100+ Investors, $103 M in Ancient Nutrition Capital Round
It helps to have friends — and soon bone broth products company Ancient Nutrition will have many friends to lean on. At Expo West, the brand of “real food nutritional products” announced the close of a $103 million minority investment. Led by VMG Partners, the deal also included investment from Hillhouse Capital, ICONIQ Capital and a distinctive network of friends — a 100-plus member co-investor network hereon known as the “Ancient Pioneers.”
Ancient Nutrition formally came to market in January, 2017 with the merger of supplement brands owned by natural products entrepreneur Jordan Rubin, and Axe Wellness, a line of collagen powders started by online nutrition expert Dr. Josh Axe. The company primarily sells powdered bone broth-based supplements and meal replacements, as well as a line of essential oils under the Ancient Apothecary brand name.
Nashville, Tennessee-based Ancient Nutrition has seen rapid growth since its inception. The brand is the number two ranking protein supplement and meal replacement brand in the natural health channel and the largest dollar growth contributor to the category with $10 million in sales, according to company reported SPINS data.
Wayne Wu, a managing director at VMG, reached out through VMG’s network to develop the deal’s signature list of CPG and wellness luminaries, dubbing it the “Ancient Pioneers.” Wu said that while the community is not required to provide any assistance to Ancient Nutrition, he hopes they will support both the company and each other.
“We wanted to take our community building to the next level… and we thought what could be even better then let’s all invest in something together,” Wu said.
Rubin told NOSH that given its growth, the company had planned to look for financing later in 2018, but when the opportunity to work with this combination of investors arose, he and Axe decided to act. Rubin had previously started Garden of Life, a supplement line that he sold in 2009.
“For [me], being the CEO of Garden of Life, we had a second hand experience with a VMG partnered company in Vega. We had a nice competitive run and we got a chance to see what a VMG partnered company could do,” Rubin said. “I had a chance to get an understanding as to the great lengths that VMG would go to provide more then capital and the deep expertise and really strong relationships.”
Part of the investment interest in Ancient Nutrition stems not only from the product line and its sales numbers, but also where those sales are taking place. The brand is currently in 6,000 retail locations and growing rapidly in brick and mortar. But a significant part of its sales are thanks to a robust online presence an on its own ecommerce platform, as well as through Amazon. Axe’s website receives close to 18 million visitors per month, and he counts 275,000 followers on his own personal Instagram account.
Bonafide Beefs Up Offerings & Brand
Last month bone broth company Bonafide Provisions unveiled a new brand identity, including a rebrand of its bone broth and “drinkable veggies” lines, and a new line of frozen soups. The goal is to create a unified look that better captures the company’s voice and that can better support line extensions.
“As we we branched out of bone broth as a single product and we started incorporating it into other [products] we really found that the bone broth and drinkable veggies looked like distant cousins, they didn’t look like brother and sister,” co-founder and CMO Alexandra Rains told NOSH. “Also our brand and our brand voice that we had weren’t quite aligning with what we were seeing on pack.”
Design firm Bex Brands is responsible for the new aesthetic. Rains said the company wanted to embrace a simple, “modern farmhouse” look in order to convey that the company takes classic dishes, such as broth, and modernizes them for today’s consumer.
Sales have been good, according to Rains and her co-founder, Sharon Brown. in 2017, according to Brown, Bonafide chicken broth was the second highest selling item within the natural frozen entree category, beating out some of the top frozen pizzas and chicken nuggets. The brand is now sold in over 6,500 retailers.
However, the pair acknowledge there were areas where the packaging for their drinkable veggies could have worked harder for the brand. Formerly named after attributes such as “glow” or “thrive,” the label now emphasizes the use of bone broth as a base and each drink’s key ingredient, be it carrots or beets. Another struggle, Rains said, was conveying to consumers that this wasn’t a juice — although it was merchandised alongside them — but rather a savory beverage.
“When you’re expecting a drink of orange juice, but you get milk, it’s confusing to the palate,” Rains said was the feedback. “Both are delicious, but if you’re not prepared for what you are going to get, it can be confusing.”
Beyond ‘Bubba’: How Better-For-You Jerky is Changing Convenience
Chew on this: at more than $1 billion in sales last year, the jerky business is just entering the growth phase of its life cycle. Jerky — in all its snacking forms — is forecast to grow an annualized 4.2 percent through 2022. Much of that will be driven by the natural jerky set, according to research firm IBIS World.
To capitalize on this potential, both emerging and major jerky companies have launched products emphasizing their artisanal, natural, gourmet or premium origins. While those offerings have mostly been seeded in the grocery channels, for jerky, the convenience store has always been — and will most likely always be — king, and anyone who wants to rule the category will have to win the c-store as well.
