Goodles' Great Deal And Rahal's Big Week

0:05Welcome to the CPG Week podcast by BevNet and Nosh. I'm Brad Avery here with my co-host, Lukas Southard. If you enjoy the show, then please subscribe on your listening platform of choice. Lukas, good to see you again. Do you have a good long weekend? I did. Yeah. Nice to have a holiday weekend. We went to a local fair with the kids, which which is always quite an experience with rides. And there was a rodeo. And it was funny. At one point, I needed a little coffee pick-me-up. And the only coffee stand I could find, I asked for just a cold black coffee. And they were like, we don't sell that. Nobody asked for it.

0:43So we just do the flavored stuff. So I got a mocha iced coffee that was probably more sugar than coffee, but it gave me the caffeine kick I needed. So I couldn't complain too much. Nobody asks for it. Nobody asked for it, which was a very telling of the kind of demographic at a county fair. Well, it may have been a long weekend. It was still a long and busy week before Labor Day. One of the headline deals of last week, better for you mac and cheese maker Goodles has agreed to be acquired by Barilla. The company announced that on Wednesday. The financial terms of the deal were not disclosed, but Goodles will continue to operate as a standalone brand, quote, free to make its own decisions about product, recipe, quality, ingredients, supplies, marketing, and more.

1:31They'll remain headquartered in Santa Cruz, California, and co-founder and CEO Jen Zesuit will continue to lead the company. Yeah, this was a big deal that was kind of unexpected from at least my perspective. Usually we hear some murmurings about these kind of deals before they happened. Goodles was at least not on my bingo card. It seems like a good deal. It seems like a good fit with Barilla in terms of kind of the dried pasta and more kind of traditional Italian pasta that Barilla is known for. So well done to Goodles and shout out to my people in Santa Cruz as a former banana slug. I always love to see Santa Cruz brands do well.

2:12Barilla, of course, is one of the mainstays of the U.S. pasta aisle in the supermarket. It's a major company bringing on a brand that was founded only in 2020 and launched in 2021. So it's been a fast track for Goodles, but it's hard to deny that that brand has seeded its image and made itself a face of next gen quick and easy Mac for the average consumer. So when you consider Barilla's portfolio, they've been doing more premium pastas lately on the dry set. They've been playing with whole wheat and other formats to bring it into better for you. But the brand is still legacy. Goodles is next-gen branding.

2:50It's very Instagrammable. And it makes perfect sense to me why a company like Barilla would want this brand. What's been really fun to watch for Goodles as a brand is how they've innovated. Obviously, they started in the boxed set similar to Kraft mac and cheese, but they also launched more of a Velveeta-type liquid cheese format. And then most recently they've been doing the instant cups like Easy Mac. But also earlier this year, they expanded with a new format, a new noodle format called Twirly Mac. And they started kind of dipping their toe into some other flavor combinations, like a miso flavored Alfredo and a chili garlic hot shot jackpot is what they called it.

3:40I actually tried that this weekend in honor of the acquisition. they had sent me some samples and I was like, you know what? I want some mac and cheese today. And I tried the hotshot jackpot and I was really impressed. It was just the right amount of spiciness for me. It had a kind of Asian element to it, but it was still mac and cheese. It was still very much within what they do. I think their innovation stream has been really impressive. It'll be really fun to see how that might be jacked up when they have the backing of Barilla to fund those new innovations. hot shot jackpot sounds like something you get at the state fair it's true actually i i did have it the day before the state fair so it was uh in anticipation of my time a pre-game yeah yeah it was a the pre state fair indulgent flavors well speaking of mna lucas you were looking into a deal between chobani and kdp what's going on with the relationship between these two companies Well, Chobani and Keurig Dr.

4:39Pepper, or KDP, announced a deal last week that kind of continues their relationship. KDP sold back its full minority stake in Chobani for$800 million. Well, at the same time, the beverage strategic offloaded a Pennsylvania production facility to Chobani for$125 million. This is significant for KDP because it is part of a larger restructuring that we've been keeping track of ever since the company announced it was acquiring JDE Peets and splitting its coffee portfolio from its other beverages. Now, as you might imagine, acquiring a behemoth in coffee like JDE Peets did not come cheap. And to help fund this debt financed$18 billion deal, KDP needed to free up some cash.

5:27But this deal between KDP and Chobani is also a continuation of what these two companies have done together. It plays to one of KDP's strengths over the last decade, which has been its ability to partner with fast-growing companies and leverage its distribution network. This is parcel of this recent deal with Chobani because it updates and broadens the existing distribution agreement between the two companies. KDP will continue to distribute Chobani's La Cologne brand, RTD lattes, as well as other Chobani-owned beverage products and future RTD innovation. KDP also maintains its long-term licensing, manufacturing, and distribution agreement for the La Cologne-branded K-Cups in both the U.S.

