantage Capital, was acquired by Grays Peak Capital. NurturMe provides baby food and children’s snacks that emphasize healthy digestion. The certified organic products are free from common allergens and include dairy-free yogurts, and pouches with blends of fruit, vegetables and ancient grains. Silverwood Partners was the exclusive financial advisor to NurturMe.

In allergy prevention, Before Brands Inc. announced that Nestlé Health Science had become a significant minority investor and acquired exclusive licensing rights outside the United States. Before Brands is the inventor of SpoonfulOne nutritional products that reduce the risk of developing food allergies by training a child’s immune system. Nestlé Health Science has an option to purchase all remaining equity in Before Brands in the future.

The small but fast-growing subcategory of refrigerated baby food, which includes Once Upon a Farm and Gerber’s Freshful Start, represents only around $10 million in annual cross-channel sales, but with an annual growth rate of 363% is a hot spot worth watching, according to SPINS. In September, Elizabeth Street Ventures led a $2.5 million investment in Tiny Organics, a brand of refrigerated organic finger foods designed to encourage “self-feeding.” Prepared with fresh ingredients and created in collaboration with Tufts School of Nutrition, the menu includes paella, ratatouille and coconut curry, with items sold at retail, online and via text-to-buy.

Toddler foods were also in the deal mix, with family company Rollin Greens raising $500,000 and expanding its portfolio of organic vegan food items with frozen cauliflower snacks, according to Food Navigator. Rollin Greens is focused on the freezer aisle with its flagship product Millet Tots, a non-potato version of tater tots.

Animal-free dairy deals

Culture Fresh Foods landed an $11 million Series A led by CEI Ventures and FreshTracks Capita. Funding will be used to convert a former Danone dairy facility into one for making plant-based yogurts, puddings and spreadable cheeses from nuts, oats and seeds. Founder Tom Moffitt previously established Commonwealth Dairy, a joint venture with the German yogurt company Ehrmann AG, which made its own Greek yogurt brand Green Mountain Creamery.

New Culture, a startup making animal-free dairy cheese, closed $3.5 million in a seed round led by Evolv Ventures, a venture fund backed by Kraft Heinz. New Culture uses microbial fermentation to make dairy proteins from plant-based materials, saying its end product is “sustainable, healthy, ethical and indistinguishable” from traditional dairy cheese.

Lyrical Foods Inc., doing business as Kite Hill, raised $10 million out of a total offering of $15 million, according to an SEC Form D filing dated in September. Kite Hill makes almond-based milk, yogurts and cheeses. General Mills’ 301 Inc. venture arm led a $40-million investment in Kite Hill a year ago, with Cavu Venture Partners participating.

Plant-based food deals

Frozen food business Strong Roots raised $18.3 million in a Series A round led by Goods Partners LLC, according to The Irish Times. Strong Roots makes plant-based products such as cauliflower hash browns, mixed root vegetable fries, and vegetarian burgers. Strong Roots recently expanded into more than 3,000 U.S. stores including Target, Wegmans and Whole Foods Market; it expects sales of $50 million this year, the newspaper reported.

Subscription vegan and vegetarian meal service Simple Feast raised a $33 Series B from 14W and existing investors, including Balderton. The Danish company delivers family-style dinners made with organic ingredients; its goal in providing plant-based fare is to improve health and help reverse global warming. The company plans to expand into new markets, including the United States.

Healthy breakfast cereal deals

Two direct-to-consumer breakfast cereal brands made deals in September. Magic Spoon received $5.5 million in seed funding, led by Lightspeed Venture Partners. Magic Spoon makes better-for-you versions of sugary childhood favorites, replacing grains with tapioca flour and chicory root fiber. The high protein, low carb cereals are sweetened with a blend of allulose, stevia and monk fruit. The co-founders of Magic Spoon sold their previous company, Exo cricket protein bars, to Aspire Food Group in 2018.