While the $550 billion industry was largely built on the back of “Bubba,” its composite blue collar consumer seeking beer, cola, and snacks, it’s moving past that. While Bubba remains a core jerky consumer within convenience, retailers are also looking to cater to new consumers that are starting to frequent c-stores: millennials, parents and women.
Meat snacks are among the most popular snacks in the savory snacks category, witnessing a compound annual growth rate of nine percent over the past five years. Still, while jerky and its high-protein benefits suddenly became on-trend, it hasn’t always been an innovative category. It wasn’t until 2010, when Krave first entered the scene with its natural credentials and gourmet flavors that jerky started to resonate. Because of its apparent potential, The Hershey Company, developing a snack portfolio of its own, acquired Krave for $220 million in 2015.
The company’s success is reflective of an overall change in consumer preferences. Premium is the name of the game, with more and more consumers seeking callouts from organic and grass-fed to antibiotic-free labels. In order to stay relevant to category manager, new brands are creating premium options while legacy brands are acquiring or innovating.
“People’s palates today are more sophisticated,” Lance Pitts, 7-Eleven category manager for snacks, told NOSH. “While popular, original, teriyaki and peppered flavors are still available, today’s flavor variety is more complex with recipes like brown sugar bourbon or even sriracha.”
Many jerky brands have avoided convenience as a launch platform. But now they are warming up to the channel where the category was born. Within the last year, emerging brands like Country Archer, Chef’s Cut, Perky Jerky, Fusion Jerky, Lawless Jerky and The New Primal all announced growth within the convenience sector. Even tea titan Arizona Beverages is getting in on the jerky action with the launch of their first natural food line, Crazy Cowboy jerky.
Pioneering convenience’s better-for-you jerky set hasn’t been without challenges for emerging brands, though. While these new entrants are making traction in the space, legacy brands still maintain their grasp on convenience with total category sales, in part because of their familiarity and in part because of their lower price point.
According to market research firm IRI, the meat snacks category saw over $1.549 billion in sales, with jerky raking in over $694 million of that total within the last year ending in October. The leader, Jack Link’s Jerky, had about $324 million in sales — quadruple that of its closest competitor, Old Trapper Smoked Products.
Brian Levin, founder of Colorado-based Perky Jerky, said the struggle for many emerging brands in the convenience channel is finding the right balance to reach both old and new jerky consumers. Many companies are still trying to figure out the intricacies of the convenience channel, even down to where the product is placed, he said.
“It’s interesting from the perspective of the better-for-you customer set because it is not the same consumer who is shopping the jerky set. This is something these guys are just figuring out,” Levin said. “They will put better-for-you offerings in jerky, but it doesn’t do as well if you put jerky in a better-for-you set.”
That hasn’t escaped the notice of the major CPG companies, who have taken advantage of the growing meat snack category by purchasing smaller brands. Hershey’s led the charge with its acquisition of Krave in 2015. Then Jack Link’s bought grass-fed beef supplier Grass Run Farms in order to launch its own natural line, Lorissa’s Kitchen. Last year, Chicago-based Conagra Brands — the parent company of Slim Jim — acquired Thanasi Foods, the maker of Duke’s meat snacks.
RX Goes Beyond the Bar with Nut Butters
While RX Bar shook up the standard for the bar industry with its limited-ingredient bars in 2013, the company– now part of Kellogg’s — is ready to establish itself as a platform brand. The first iteration of this expansion is a line of protein-enhanced nut butters, which launched at Natural Products Expo West 2018.
The nut butters will be sold in single-serve, 28-32 gram packets in vanilla almond, original peanut butter and honey cinnamon peanut butter. Each will retail for under $2 and have roughly nine grams of protein per serving.
While the product is new, the strategy is the same: fill the gap between performance products consumers need to achieve their health goals and natural products consumers want for their simple ingredients.
“In nut butters, there’s a similar dichotomy that existed with bars,” CEO, president and co-founder Peter Rahal told NOSH. “There are very natural, minimal ingredient bars on one end of the spectrum and then there’s super performance-based ones that you’d find at specialty stores like GNC.”
Rahal said that while a multi-serve jar will follow, the single serve packets were faster to bring to market, are better at driving trial and fit the needs of their on-the-go consumers who are looking for easy, healthy snacks.
The line will roll out on the company’s own site and ecommerce platform in the spring before heading to retail shelves. Rahal told NOSH that it will continue to use the company’s tried-and-true digital presence to launch new products and quickly get them into the hands of consumers.
While this will be RX Bar’s main innovation of 2018, it is the start of the company’s progress toward having a suite of clean ingredient, protein-forward products.
“This is the first trigger of RX as a platform,” Rahal said “[RX] means recipe, that’s the origin of the word, and it’s just a shorthand for health and high standards.”