6:14and Canada. KDP, before Chobani bought La Cologne, had a stake in La Cologne, if I'm not mistaken. Yes, that's true. When you look at it from the Chobani side, this is also really interesting because it kind of follows on some similar trends of what the company has been doing in its manufacturing structure. So the acquisition of this$1.5 million square foot facility in Allentown, Pennsylvania is just part of what the brand has been doing for the last year and a half, basically. Chobani broke ground on an expansion in an Idaho dairy facility that will increase its capacity by 50 % at that specific production center.

6:58It also announced a new$1.2 billion facility in upstate New York and a plan to expand its La Cologne coffee production plant in Michigan with a$567 million infrastructure project. So Chobani is not afraid to spend some money on growing its production footprint and really doubling down on being a producer as well as a big name in dairy and coffee. And I think when you bring up coffee, La Colombe is one of the best growing brands in the market right now is when it comes to RTD. The coffee category, liquid coffee specifically, has been struggling. Unfortunately, a lot of the brands that have been carrying this space have been in decline or slow moving.

7:50A lot of Cologne's a standout. And it's because Shabani has invested so much behind the distribution because the product, they recently reformulated it, rebranded it. So I can totally see how KDP continuing to have a play in it, especially when you consider this big coffee focus with the J.D. Pete's deal. It's really fascinating to watch. It's the most interesting part of Chobani's business, in my opinion. Of course, their core yogurt and dairy options are nothing to laugh off either. They are continuing to do quite well. Like you said, Brad, the La Cologne coffee business has done really well for Chobani.

8:31Cold coffee in retail has been something that we've been tracking a lot in terms of how many brands have gotten in there. But La Colombe has been one of the mainstays and continues to grow its footprint across channels. So they are kind of one of the biggest brands in terms of the RTD set for cold coffee. And I don't see that changing anytime soon. Well, we've got even more M &A news from last week to report on. In this case, Nestle divested its vitamins, minerals and supplements business, or its holistic health platform, as it refers to it, to Yellowwood Partners for$1 billion. Yellowwood Partners is a Boston-based private equity firm.

9:13And as part of this deal, it will be gaining control of electrolyte tablet brand, Noon. Now with Noon, you have a brand that Nestle acquired just in May 2021. It was not too long ago that this company was interested in growing out this hydration tablet business. And it's curious to see it now go so quickly. This is not the first time that Nestle has done something like this, though. They, of course, bought and flipped Chameleon after not quite seeing the growth that they wanted on that business. I don't know if you can call it their MO, but it's perhaps not unusual for Nestle to acquire a rising brand and then divest it only a few years later.

9:57With respect to Nestle's beverage strategy, this reminds me of another deal that the Swiss multinational did in July with another private equity firm. Yes, they entered a joint venture with private equity firm Platinum Equity to co-own Nestle's water and premium beverage portfolio, which they've renamed Perrinel. That portfolio includes San Pellegrino, Source Perrier, Aquapana, and Nestle Pure Life, as well as premium and functional hydration beverages. It's also not the only recent divesture from Nestle moving a brand entirely. They recently sold off Blue Bottle Coffee to Centurion Capital, which is the majority stakeholder in Luckin Coffee.

10:42After months of speculation that they were ready to move past the Blue Bottle brand. It's still taking shape, but I guess we're trying to figure out what Nestle's strategy is in packaged food and beverage moving forward. All these deals seem like there are some restructuring of their portfolio, kind of re-evaluating where they can really make an impact. But in terms of this holistic health platform that they offloaded to Yellowwood Partners, they did keep a couple of their vitamin supplement brands. So it wasn't their whole portfolio in that kind of wellness set. And at the same time, Nestle unveiled a new at-home condiment line called Miner's Kitchen, which is the first brand it's launched in the U.S.

11:30in over two years, which does seem like a strange zag when all the other deals they've been doing seem to be offloading things and trimming down their portfolio as opposed to adding on. Well, as always, you can keep up to date with our coverage of Nestle on BevNet and Nosh. Now, Lucas, you recently spoke to someone who has been innovating nonstop, in effect. You interviewed Peter Rahal. The empire that Peter Rahal built is apparently expanding. The founder of David Protein made news a couple times last week. Not only did his protein bar, David, quietly launch a two-variety line of ready-to-drink protein shakes, or milkshakes as he's calling them, but the parent company of David Barr, Medici Brands, raised$250 million in a Series B on a$2.25 billion valuation.