Australian dairy processor and food manufacturer Bega Cheese is buying Hummingbird Superfoods, maker of subscription breakfast foods such as ready-made “blendies,” mueslis and porridge, in addition to superfoods like spirulina and raw cacao, according to The Australian Financial Review. This follows Bega’s acquisition of a majority stake in online protein-powder business 180 Nutrition in February.

Natural, organic & better-for-you food deals

The Hain Celestial Group Inc. sold Tilda, a premium basmati and specialty rice brand, to Ebro Foods SA of Spain for $342 million in cash. The price reflects an adjusted EBITDA multiple of 13.5x.

Campbell Soup Company is selling its European Chips Business to Valeo Foods of Ireland, a portfolio company of CapVest Partners LLP, for approximately $80 million. Brands to be sold include United Kingdom-based natural Kettle Foods chips and Yellow Chips in The Netherlands. Campbell bought Kettle as part of its acquisition of Snyder’s-Lance in 2018 and will retain the Kettle business in the United States.

Following its sale to Audax Private Equity in early August, specialty food producer Stonewall Kitchen is acquiring the Vermont Village brand of organic applesauce and apple cider vinegar. Stonewall Kitchen brands include its flagship Stonewall Kitchen, Tillen Farms, Napa Valley Naturals, Montebello and Legal Sea Foods.

ACH Food Companies Inc., a manufacturer of cooking oils and baking products, acquired Anthony's Goods, a digital-native brand in the natural and organic food space that sells almond and coconut flours, nuts, sweeteners, spices and other gluten-free ingredients.

Nounós Creamery, a maker of handcrafted strained yogurt packaged in recyclable glass jars, received a strategic investment led by AccelFoods, according to news reports. Joining the round was the founding investor of Siggi’s Dairy, and a Nounós Creamery board member who was formerly general manager for premium yogurt at Danone.

Wells Enterprises Inc., maker of Blue Bunny and three other brands, is acquiring the Halo Top brand from Eden Creamery LLC. Halo Top is a high protein, low sugar, low-calorie ice cream that comes in both dairy and vegan formats and is sweetened with organic stevia and erythritol. Family-owned Wells is one of the largest ice cream manufacturers in the United States, making both branded and private label products.

Functional food deals

IQ Bar raised $1 million in funding led by angel investors, according to Bakery and Snacks. The bars focus on brain nutrients such as omega 3, vitamin E, choline and Lion’s Mane mushroom extract. They contain less than 1 gram of sugar and are sweetened with allulose.

Purdue University-affiliated startup NutraMaize LLC was awarded a Phase II Small Business Technology Transfer Research grant of nearly $750,000 from the National Science Foundation for research into orange corn. Agronomy professor Torbert Rocheford, co-founder of NutraMaize, began working on naturally increasing the amount of carotenoids in corn more than two decades ago to address vitamin A deficiencies in Africa. It appears orange corn could also benefit Americans at risk of age-related vision loss because they don't get enough carotenoids.

Beverage deals

Celsius Holdings Inc., maker of the Celsius fitness drink, is acquiring nutritional products marketer Func Food Group Oyj of Finland for approximately $15.1 million in cash and the assumption of $9.5 million of debt. Func Food had approximately $37 million in revenue in 2018. Func Food markets branded beverages, protein bars, supplements and superfoods, and has been distributing Celsius in the Nordic countries since 2016. Celsius said it would finance the acquisition from a secondary share offering.

Family owned Perricone Juices is purchasing the rest of Lambeth Groves that Perricone does not currently own. Perricone Juices says that this newly combined entity enables the company to provide the highest quality premium juices at the most cost-effective prices. Perricone Juices makes conventional and organic juices, including fresh, pasteurized, and HPP, in addition to essential citrus oils.

