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Mission now matters to Wall Street investors

A private equity panel at CRN's annual conference points toward the increasing value of a company's mission—good news for naturals looking for investment.

I was fortunate enough to spend a few days last week in Laguna Beach at The Conference, the Council for Responsible Nutrition's annual symposium for leaders in the dietary supplement industry.

One session in particular, a panel of investment professionals—strike that, three private equity professionals and Jeff Nagel, the CEO of NBTY who now works for private equity professionals—struck me as indicative of where smart money might push this industry over the coming decade.

Panelists included:

  • David Thibodeau, now of 212 Equity/Wellvest and seasoned enough by this industry to effectively advocate for the nuanced fit between investor and investee
  • Michael Rabin of Sawaya Segalas who took us through the landmark deals of recent history and how they too point toward the inability for private equity to approach this industry with cookie-cutter analysis
  • and John Barrymore of 6 Pacific, fresh on the heels of a wildly successful exit for New Chapter to the cauldron of brands at the world's largest CPG, Procter & Gamble

Here's my key takeaway: Wall Street now recognizes the value of mission.

Whether that's Barrymore on the attractiveness of New Chapter's heritage mission toward organic, non-GMO, sustainable ingredients or the way that mission drives companies toward the premium end of the market, mission translates into value and the smart minds in finance see that.

It was rather delightful to hear just how mission-driven Nagel at NBTY seems to be, even under the watchful eye of Carlyle's bankers. "This industry is addressing one of the central challenges of the West—preventive care over allopathic cures. Private equity wants to get well," he said, referring to the capital influx in natural products. "CPGs want to get well."

The attention draw from this brighter spotlight is often viewed by incumbents in the industry as a negative, given media response to studies gone bad or bad actors tarnishing whole categories of product. Nagel flipped that conceit on its head.

Attention also leads directly to more talent within the industry. It leads to deeper science, best practice adoption from more established industries, more capital for expansion, more wellness for more people.

I tend to agree. The supplement industry needs and seems to be moving toward an attitude change, one that takes it from a reactionary, defensive position (countering bad press) toward one of optimism and proactivity (give us a chance, we'll make people healthier).

Next move for New Chapter

As a final tidbit from the panel, Barrymore's insights and predictions into a post-close New Chapter were noteworthy. "P&G has an unrelenting desire for dominance baked into its culture," he said. "These are tigers like I have never seen before. Every meeting talks about winning and dominating. I don't think P&G did this deal to have a nice little company in Brattleboro."

Barrymore sees channel expansion for New Chapter as a given, and when that happens, it will happen in a big way. Expect tens of millions in an explosion of advertising that takes the brand everywhere, from new domestic channels like food, drug & mass to international markets rife with regulatory challenges.

The key question, of course, becomes: How will consumers respond to the channel expansion and the CPG backing? It's a question we could ask of the entire industry, given its trajectory toward mainstream health and the smart minds taking an interest from financial centers across the globe.

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