Protein Ice Cream Brands Scoop Up Cash

0:05Brad Avery:Welcome to the CPG Week podcast by BevNet and Nosh. I'm Brad Avery, here with my co-host, Lukas Southard. We're filling in while Monica is out of town. And if you're enjoying the show, please subscribe on your listening platform of choice. Here is the latest in food and beverage industry news. A new report from FMI, the Food Industry Association, and Nielsen IQ is projecting that online grocery shopping will hit$452 billion in sales by 2028, going from a 20 % share of the industry today to a roughly 25.5 % share. That stat reflects the rapid clip in which e-commerce is outpacing in-store brick-and-mortar retail sales.

0:44Brad Avery:Online sales are projected to grow at a two-year CAGR of 11.5%, while in-store is expected to inch ahead just 0.6 % in the same time period. Combined, omnichannel growth is looking at a total 3.1 % growth rate. These predictions, from a report titled Digital Engagement Transforms Grocery Shopping, come as the line between brick and mortar and online grocery shopping continues to blur. Over 94 % of all shoppers are making at least some purchases in both channels, and retailers are continuing to integrate more technology into their stores, including, quote, quality upscale shopping experiences, personalized customer service, and frequent shopper loyalty programs.

1:25Brad Avery:However, behavior between brick and mortar in online shopping does tend to differ. E-commerce purchases continue to skew to smaller mission-focused baskets of about one to three items, the report notes, calling the trend spear-fishing. In-store sales, however, are still focused on stocking up with large baskets remaining the norm. Quote, The food industry has opportunities to enhance online shopping experiences to increase stock-up missions in e-commerce, the report adds. One opportunity is optimizing digital experience for speed, such as by improving website taxonomy. Shoppers are likely to buy more, for example, if they can quickly filter for an attribute such as gluten-free or sort by price.

2:02Brad Avery:Another strategy is suggesting items to add to baskets at checkout, which can increase the dollar value of trips. I love the term spearfishing. It feels really dramatic when you're just buying some toilet paper. I just need peanut butter. I'm spearfishing. You know, it is true, though. And I think the 94 % or more have made a purchase online at this point is pretty indicative. I don't have the numbers pre-pandemic right in front of me, but we do know that was a major catalyst for pushing more consumers online. and the report also showed only just above 5 % are only shopping in-store. And so it's a sliver that is doing all their shopping online.

2:46Brad Avery:We're definitely not going to be seeing a big shift away from the physical retail space anytime soon. But this hybridization really does matter and it's important for retailers, of course, but also for brands as they're working on merchandising and promotion and marketing. And in particular, their SKU rationalization is going to be extra important. That's something else from this report is that with the integration of AI and all these other types of programs and technologies, retailers are going to be a lot more diligent about what SKUs they keep around because they're going to have a stronger data and they're going to have ways to push products that are successful to consumers.

3:27Brad Avery:And products that don't hit are going to be that much more vulnerable to getting delisted. And back to the idea of spearfishing, I know I'm not quite in the 5 % that only shops in stores, but I would say 95 % of our shopping, grocery shopping happens in a grocery store. But there are certain items that I can't find easily in the store and I go spearfishing for them, whether it's on Amazon or Sam's Club or some of the other online e-commerce retailers. It makes perfect sense, too, if you're on a specialty diet, if you have allergies or other diet restrictions, or if you just like a particular brand that you can't find.

4:04Or if you have small children who only like very particular brands of certain things. So, you know, that all fits together. Moving on. You know what they say, Brad. When the days get longer and the weather gets warmer, protein ice cream brands raise money.

4:20Brad Avery:Do they say that? I don't think that's actually a real thing. But what is actually true is that competition is heating up among the high-protein frozen dessert brands. Last week, Frozen One, a relatively new entrant into the category, raised a$2 million seed round led by Supernatural Ventures and the Angel Group, with additional participation from Tonic Ventures and Lucinda Capital. The Austin-based brand launched last year and is already expecting to hit 2 ,300 doors by the end of the summer. The brand is available in Wegmans, Bristol Farms, Central Market, Heinens, and Schnucks, but it's also currently rolling out nationally in Target stores.

5:01Frozen One is positioning around having the highest protein per pint in the category. It's available in three flavors, chocolate, apple pie, and PB chip. Frozen One has 40 grams of protein and 8 grams of fiber with 390 calories per pint. Now, looking next to it in the freezer aisle, fellow frozen protein dessert brand Smearcase also raised its first institutional investment round in the last week. The round was led by Listen Ventures, but the brand did not disclose the details of the deal. Smearcase, whose name you might recall sounds like 90s era one-hit wonder punk band, makes a frozen cottage cheese dessert that the brand calls Froko.

