New Year, New Acquisitions

0:05Welcome to the CPG Week podcast by BevNet and Nosh, your source for the latest food and beverage industry news. I'm Monica Watrous, Managing Editor of NOSH, here with my co-hosts Brad Avery and Lucas Southard. If you're enjoying the show, please subscribe on your listening platform of choice. On the podcast today, we are discussing four acquisitions to kick off the year. But first, the Supreme Court is set to rule soon on a potential TikTok ban due to national security concerns. What does this mean for packaged food and beverage brands? Early reports suggested that the justices were skeptical to the arguments for not banning TikTok.

0:45So it makes it sound like a ban is likely going to go through unless some sort of last minute acquisition deal can happen in order to move TikTok to an American owner or at least the components that are required by the law for it to be unbanned. Right. So China based parent company ByteDance is looking to sell potentially. I saw a report that Elon Musk is their target buyer and savior. I heard Mr. Wonderful might also want it. Mr. Wonderful? Kevin O 'Leary? Yeah, yeah, exactly. I heard he was interested. But if this happens, if the platform is banned, that's going to disrupt a lot of marketing and sales efforts for food and beverage brands who rely on the platform to build awareness.

1:34I mean, there are 170 million American users, and it's really a wonderful way to expand reach. So brands are now having to scramble to figure out what to do and how to convert their TikTok followers to email subscribers or followers on other social platforms. It's been a little surprising to me that we're sort of just dealing with this now because we've known that this was coming for a while. and I have the feeling that a lot of people just thought, oh, well, it will work itself out. There will be some last minute thing that stops this. And right now it's looking like we're barreling towards it with five days to go.

2:13And you're not gonna get an acquisition deal finished in five days. I don't know if an acquisition deal is, you know, agreed to that will put a pause on this or not, but without the Supreme Court willing to step in and block this, it's gonna be banned. And that means you're not gonna be able to access it from American servers or IP addresses, I believe. So it's going to come down and we've sort of been, oh, well, nothing won't happen, right? From my understanding, it's simply that the app will disappear from major app stores initially. And people who already have it downloaded on their phones can still access it.

2:50But over time, with no updates available, the app is just going to get buggy and glitchy and maybe operate more slowly and eventually become obsolete. So there is a possibility, too, that the Trump administration may fight the ban. Apparently, Donald Trump is a big TikTok fan. So it remains to be seen what's going to happen here. And even as of this recording, Supreme Court is still evaluating the law that would enforce the ban. And so it's possible by the time we release this episode, things could look very different. Yeah, we could have an official ruling one way or the other, and then we'll have a clearer picture.

3:36So if you're listening to this and this is already old news, well, that's the magic of editing. And if the law banning TikTok in the U.S. is upheld by the Supreme Court, definitely check out our tips on bevnet and nosh for brands on how they can prepare and reconfigure their social media strategy i'm sure one person who's probably pretty happy about this is uh mr zuckerberg whose instagram will likely get a quite a big boost of uh of users if tiktok is no longer available so yeah all the app platforms have some sort of tiktok rift there's YouTube Shorts, there's, you know, Twitter has its own things, or X, sorry, or Facebook, obviously, as you alluded to.

4:24They all kind of have tried to put their own twist on it. So you can easily move the format. It's just you're going to lose access to a pretty broad and focused user base that you've probably been cultivating for a few years now. Now on to some good news for at least four brands who have kicked off the year 2025 with a deal. Let's start with Spindrift. Brad, can you tell us more about what is going on with that sparkling water brand? Yes. So Spindrift has been sold to a San Francisco-based private investment group, Griffin Investors. That's G-R-Y-P-H-O-N. So they've acquired a majority stake. And Dave Berwick, the former CEO of Boston Beer and of Peets, will be coming in as CEO, Spindrift founder, and until now the CEO, Bill Creelman, will be stepping into the role of chairman of the board.

5:17And this has been a long time coming. There's been rumors of Spindrift looking to exit for a long time now. And just last month, the Wall Street Journal reported on this deal and speculated that the deal could be as much as$650 million. We don't have an official final tally released, but that was the reported rumor. Well, Brad, you're there at the Newton headquarters of BevNet. And from what I understand, Spindrift is like a neighbor to... to, are they like right next door? They're right next door. And I've never been over there. They don't come over here. Go knock on their door and ask them how much money they got.

5:49I should. I just go knock on the door. Hey, guys. But it is exciting for the brand. And, you know, Spindrift has consistently been one of the fastest growing sparkling water brands. They've really revolutionized the category with their format, adding juice as a natural sweetener and flavor rather than using natural flavors. And so we've started seeing other brands mirror this. You know, Sonzo is a sort of spindrift, but with Asian flavors. They've been an influence in the category. They've been continuing to grow. Actually, just the other day, my mom just discovered them for the first time. And I was like, I've told you about this before.