Ingredient deals

Cargill invested an additional $75 million in Puris, more than doubling the supplier’s production of pea protein. Using proprietary, non-GMO pea seed, Puris has a growers’ network of more than 400 U.S. farmers. Cargill announced its joint venture with Puris in January 2018 with an initial investment of $25 million to respond to consumer demand for plant-based protein.

AAK of Sweden says it is now one of the world’s leading suppliers of specialty lecithin after acquiring a majority stake in Soya International in the United Kingdom. The newly named business will trade as AAK Soya International Ltd., supplying non-GMO, organic and specialty lecithin.

Maroon Group LLC acquired Cambrian Solutions, a Canadian distributor of specialty ingredients and chemicals, marking Maroon Group’s tenth acquisition and extending the company's North American footprint. Cambrian Solutions supplies customers operating in the natural and organic, food, household, health ingredients, and personal care markets, in addition to industrial markets.

Supplement deals

U.S. supplement industry pioneer NOW Foods acquired SuperNutrition, a family business offering high-potency multivitamin tablets and chewables. SuperNutrition was founded in 1977 by Patrick Mooney and his son, Michael Mooney, and remained a family business led by daughter Kathy Mooney. NOW Foods was founded in 1968 and sells supplements, natural foods, natural personal care, sports nutrition and pet health products.

Nestlé Health Science expanded into personalized nutrition by acquiring Persona, a company that offers customized nutritional assessments and dietary supplements online. Assessments take into account lifestyle, history and individual needs and are generated using Persona’s proprietary algorithms. Persona will operate under NHSc’s Atrium Professional Brands, which Nestlé acquired in 2017 for $2.3 billion.

Brightstar Capital Partners is acquiring contract manufacturer Capstone Nutrition in partnership with members of Capstone’s senior leadership team. Founded in 1989, Capstone owns a 300,000-square-foot facility, and produces supplements and anti-aging and general wellness products.

CBD deals

Illustrating cannabidiol’s (CBD’s) strategic advance into the nutrition and health & wellness industry, Bhang Inc., an umbrella company for cannabis brands, acquired beet beverages maker Red Ace Organics for nearly $2 million. Red Ace makes concentrated organic beetroot shots distributed in Whole Foods Markets, Sprouts Farmers Markets and on Amazon.

Pure Harvest Cannabis Group Inc. acquired Prolific Nutrition LLC, a hemp and CBD company. Prolific will operate under a wholly owned subsidiary called Pure Harvest Hemp Inc. Prolific Nutrition was formed in 2017 and sells CBD tinctures, gummies, capsules and lotion. It also makes hemp supplements and hemp oil treats for pets.

Sales of products with CBD in general retail are forecast to approach $13 billion by 2024, more than double dispensary CBD sales of $5.3 billion, according to BDS Analytics’ new report, “CBD: Cannabinoids Escape the Dispensary.” BDS Analytics estimates that food, drug, and mass channels will account for 63% of CBD spending in 2024, as legal issues around selling CBD as a food additive are resolved at the federal level.

Sustainable packaging deals

Karat Packaging, a maker of food packaging including the Karat Earth eco brand, filed in September for a $50 million IPO. Karat Earth is the company’s line of compostable cups, food containers and utensils made from renewable, plant-based materials. Karat’s customers include Applebee’s, Chili’s, In-N-Out Burger and Panda Express.

Tipa, an Israeli developer of compostable flexible packaging, raised $25 million in venture capital, according to a news brief by Chemical & Engineering News posted on Tipa’s website. The company says its multilayer packaging is made from a blend of polymers that are fully compostable in 180 days.

Microbiome deals

Vedanta Biosciences, a clinical-stage company developing therapies for immune-mediated diseases based on bacteria derived from the human microbiome, announced a $16.6 million Series C-2 financing. Total capital raised in its Series C and C-2 rounds now stands at $62.1 million. Investors include Quad Investment Management, Seventure Partners, the Bill & Melinda Gates Foundation and several others. Vedanta Biosciences is developing drug candidates based on natural bacterial strains to effect therapeutic changes in a person’s gut microbiota.

