Novamex has acquired Tio Gazpacho for an undisclosed sum, the company announced today, more than two-and-a-half years after the Hispanic-focused beverage marketer first invested in the drinkable soup brand.
Primarily an importer of Mexican brands such as Jarritos and Mineragua, Novamex said in the announcement that it is focusing on becoming a growth platform for natural and organic beverages, such as Tio Gazpacho. Speaking with BevNET, Tio Gazpacho board member Linda Barron — also the CEO of Novamex stablemate Steaz — said the company first invested in Tio last year. According to Barron, Novamex has identified strong growth potential in better-for-you products and the drinkable soup space as market demand for meal replacements increases.
The acquisition comes roughly a month after Tio Gazpacho founder and CEO Austin Allan stepped aside from his day-to-day duties with the brand. Speaking with BevNET, Allan said he stepped away while the sale was in negotiations, and after Novamex’s initial plan for the brand changed he left the company. He is currently working on a new beverage project.
“I’m delighted,” Allan said. “Novamex first invested in the company two-and-a-half years ago and they’ve been a tremendous partner and a great investor. I’m just happy that the company is in good hands.”
Matt Merson, who joined the company in January, has assumed the top leadership position in the brand but has maintained his title as VP and general manager. Barron complimented Merson, noting during his time with Tio Gazpacho the company has grown.
“Going based on sales results, I would say to date 2018 has been their most successful year,” Barron said. “I credit Matt with having a lot to do with that. Matt’s very dialed in and he’s a road warrior. He’s out there doing what he needs to do and what has to happen when you have what is still a very young startup, entrepreneurial brand.”
The acquisition is also the first exit for 301 INC, the business development and venture capital arm of General Mills, which led Tio Gazpacho’s $1.25 million Series A funding round in 2016. The brand also previously raised money from CircleUp Growth Fund.
“Our goal at 301 INC is to help early stage food brands accelerate their growth,” 301 INC said in a statement sent to BevNET. “Tio was one of our early partners, and we really enjoyed working with Austin Allan and the entire Tio team. Acquisition – by General Mills or another company – is one of several potential exit opportunities for our portfolio companies, and we’re excited for Tio’s continued success with Novamex.”
Merson told BevNET he anticipates Novamex ownership will allow Tio Gazpacho to accelerate growth through existing distribution and retailer relationships. In 2018, he said the brand more than doubled its sales growth from 2017 and has achieved stronger alignment across its marketing and operations departments without reshaping its team. The brand has also added a number of key retailers in the past year, including Mariano’s, Jewel, Shaws, and Walmart, while staying focused in a limited number of key markets including Southern California, Chicago, New York and the Northeast. The company also has an ecommerce business.
Merson said “the dust is still settling” as the deal closes ahead of end-of-the-year holidays and the brand has not yet sat down with Novamex to plan out its 2019 strategy, but the focus for the year will likely be on continuing distribution growth within its core markets. The brand made a number of Q4 pitches to retailers he hopes will come to fruition when resets take place in January.
Tio Gazpacho will likely move its “back of the house” financial departments into Novamex, Merson added, but will maintain oversight of operations and production. Novamex will provide dedicated brand and sales support. According to Barron, the Board of Directors has been disassembled.
“I think that this has worked out tremendously for the brand,” Merson said. “To be part of the 301 incubator, to have Novamex assist with marketing and distribution really set this brand up for success. We have really great investors who not only brought capital but brought sweat equity, contacts, relationships, advice, mentoring. And now to roll that all into Novamex is, I think, the perfect time for the brand. Novamex will really get behind it in an ownership way and I’m really excited for the future.”