NOSHscape: The Latest Food Brand News

Cibo Vita Acquired By PE Firm Citation Capital

Cibo Vita, the parent company of Nature’s Garden, in October sold a majority stake of its better-for-you snack business to Citation Capital, a private equity firm focused on founder and family-led companies.

The food company was founded in 2009 by Emre Imamoglu and Ahmet Celik who now serve as CEO and president, respectively, and have both retained “significant ownership interest” according to a press release. Citation is Cibo Vita’s first and only external shareholder.

“We found a differentiated partner in the Citation team, given their resolute focus on performance and deep understanding of the importance of values and culture in founder-led businesses,” Celik said in a press release.

Cibo Vita began as a private label healthy snack producer and launched its flagship Nature’s Garden brand in 2011. Today, the New Jersey-based company owns three manufacturing facilities, employs over 900 individuals and makes functional snack products for grocery, big box and warehouse/club retailers across the country.

Under its Nature’s Garden banner, the company sells a wide array of snacks including trail mix, nut packs and dried fruit products. It also sells snacks under its Chocolate Orchard (chocolate covered fruits and nuts) and Woodpecker (value snacking) brands.

“Our vision in founding Cibo Vita was to bring healthier snacking options to all families, inspired by our Mediterranean roots,” said Imamoglu, in a press release. “Throughout our history, we have experienced phenomenal growth, attributed to our innovation capabilities, commitment to quality, and a drive to meet the needs of consumers increasingly seeking healthier functional snacking. We sought out a strategic partner that could help ensure that we stay on the forefront of innovation and who is aligned with our personal core values.”

Dallas-based Citation Capital is a relatively new investment vehicle that was founded earlier this year by Tiffany Hagge, who brings two decades of investment banking experience, and Lydie Hudson, a former Credit Suisse executive. The firm is said to be focused on the consumer products, industrial and business and financial services sectors.

“[The founders] put everything they had into building Cibo Vita into a highly innovative, profitable business that provides value-added services and products to some of the most coveted customers in North America,” said Hagge in a press release. “Cibo Vita exemplifies Citation’s investment philosophy in backing fundamentally strong, defensible businesses with exceptional cultures and shared values, helping them to become ‘best in class’ in their segment through strategic partnership, operational excellence, and a relentless focus on execution.”

Smashmallow Wins $21M From The Case That Caused Business Shut Down

Snacking marshmallow brand Smashmallow might be no more, but at least the company has won a measure of justice: by that we mean a roughly $21 million measure. In a lawsuit against the equipment company that Smashmallow founder Jon Sebastiani said ultimately caused its downfall, the verdict has provided “a sense of redemption.”

In October, a Sonoma County Court jury found that Netherlands-based company Tanis Food Tec B.V. failed to deliver working production equipment to the marshmallow brand, which violated its contract and caused damages to Smashmallow. The Sonoma Brands-backed company was awarded $6.66 million for past losses, $14.3 million for expected future losses and, once the total sum is determined, will be reimbursed for attorney fees and expenses.

A representative for Smashmallow’s lawyers told NOSH that because the machinery was never able to “make marshmallows to Smashmallow’s specifications,” ultimately the company “had no choice but to wind down its operations.” Noah Hagey, one of Smashmallow’s lawyers, posted on LinkedIn that the “breaches and deceptions destroyed everything” for his client.

Smashmallow hired Tanis in 2018 to build a custom production system that could accommodate the product’s coatings and color varieties; one particular need: a system to safely coat all sides of its popular Cinnamon Churro SKU with a powdered mixture. Despite paying Tanis approximately $2.1 million, Smashmallow said the machinery never properly worked, and released unsafe amounts of microscopic air particles from the Churro SKU’s cinnamon and sugar coating process. Though the machinery was under warranty, requiring Tannis to “repair, replace, or redesign,” the system, Tanis refused to fix it and also demanded its final $300,000 payment.

In order to continue producing its marshmallows, Smashmallow was forced to spend over $100,000 on new equipment, but the machinery was slow and produced substandard marshmallows.

Due to all of these issues, and after years of trying to “fix the machine and mitigate its damages,” Smashmallow was unable to hit production requirements by its co-packer and was forced to pay a half a million dollars in penalties. The company fell behind in production, missed on-shelf commitments to retailers and was eventually forced to close operations.

Daily Harvest Chief Supply Chain Officer To Become CEO

Daily Harvest founder and CEO Rachel Drori has stepped away from overseeing day-to-day operations at the frozen food company, turning the reins over in October to chief supply chain officer Ricky Silver.

Silver was promoted immediately to the newly created role of president and will subsequently move into the role of CEO next February. Prior to joining Daily Harvest in 2018, Silver spent close to three years in innovation-centered roles at Vita Coco, and over five years in R&D at PepsiCo.