5:45With about three years under its belt, Smearcase has built intentionally in its New York City home market, but it has begun to expand into midwestern retailers like fresh time market and the fresh market after going nationwide at sprouts the brand is also preparing for an expansion into whole food stores in the northeast frozen one and smear case are part of a quickly growing set of high protein ice creams that have become the go-to option in better for you frozen indulgence while early adopters like protein pints have scaled quickly there is competition coming from all angles bar brands like Indulge and Tough Pops are innovating in format, while incumbent brands like Halo Top and Bluebell have shouldered into the set.

6:30Even protein bar maker David has hinted it will be launching into the freezer section, potentially later this year. I'm not sure the first thing I want after working out is a pint of ice cream, but you know, it seems like there is a big enough market for this, and I have had a lot of these different varieties, and for the most part, they all taste like ice cream. So if you're going to grab a frozen dessert like that, you might as well have some with a little extra protein in there.

6:57Brad Avery:Ice cream is already seen as an indulgence. And so a protein version of it does seem like a curiosity. All this investor interest is certainly exciting for the category. I do wonder, are consumers picking this up and changing the way they view ice cream as a potential health and functional product? As I reported on the trend last year, there is something to be said for what Halo Top did many years ago in making ice cream a more broadly mainstream product that people could enjoy and not feel bad about. And I think this is the 2.0 version of that. Nestle has divested its blue-bottle coffee brand, selling the specialty coffee roaster and retail chain to Centurium Capital.

7:49Brad Avery:Terms of the deal, which was announced last week, were not disclosed. The deal marks a significant achievement in Nestle's strategic portfolio overhaul, which has seen the Swiss conglomerate divest from its North American bottled water business and put its premium imported water portfolio on the auction block. Nestle reportedly paid up to$425 million for a controlling stake in Blue Bottle in 2017. The brand platform includes a range of ready-to-drink beverages, as well as around 140 retail locations worldwide. The transaction boosts Centurium's North American presence less than a year after the soft opening of Luckin Coffee's first two stores in the U.S., both located in New York City.

8:28Obviously, this has been a bit of a rumor floating around for a little bit. But this news also comes on the back of Keurig Dr. Pepper splitting its beverage portfolio from its coffee portfolio with the acquisition of JDE Peets. So it does seem like there is a lot happening in coffee and all of this comes amidst high coffee prices. So it just is representative of how some of these larger coffee conglomerates are adjusting to the new norm in their category.

9:03Brad Avery:And as far as CPG goes, Blue Bottle was never quite as big a brand as some of these competitors. Many of the products that are going into the KDP and the Pete's portfolio have a much bigger retail presence. Blue Bottle, I think you can find in Whole Foods and some other specialty and natural retailers, but never made a big push for the mainstream. We previously also saw Nestle Divest Chameleon, which they had purchased around the same time, sometime in the last decade. And that brand has now been sold off a couple times as a result of that. So we're seeing Nestle move away from some of these acquisitions they made just under 10 years ago.

9:45The founder of Lemon Perfect, Yanni Huffnagel, is taking a fresh swing at the plate with a new brand, Popwater. It's an electrolyte-infused flavored sparkling beverage that, quote, tastes like soda but hydrates like water. The brand is expected to launch in September with four flavors, grape, lemon-lime, orange, and the wildcard flavor, in my opinion, cotton candy. It's following that with blue raspberry and cola, expected to hit market shelves in the next two years. Huffnagle registered the trademark for Popwater in 2021, intending to fold it into the Lemon Perfect portfolio. That plan was adjusted when Lemon Perfect hit some challenges after switching co-packers in 2024 and deciding to switch from a 12-ounce aseptic plastic bottle to a 15.2-ounce size.

10:41Huffnagle told me that Lemon Perfect's liquid faced stability issues due to the lemon juice oxidizing at a much faster rate in the larger bottles. Much of 2025 was spent reformulating Lemon Perfect's recipe so it doesn't oxidize so quickly. The company is in the process of rolling new product out with its reformulated recipe into retail partners as we speak. As a result of all of this, Lemon Perfect has been in a period of cost-cutting which included shaking up its leadership team. While Huffnagle is still the brand's chairman of the board, he consulted with the board to buy the Popwater trademark from Lemon Perfect and spin it off into its own business.