Digital health deals

Kaia Health, a digital therapeutics company, announced an $8 million funding round led by Optum Ventures. Kaia has developed a smartphone-based approach for managing chronic conditions, starting with musculoskeletal disorders such as chronic back pain. The company is backed by three peer-reviewed clinical studies, including a randomized controlled trial recently published in NPJ Digital Medicine.

Fitplan raised $4.5 million in capital led by Corazon Capital and Sam Yagan, co-founder of OKCupid, Sparknotes and former CEO of Match Group. The Fitplan personal training app connects members to top trainers for workout plans and advice. Launched in 2016, Fitplan offers routines for all levels of fitness from beginner to pro.

Other deals

Boll & Branch sustainably made bedding received a $100 million strategic investment from L Catterton. Launched in 2014, Boll & Branch has been profitable since 2016 as a family owned-and-operated business. Its products are Fair Trade Certified and contain no harmful chemicals, pesticides or GMOs.

Self Esteem Brands, parent company of Anytime Fitness, purchased The Bar Method low-impact fitness franchise with 123 studios across 30 states and Canada.  As the name implies, The Bar Method, which opened in San Francisco in 2001, offers a barre workout that primarily uses your own bodyweight for resistance.

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.

UNFI sales pass $21.39B in 2019

United Natural Foods Inc.

United Natural Foods Inc. reported Tuesday that its net sales totaled $6.4 billion for the fourth quarter of 2019 and $21.39 billion for the fiscal year.

Net income for the quarter was $18.9 million, compared with $32.8 for the fourth quarter of 2018. This year’s fourth quarter, which ended Aug. 3, was 14 weeks long, while in 2018, the quarter was 13 weeks.

For the year, UNFI saw a net loss of $285 million, a considerable fall from the $165.7 million it reported as income in fiscal 2018.

“Better-for-you products drive who we are and where we will grow,” said Steven Spinner, chairman and chief executive officer, during Tuesday afternoon’s earnings call. It’s been nearly a year since UNFI, a distributor of natural foods, closed on the purchase of Supervalu, a distributor of conventional groceries as well as the owner of several retail chains.

“I want to reinforce that we are very confident in how UNFI is positioned today and what we are building for the future,” Spinner said during the call. “When we look across the industry, we believer [that UNFI’s advantages] could not be easily replicated.” As he continued, he enumerated those advantages:

  • Sixty distribution centers, serving all 50 states and part of Canada.
  • Access to 250,000 SKUs to offer a variety of products to customers.
  • A suite of services to help UNFI customers run or expand their operations, including click & collect or ship-to-home.
  • Scale that allows them to be first to market, to offer private-label products, and more than 4,000 items exclusive to UNFI.

“Over time, we believe these competitive advantages will increasingly set UNFI apart and underpin the results that we intend to deliver.” Spinner continued.

“Natural products continues to grow in both natural and conventional formats, while conventional products are contributing to growth in natural outlets,” Spinner said before he read supportive testimonials from natural retailers.  

The company also understands concerns that e-commerce will affect traditional retail. Critics don’t realize how UNFI’s largest customers can adapt to the changing retail landscape, he added. UNFI’s sales to its biggest 25 customers increased 5.4% in the fourth quarter, based on a 13-week quarter, he said. Even without UNFI’s biggest customer—Whole Foods Market—sales to the top 24 customers rose 3.2% during the same comparable period.

The company’s press release detailed how the addition of Supervalu affected Q4 financial results, both positively and negatively:

  • Because Supervalu’s products carry a lower gross profit, gross margin at UNFI fell to 12.83% of net sales from 14.5% in Q4 2018.
  • Operating expenses as a percentage of net sales fell slightly to 12.13% in Q4, compared to 12.21% a year ago. Some of the reduction came from cost synergies.
  • Operating income for Q4 was $66.3 million including adjustments or $45.4 million before adjustments. In Q4 2018, adjusted operating income was $49.8 million and $59.4 million before adjustments.
  • As a percentage of net sales, operating income before adjustments was 0.7% of net sales in 2019 and 2.3% of net sales in 2018.

