The International Finance Corporation (IFC), a member of the World Bank Group which offers investment, advisory and asset management services to encourage private sector growth in developing countries, has announced a $40 million investment in Brazilian healthy food and beverage brand WOW! Nutrition.
As a result of the investment, WOW! Nutrition should be able to increase its pipeline of products into the U.S., according to company advisor Bill Sipper, the Managing Partner at Cascadia Managing Brands, which has worked with WOW! since 2014.
“We will bring in maybe 50 SKUs in January,” said Sipper, citing coffees, exotic juices and a popular diet chocolate milk drink as potential imports from WOW!’s portfolio. “Everything they do is just a little different, from the packaging to the taste profile.”
The investment comes in two parts: a $25 million equity investment, and a $15 million five-year loan. According to a press release, the funds will allow for the expansion of production lines, improvements in operational processes and a strengthening of WOW!’s capital structure.
Sao Paolo-based WOW! Nutrition, part of the Grupo Brasfanta portfolio, was founded in 1999 and is Brazil’s third largest beverage manufacturer. The company manufactures and distributes brands such as Sufresh, Soyos, Assugrin and Gold.
IFC has invested $260 million in the agribusiness and food sectors in Brazil during the last four years. The company’s global portfolio for agribusiness in the fiscal year 2016 totaled $4.9 billion, with funds directed towards increasing production liquidity, improving logistics and expanding access to credit for small farmers.
In a press release, Luiz Daniel de Campos, Principal Investment Officer for Agribusiness for IFC Brazil, said: “This investment is aligned with IFC’s strategy for the food and agribusiness sector, which has a great potential for creating jobs and expanding access to quality food products in Brazil. WOW! Nutrition’s expected growth will create additional jobs and increase the demand for agricultural products from its supply chain.”
Sipper said New Jersey-based Cascadia has developed and executed marketing, operations, logistics and finance for WOW! in the U.S. since 2014. He told BevNET that Cascadia has been studying the market for WOW! products in the U.S. for over two years, and that IFC’s investment in the company will have a significant impact on the domestic market, particularly in growing distribution.
WOW! Nutrition first entered the U.S. market in March with Feel Good, a zero-calorie iced tea available in six SKUs. The brand is distributed in 800 stores in the New York City area through a partnership with Drink King, with plans to expand to New England and Los Angeles.
Sipper noted that while Cascadia would be bringing in products that have proved highly successful in Brazil, they would be adapted to better fit U.S. consumer preferences. Feel Good, for example, uses a different formula and redesigned label for the U.S. version.
“In Brazil, nobody cares about artificial vs. natural flavors,” said Sipper. “In the U.S., that’s very important, so we switched the formula for this market. It’s amazing that a big company would use different ingredients just for a different market.”
One Equity Partners, the former proprietary investment arm of J.P. Morgan Chase & Co., purchased a minority position in WOW! in 2012. Sipper noted that although One Equity Partners has since split with J.P. Morgan Chase & Co., they retain their investment in WOW!