11:24Popwater is currently raising a$9.5 million seed round that Huffnagle hopes will be the only funding the brand needs. In this way, it is already trying to approach Popwater differently than he did with Lemon Perfect, which raised about$100 million over multiple rounds. Brad, I'm sure you've spoken to Yanni over the years and will likely agree that he is always enthusiastic when talking about his brands. In the case of Popwater, he seems exceptionally exuberant and optimistic about the brand's future prospects, where he seems to be targeting Talking Rain's sparkling ice brand as the category leader to take some market share from.

12:03Brad Avery:Well, he's certainly entering a more crowded category than he did the first time with Lemon Perfect. Lemon Perfect seemed like it hit at the right time to be a disruptive, enhanced water, superior hydration product. Simple positioning, you know, lemon water. Popwater obviously has potential, but it's definitely a bigger space that he's trying to disrupt this time. There's more competition and a lot of big names have been throwing hats in the ring. That's not to say he shouldn't do it, but I will be curious to see how he comes at this from a fresh original angle. And what I will be tracking is how he positions the brand.

12:45And again, it seems like the comp is to sparkling ice. But from my opinion, it speaks more to like the modern soda category. And frankly, he sent me some samples. I taste a couple of them. It tastes like soda and they were pretty good. I'm not going to lie, but they don't. I wouldn't pop a can thinking, oh, I really want a flavored sparkling water. I would drink that product because I would want a better-for-you soda.

13:18Brad Avery:Speaking of modern soda, we have some here with us. While Monica may be out of town this week, Lucas, you are in town. We are together in person in the office in Newton, Mass. And you picked out a couple of the protein sodas we've had sitting around the office for us to try and discuss. us. I thought it'd be kind of fun to do a little taste test as we're together. The first one we're going to drink here is Koya's Protein Pop. It is their rocket free. So it's not my first choice of flavor, but it was what I could find and it was cold. So this has 10 grams of protein and four grams of fiber. And this is Koya's kind of entrance into soda.

13:59Brad Avery:Well, it's very cherry forward. Yep. Yeah. I think you still get some of the, I don't want to say it's chalky, but you do get some protein taste. I think it's definitely smoother than you think of with a protein drink for sure. There is an element there of that protein flavor that is difficult to innovate around. And I know that Koya has been very proactive in innovating here, in optimizing for flavor. And I think there's a strong sweetness on this product that aims to mask that protein. I'm curious where you think this stands on the shelf and the ability to sort of hit that mainstream user It's hard for me to really judge if I'd want to drink this on a regular basis Because I don't drink a lot of soda, I do drink a lot of flavored sparkling water So something that is a little less sweet is usually my go-to But I could see how a soda drinker would pick this up If they want a fruit-forward soda that has some functional benefits some protein benefits, a little bit of fiber in there.

15:04I will say this next one we're going to try is Prota's orange flavored soda, protein soda. This also has 10 grams of protein, but it has one less gram of fiber. So we'll see if we can sniff out the difference here.

15:18Brad Avery:Yeah, I'm not overly familiar with this brand. You know, the company itself, Koya has been around a long time doing protein shakes. Prota, I believe is newer. And this is definitely my first time trying it. I would say this definitely hues closer to a traditional orange soda. It's a little light on carbonation, but that's okay. Yeah, I agree. It definitely has a stronger soda profile from my taste. And when I do pick up a soda, I do end up picking up orange soda a lot of times. So this is good for me. I'll tell you flavor-wise, this tastes closer to drinking the juice from a fresh orange than a lot of orange sodas do.

15:57Yeah, it's not as punchy in the mouth with sweetness. So I like that. There is, again, that kind of coating over the mouth. I don't know if that comes from the protein or just from, again, being a low-sugar kind of modern soda option. But I don't know, it's pretty good. Well, glad you could be here. Happy to be here. It's always nice to be in the same room and talk it out in real life.

16:24Brad Avery:Here are some other notable bits of news from the week. Fresh Foods delivery platform Fresh Realm has filed for Chapter 11 bankruptcy protections and will sell its business and operations through a court-supervised process. Relid USA, LA Libations Water, the 9.5-plus pH water brand produced by beverage incubator LA Libations, has unveiled what it claims is the beverage industry's first fully recyclable, resealable aluminum can. And Republic National Distributing Company plans to shed the majority of its remaining business with another transaction divesting from 17 states. For these stories and more, become an insider at BevNet and Nosh.

17:04That wraps up this edition of CPG Week by BevNet and Nosh. Thank you to our audio engineer, Joshua Pratt. Our director is Mike Schneider. And our designer is Aaron Willett. If you enjoyed the podcast, please subscribe on your listening platform of choice, and we will see you next time.