“Ricky has been by my side for over five years” Drori wrote in a LinkedIn post about the leadership transition. “In addition to being an indispensable partner to me, he is deeply committed to our mission and values.”

In her post Drori said that she will work with Silver throughout the transition, after which she will remain on as Daily Harvest’s chair of the board and continue to be involved with business and brand strategy.

Drori also revealed that she “went through a profound health scare” and the leadership change will offer her the space needed to “focus on her own health.” She also plans to continue working to effect change in the food system and serving as a strong advocate for the Daily Harvest brand.

Drori has long been vocal about the need to embrace more sustainable agriculture efforts, and in recent years has leveraged the company’s supply chain as a means of pushing for change. In 2022 Daily Harvest’s “Bite Me” campaign sought to raise awareness for underserved farmers via ads in major newspapers and via a light projection on USDA headquarters, and in tandem, the company announced multi-year partnerships with both the American Farmland Trust (AFT) and California Certified Organic Farmers (CCOF).

“This is an exciting time for the business to grow and reach new consumers and I can be most effective when representing the company and mission to the outside world,” Drori said. “As a result, I’ve decided it is time to change the role I play. Instead of running the daily operations of the business, I need to spend my time advocating for our beliefs and disrupting the system to create the food we all deserve.”

Silver’s appointment, however, comes at a challenging time for the frozen smoothie and meal company. On the sales front, the company made the leap from D2C into retail, launching into about 1,000 Kroger-owned stores this past summer. It also launched new product formats such as multi-serve grain packs.

In June 2022 the company was forced to issue a recall after the tara flour in its newly launched protein crumbles sickened hundreds, causing gastrointestinal illness and liver dysfunction.

Just as the negative headlines began to die down, Bloomberg released an expose on Daily Harvest, alleging that Drori and the company mishandled the recall. Daily Harvest has denied the allegations by Bloomberg. Behind the scenes, Daily Harvest has also undergone several rounds of layoffs, looking to trim overhead and reduce spending as consumer spending on meal kits began to normalize after a COVID-19 pandemic-induced spike.

The headwinds and setbacks came soon after the company announced its own series D round of funding, which Daily Harvest said valued the company at over $1 billion.

4th & Heart Gets $10M To Scale Ghee Stick Production

With an eye towards scaling its ghee stick innovation, 4th & Heart secured a $10 million growth equity investment in mid-November led by existing investor Cambridge Companies SPG. The raise also included backing from new and existing investors including Boulder Food Group and Harbinger Ventures as well as 15 professional athletes and several food industry operators and influencers.

“The business has seen an outsized amount of growth relative to our capacity in our [current] facility,” CEO Max Dichter told NOSH.

More capacity will come in the form of expanding the manufacturing capabilities in the company’s existing 30,000 sq. ft. production facility. which will scale production of the company’s ghee sticks. 4th & Heart moved to self-manufacturing last year, receiving $1 million from Bridge Finance Group to help the brand acquire new equipment.

As of November, the brand was operating out of a manufacturing facility and fulfillment warehouse but will use the new capital to pay for “proprietary equipment” within the existing additional space to keep up with growth and demand for the ghee sticks.

The purpose of the round is to “increase revenue output capacity, to bring that capacity to about $175 million” , said Filipp Chebotarev, Cambridge Companies managing partner and COO, giving the company flexibility in how it can grow, especially with its ghee stick innovation.

The sticks are currently in the chilled dairy case in about 1,200 retail doors, the sprays are in 2,300 stores. Whereas, 4th & Heart’s jarred ghees are on ambient shelves in 16,000 stores; yet, in locations where both sticks and jars are both sold, the sticks are already “meeting and exceeding the velocities” of the jars, Dichter said. Currently, the sticks are sold in retailers including Kroger, Whole Foods and specialty stores like Citarella and Erewhon.

The new round places Cambridge with about 30% ownership in the business. Cambridge has invested $175 million since it was founded in 2016 across 20 companies including Once Upon A Farm, Tosi Health, Nona Lim and The Coconut Cult.

Though the “first close” was in mid-November, Chebotarev said, there is an “opportunity to stretch a little beyond that” and there are ongoing talks with existing and new investors to add to the current round.

With this round, 4th & Heart has raised at least $26 million including equity and equipment debt financing.

Repole’s Impact Capital Acquires Majority of Junkless Foods

Impact Capital, the private equity group of CPG entrepreneur Mike Repole’s family office Driven Capital, has acquired a majority stake in snack bar brand JUNKLESS Foods, according to an October announcement.

“We have poured our heart and soul into getting JUNKLESS to where it is today, but we knew we needed something more to take us to the next level,” said Ernie Pang, co-founder and CEO of JUNKLESS, in a press release. “We could not have asked for better partners in Mike and the Impact Team, who share our passion for JUNKLESS and see the incredible potential of our brand, and know how to get us there.”