Fiscal year 2019 a new start

“This past fiscal year has been a transformational one for us as we began realizing some of the key benefits and competitive advantages from the Supervalu acquisition that will be the foundation of our long-term success,” Spinner said in a statement released before the late afternoon earnings call.

“As we begin the new fiscal year, I see tremendous focus and enthusiasm across the organization as we execute our strategy,” he continued. “This passion will be a tailwind as we drive to accelerate cross-selling efforts, realize new cost efficiencies, aggressively pay down debt and deliver results in the quarters to come.”

Niether Spinner nor interim Chief Financial Officer John Howard spent much time reviewing year-end earnings. Because the purchase of Supervalu was completed at the end of the first quarter 2019, the year’s sales, earnings and profits aren’t comparable to those from 2018.

For fiscal 2019, UNFI reported:

  • Net sales of $21.39 billion.
  • Gross profit of $2.79 billion.
  • Operating expenses of $2.63 billion.
  • An operating loss of $291 million.
  • A net loss of $284.9 million.

Howard said the company expects fiscal 2020 sales to fall in the range of $23.5 to $25 billion.

5@5: Amazon initiates brick-and-mortar grocery plan | Dog owners pay 3 times more for organic, vegan pet food

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Amazon’s grocery store plan moves ahead with Los Angeles leases

Amazon is apparently making good on its plan to operate a slew of brick-and-mortar grocery stores in cities nationwide after signing “more than a dozen leases” in the Los Angeles area. The locations it is considering are by and large in “strip centers and open-air shopping centers and would occupy about 20,000 to 40,000 square feet." Read more at The Wall Street Journal

Dog owners paying 300% more for organic, vegan dog food

A new study shows that dog owners are willing to pay 300% more for healthier, premium dog food. The current top brands draw in consumers by offering product lines that target specific diets for pets that oftentimes mimic those of their owners—at a significant price hike. Read more at WWJ News Radio

No need to cut back on red meat? Controversial new ‘guidelines’ lead to outrage

Nutritionists are “outraged and bewildered” following a new recommendation that an influential medical journal recently published—with little to no contribution from nutrition experts. The panel of scientists reported that there is no need for adults to cut back on processed meat consumption, in spite of decades of evidence that those who consume less red and processed meats have lower rates of heart disease and death from several cancers. Read more at NPR

The FDA tried to ban flavors years before the vaping outbreak. Top Obama officials rejected the plan

The Food and Drug Administration attempted to push kid-friendly vaping liquids off store shelves four years ago but were barred by senior Obama administration officials who argued that the economic burden on vape shops would outweigh the potential health benefits of the ban. Now, scientists expect over 1.5 million years of human life to be lost from the explosion in nicotine addiction that has grown among America’s youth. Read more at L.A. Times

Banana milk joins the dairy wars

Is banana milk the new oat milk? The dairy- and nut-free beverage is growing in popularity among consumers because it’s free of the top eight allergens and for the natural sweetness that the bananas impart on the finished product. Read more at Forbes

3 brands that showcase the plant-based supplements trend

Plant-based is real, it's a thing, it's on the supplements floor at Natural Products Expo East. Watch the sizzling observations and insights by supplements editor Todd Runestad and "Mama Bear" Shanny Bella XO. 

Natural Products Expo

Energy isn't just from caffeine—and isn't just in drinks

What started in coffee, then famously started the billion-dollar energy drink category, is diversifying further. Supplements editor Todd Runestad strolls through—no, hustles—nay, runs at full tilt!!—through the Natural Products Expo East show floor in search of the many ways to energize your tired, flustered, worn-out customers. He visits Vital Proteins, Youtheory and Quality of Life.