12:29So in total, Rahal has raised about$350 million for his various brands in less than two years. Rahal also launched his anticipated move into low-calorie, low-sugar chocolate with Hall Pass, which is also nested under the Medici brands. And Rahal, he was also linked to a different low-sugar chocolate brand called Horrible's Chormbles, but I believe he was only an investor in that. Is that right, Lucas? Yeah, he was listed when it was first announced as a co-founder. But I did ask Peter about this last week when we talked. It was a high-protein, low-calorie and low-sugar chocolate brand. Rahal confirmed that he's no longer with the brand, even though he started it with his fellow Rx Bar founder, Jared Smith.

13:17It seems like there was a little bit of a disagreement if Hornbulls-Chermbles would be incorporated within the Medici brands, and it is not. I don't believe that Hall Pass is necessarily a response to Ray Hall not being part of Hornbulls-Chermbles anymore, because they are slightly different in terms of one is a high-protein chocolate bar, and the other is just kind of a better-for-you candy brand. And there's been no shortage of innovation from Ray Hall's David Protein brand either. They've done ice cream or frozen desserts, rather. They've got the bars. They've been moving into all these different categories at a pretty rapid clip.

13:59And to be launching a second brand at the same time, does he, I don't mean to make it sound too big, but does he ever stop? Does he ever take a break? It doesn't appear so because they are planning to launch another brand by the end of the year, hopefully. It's going to be called Rowdy. Details still are a little murky and he wouldn't lift the curtain completely for me, but he did say that it will be a high protein chip brand and yeah, that they're hoping to get it out before the end of the year. So it will also be nestled under the Medici brand. So that will be three brands plus Epigee, their ingredient provider.

14:38Well, I hope our listeners will forgive us if between us recording this episode and it going out if Peter announces yet another brand. But in the meantime, it seems like he's got his hands full. Hey, listeners. This September 10th roundup brings jobs at cpgjobs.com from Barrel RM, Revolution Brewing LLC, and Good to Grow. Harkin Sweets, Russian River Brewing Company, and Trade Turbine keep it rolling. Check opportunities and apply today. Need great people? Put your opening before category pros following the industry. Reach operators, sales leaders, supply chain pros, and retail buyers spending more time with candidates and less on mismatches.

15:22At cpgjobs.com, post your opening. Use code TASTERADIO26 and save on the listing. Your inbox should reflect the parts of CPG that matter to you. Choose from BevNet's seven free newsletters covering beverage, food, beer, spirits, careers, education, and more. Sign up and select your favorites at cpgmedia.com slash newsletter. Lucas, anything you've tried recently other than what we've been talking about that jumps out to you? Any brands that have excited you? yeah actually speaking of all the rtd coffee conversations we've had i'm actually drinking today a new brand called thunder milk coffee milk was that the one from australia it is australian i didn't actually know this was a thing but i guess australians brew their coffee with milk or can brew their coffee with milk and so this is a what they call an aussie style lactose free coffee milk comes in three varieties.

16:26I'm drinking mocha. There's also vanilla, and then there's a double espresso, which is 150 milligrams of caffeine. The other two flavored kinds are 75 milligrams caffeine, nine grams of protein. I will say I like them a lot. They are sweeter, not quite as sweet as my Columbia County fair mocha coffee that I had, but they definitely have some sweetness, but they're also a little, they have more body because they're brewed with milk instead of water. So I really like them. I'm looking forward to talking to this brand in the future. How about yourself, Brad? What have you been tasting this week? I'm enjoying a nice non-alcoholic lime tonic from Cheeky, their recent tonic launch.

17:08I saw the brand back at Summer Fancy Food Show in June, sampled it there and recently saw it showed up in our fridge in the office here at Newton. And it's quite a good afternoon refresher. Good for recording the podcast with. So I'm getting caffeinated, but you're just having a nice summertime refresher. Relaxing with some quinine flavor. Ooh, dried lemongrass. Sounds pretty good. I got to try that next time I'm in the office. Save me a couple. And some other more notable bits of news from the week. Liquid Death founder Mike Cesario is partnering with Sazerac to launch Mr. Fancy, a new ready-to-drink can sparkling wine.

17:50The hemp beverage industry has received a one-month reprieve from Congress after a bill passed to push the federal ban deadline back to December. And Unilever and Groons are two of the latest companies to be hit with class-action lawsuits taking aim at their labeling of allulose. We spoke about that last week and I've continued to cover it on BevNet and Nosh. You can read about all of these stories and more on the websites. Thank you for joining us. And remember, if you enjoyed the show, please like and subscribe.