Terms of the deal and future operating plans were not disclosed. A press release notes that Impact will “partner” with Pang and co-founder Larry Beyer.

Founded in 2017, Michigan-based JUNKLESS sells five varieties of limited-ingredient, chewy granola bars and two flavors of crispy protein bars. The company previously sold a line of crispy cookies, which have since been discontinued.

According to JUNKLESS’ website, the snacks are available in retailers including Walmart, Kroger, Giant, Stop & Shop and Food Lion as well as on Amazon. As of 2022, the products were sold in more than 6,000 doors nationwide.

JUNKLESS raised $500,000 in 2016, according to filings with the Security and Exchange Commission (SEC). It is also listed as a portfolio company for Quake Capital.

Along with capital, Repole brings expansive expertise in the snack space to the bar brand. In 2009 he acquired a majority share of Pirate’s Booty alongside investment firm VMG; the puff brand was later sold to B&G Foods in 2013 for $195 million. Repole was previously an early investor and board member for snack bar brand KIND. Within beverages, he has co-founded Vitaminwater and BODYARMOR, both of which sold to The Coca-Cola Company for $4 billion and $8 billion, respectively.

In July, Impact Capital also acquired the majority of sneaker and apparel brand Nobull.

“We saw a huge opportunity for JUNKLESS to become a major brand. Everyone is looking for better-for-you versions of their favorite snacks – and that’s exactly what JUNKLESS provides,” Repole said.

Junkless has seen significant growth over the past year. According to IRI data (MULO + c-stores) for the 52-week period ending August 12, the company’s total dollar sales increased 82.6% to more than $18 million. Despite raising prices about 11% (a $4.49 uptick) JUNKLESS has managed to maintain unit velocity with volume growth rising 63.6% over the past year, per IRI.

The brand’s growth rate is outperforming the granola bar category at large, which saw sales increase 9.3% while volumes declined 4.5%, on average, and prices went up nearly $4. But JUNKLESS still has some catching up to do; currently category leaders (in terms of total dollar sales) are Nature Valley ($676 million), Quaker ($453 million) and Sunbelt ($137 million). The broader snack bar category also reported similar sales/volume dynamics.

Second Nature Picks Up Sahale From Smuckers

Snack platform Second Nature Brands (SNB) is now the owner of nut brand Sahale Snacks, acquiring the brand in September from The J.M. Smucker Company.

The all cash transaction was valued at roughly $34 million and included trademarks and other intellectual property, as well as Sahale’s leased manufacturing facility in Seattle. According to a press release, employees at the plant will transition to SNB as well.

For the fiscal year ending April 30, 2023, Sahale reported net sales of $48 million. Though the product line is sold internationally, Smucker’s said the brand’s revenue derives largely from U.S. sales. Sales are almost in line with when Smuckers bought the brand in 2014, at that time reporting the nut brand’s revenue at $50 million.

The deal is the CapVest Partners-owned company’s second purchase in under a year. Its efforts to ramp up expansion of its snack and treat platform date back to a 2021 rebrand, which saw Kar’s Brands transition its Kar’s Nuts, Sanders Chocolates and Second Nature Snacks lines under a new Second Nature moniker. The goal, executives told NOSH at the time, was to create a parent company to provide the portfolio a more unified framework, and ultimately, support further brand additions.

In December 2023, SNB then added Brownie Brittle, purchasing the treat line from Encore Consumer Partners.

“Sahale Snacks adds a fantastic super-premium product to our range, considerably broadens our snack mix & nut portfolio and unlocks significant new opportunities for us to help grow the category,” said Victor Mehren, CEO of SNB in a press release

For Smuckers, the deal is evidence of the company’s ongoing efforts to narrow its attention towards more profitable, growing sections of the business, in particular, its wildly successful Uncrustables brand.

The nut butter and spread company made its own acquisition, picking up Twinkie, Ho-Ho, Voortman Cookie and Ding-Dong maker Hostess for $5.6 billion.

“The divestiture of the Sahale Snacks brand will support continued growth in our Consumer Foods business,” said Mark Smucker, Smucker’s chair of the board, president and CEO. “As always, any decision that impacts our employees is only made after careful consideration and I want to thank all who have supported this brand, which has played an important role in our consumer foods portfolio.”

According to an IRI report from January 2023, the snack nuts market saw a 2% drop in dollar sales and 4.1% drop in volume year-over-year, with the data company noting branded products within the category are subject to cannibalization by private label brands.

That said, consumers are still looking for better-for-you snacks, the data company wrote, and snack nuts are a core driver of that category. When surveyed, 26% of consumers said snack nuts support mental wellbeing and 32% said they “help me manage my weight.”