6:25Don't act like I haven't mentioned this brand. But we know that this has been something they've been gearing towards. You know, they took on money from VMG and other institutional investors a long time ago now. And that an exit was always something that they were looking for. So it's exciting to see it finally come to fruition. Yeah, well, congratulations to our friends next door. And another deal that we reported recently was Flower Foods acquisition of Simple Mills. Now, Flower Foods is the owner of Dave's Killer Bread, Canyon Bakehouse, Wonder Bread, Tasty Cake, and a couple other bread and sweet baked goods brands.

7:01and it is now diversifying its exposure to the better for you snacking category with this acquisition of Simple Mills for$795 million. The brand debuted in 2012, was launched by Caitlin Smith and is known for its clean label recipes. It started in the baking mix category but soon expanded into ready-to-eat offerings like almond flour crackers, cookies, and some children's snacks and it seems like it's a really great fit for flowers. I see that there are a lot of potential areas where flowers can really use its resources and capabilities to supercharge Simple Mills distribution and accelerate its innovation pipeline.

7:51Now for flowers, there's not a lot of synergies to capture at this point because flowers is going to operate Simple Mills as an independent subsidiary. It's going to retain its leadership team and its headquarters in Chicago and Mill Valley, California, and just support the brand as it looks to increase the number of items carried in each of the stores it's already in, which is 38 ,000 outlets currently, while growing its footprint into away-from-home channels where it doesn't have a presence like food service and convenience. Now, it's important to note that Flowers Foods has operated in bread, and bread is its bread and butter, shall we say, with Dave's Killer Bread and Wonder, Nature's Own.

8:37So there is some synergy with baked goods, but not as much in what Simple Mills really does. And bread is kind of a slow-moving category. We have seen some of those brands that Flowers Foods already operates kind of move more into snacking. Dave's Killer Bread has launched a couple innovations into that with their like bars, their oat bars. And so there is some, this does seem to unlock some key areas that Flowers Foods has been looking to grow into more. And Simple Mills already has a lot of footprint in the store. flowers foods executives have identified some key areas of growth for simple meals which last year generated an estimated 240 million in net sales that was up 14 over the prior year but the brand only has less than 10 in crackers and cookies and less than one-third of total distribution points compared to leading cracker brands so there's a lot of upside here and it looks like a really good buy for Flowers Foods.

9:43Nosh insiders can read more about that deal in a story called Flowers Foods. CEO talks simple mills, minor synergies, but significant long-term upside. Now moving over to the condiments category, private equity firm Advent International has gobbled up condiment and spice maker sour brands. That's S-A-U-E-R as in sauerkraut, even though I I don't believe they make sauerkraut. They do make some spices, and they also make the Colonel Seasons popcorn seasoning, Mateo's Gourmet Salsa, and most importantly, Duke's Mayo. So they are kind of all over the place in terms of where they are in the center of the store, but some brands that are pretty recognizable and growing well.

10:33So Advent International acquired the Sour Brands portfolio from Falfurius Capital Partners. And part of the deal is there's four manufacturing facilities, one in Richmond, Virginia, one in Maudlin, South Carolina, New Century, Kansas, and beautiful San Luis Obispo, California. So if you remember, Advent International was the private equity firm that controlled the Sovos brands, and they sold that in 2023 to the company formerly known as the Campbell's Soup Company. So this is re-upping Advent International's portfolio with some brands that have been growing pretty well. Mateo's and Duke's Mayo have both been growing quite steadily with this kind of legacy portfolio brands that's about 135 years old.

11:28So Sour Brands originally was the C.F. Sour Company, and it was founded in 1887 in Richmond, Virginia. And it's had some owners over the years that have added to its portfolio. But it's a pretty interesting group of brands in there that Advent is hoping to grow. Well, speaking of portfolio plays, one other acquisition from this past week was the merger of Yerba, a sparkling Yerba Mate drink, and Safety Shot Inc., which makes a hangover shot, which recently rebranded as SureShot. So Safety Shot has acquired Yerba, and the companies are going to be merging together with CEO and co-founder of Yerba, Todd Gibson, and his wife, Carrie Gibson, staying on with the company.

12:16I was able to talk to Todd, and he had a pretty candid explanation of what went down with this deal. So even though these are two brands playing in different categories, they see an opportunity to build out a portfolio. And Todd said that he's going to be helping lead the charge and finding new acquisitions for this company. So they're certainly looking for early and midsize brands that they can bring into the fold. Now, Yerba went public on a Canadian exchange a couple of years ago now. and it's been a little bit of a challenge for the business. As he said, they had trouble raising money on the Canadian Stock Exchange and as a result, they've had to pull back from the market a little bit.

12:56Revenue was down last year, but they're hoping now that SafetyShot, which is on the NASDAQ, will allow them access to more capital that they can use to then regrow and supercharge the business. So it's exciting to see where this goes and it's another acquirer for a smaller early-stage brand that's out there. They are on the prowl. BevNet Insiders can read more about that deal in a story called Your Bay Acquired by Safety Shot, Inc. and Move to Build Portfolio Business. And here are some other notable bits of news from the week. Preem relaunches with new gut hydration platform. Bar bakers and True Food unite as tandem foods.

13:36And Magic Mind's Mental Performance Elixir plots retail expansion. For those stories and more, become an insider at BevNet and Nosh.

14:11Thank you.