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Welcome to Dealboard. In this weekly feature, The Current is providing a look at the mergers, acquisitions and venture capital deals making waves in ecommerce, CPG and retail.
This week, there were big consumer brand investments by KDP and WHP Global, while Fanatics and NotCo added to their unicorn valuations. Meanwhile, acquisitions are shaking up categories like ultrafast delivery, snacks and dessert.
Check out the latest deals:
C4 Energy has new fuel. (Photo by Flickr user Mike Mozart, used under a Creative Commons license.)
Nutrabolt gets investment from $863M
Energy drink maker Nutrabolt received an equity investment of $863 million from Keurig Dr. Pepper (KDP) as part of a strategic partnership.
The investment will give KDP a 30% ownership stake in the maker of pre-workout brand C4 Energy, post-workout brand Xtend and sports nutrition brand Cellucor.
Through the deal, KDP will distribute C4 Energy in a majority of its direct store distribution territories, which will expand retail availability.
"This partnership represents a win-win transaction between our two companies,” KDP chairman and CEO Bob Gamgort stated. “KDP gains significant presence in the rapidly growing performance energy drink market and Nutrabolt gains access to a strategic investor with extensive sales and distribution capabilities to further accelerate its growth.”
Fanatics reaches $31B valuation
Sports merchandising company Fanatics raised about $700 million in a new investment round that saw its valuation climb to $31 billion, Footwear News reported.
The round was led by Clearlake Capital, with participation from LionTree, as well as existing investors Silver Lake, Fidelity and Softbank.
Fanatics sells licensed sportswear, sports equipment and other merchandise. This is its second funding round of the year following a $1.5 billion raise in Q1. It also acquired jersey maker Mitchell & Ness, and sports card business Topps.
WHP Global invests in Express, forms omnichannel platform
WHP Global, a firm that acquires brands, will invest $235 million into the retailer Express through a new agreement that will give WHP a 7.4% stake.
The agreement is designed to turn Express into an omnichannel platform that will acquire other brands, and form an intellectual property joint venture that is designed to scale the Express brand through domestic category licensing and international expansion opportunities.
Express’ intellectual property will be valued at approximately $400 million. It will be 60% owned by WHP and 40% owned by Express as it transforms into a platform company.
"Our partnership with WHP will drive greater scale and profitability of the Express brand through their category licensing and international expertise and strengthen our balance sheet,” said Tim Baxter, CEO of Express, in a statement. “We expect to accelerate our growth by acquiring multiple brands in partnership with WHP and operating them on our platform. Both of these are expected to drive shareholder value."
NotCo raises $70 million for B2B food tech
NotCo Founders Matias Muchnick and Karim Pichara.
The Series D1 round was led by Princeville Capital, with participation from Amazon founder Jeff Bezos through Bezos Expeditions, Tiger Global, L Catterton, Kaszek Ventures, Future Positive and The Craftory. Marcos Galperin, the founder and CEO of Latin American tech company MercadoLibre, was also among the new investors. NotCo is valued at $1.5 billion.
NotCo makes an AI platform, called Giuseppe, and has patents on tools that create plant-based foods which have similar taste, texture, functionality and smell to animal-based foods. This has been harnessed to produce food products including NotMilk, NotBurger and NotChicken.
With the new funding, the company plans to build out a B2B model that will offer Giuseppe to other CPG brands, ingredient suppliers and technology providers for innovation purposes as they create plant-based products. This was already on view through a joint venture with Kraft Heinz that develops plant-based versions of Kraft products.
Maergo raises $20M for ecommerce delivery
Maergo, a parcel carrier serving retailers and DTC brands, raised a $20 million seed round.
The round was led by Deep Lake Capital, funds managed by investor and entrepreneur Neel Shah, and ACR Strategic Credit, with participation from RyderVentures, which is the venture capital arm of Ryder System, Inc.
Formerly known as X Delivery, the company has now completed its rebrand under the leadership of former Magento CEO Mark Lavelle. Its customers include Saks Fifth Avenue, Allbirds, Chubbies and Buck Mason.
"The high-growth ecommerce business is a major focus area for us," says Karen Jones, CMO and head of new product development at Ryder, in a statement. "With the growth of ecommerce and resulting capacity constraints, shippers are looking for more flexible parcel solutions. Through Maergo's tech-first approach to parcel delivery, they're leveraging existing capacity to offer an end-to-end solution."
Archive raises $15M for branded resale
The financing was led by Lightspeed Venture Partners, with participation from Bain Capital Ventures, Fernbrook Capital, G9 Ventures, and several minority investors. Alex Taussig, partner at Lightspeed, will join the company's board of directors.
Resale works with brands and retailers to set up resale platforms that are owned by the label. It has set up peer-to-peer, managed and in-store takeback models, as well as added custom features. Brand partners include The North Face, Oscar de la Renta, Cuyana and Dagne Dover.
With the funding, the company plans to hire across engineering and brand success.
Malk Organics raises $9M for alternative milk
Malk Organics, an alternative milk brand, raised $9 million in a Series B round led by Benvolio Group and Rotor Capital. Malk has a line of plant-based milks, including a recently launched chocolate oat SKU. It plans to continue growing its retail presence and its team following the funding round.
Currently, Malk is available at Instacart, Whole Foods, Sprouts, Fresh Thyme and other store stores, with plans to enter Publix in 2023.
MERGERS & ACQUISITIONS
Second Nature's portfolio is getting bigger. (Courtesy photo)
Getir acquired by Gorillas
Consolidation in the ultrafast delivery market produced a big acquisition deal involving two of the biggest European names in the space.
Istanbul-based Getir acquired Berlin-based Gorillas in a deal for which terms were not disclosed.
The deal follows a pullback in investment in the quick commerce space as a result of a post-pandemic leveling of demand and fewer investment dollars as a result of economic headwinds. This has challenged the investment-heavy business models of companies in the space, which are typically spending heavily to keep delivery under an hour.
"Markets go up and down, but consumers love our service and convenience is here to stay. The super fast grocery delivery industry will steadily grow for many years to come and Getir will lead this category it created 7 years ago," says Nazim Salur, founder of Getir, in a statement.
The Ferrero Group acquires Halo Top's maker
The Ferrero Group is set to acquire Wells Enterprises, the maker of ice cream brands including Blue Bunny, Blue Ribbon Classics, Bomb Pop and Halo Top.
Wells will join a portfolio of sweet packaged foods at Ferrero that includes Nutella, Kinder, Tic Tac and Ferrero Rocher. In recent years, Ferrero has acquired Fannie May, the former Nestlé U.S. confectionery business and Kellogg’s cookies and fruit snacks businesses.
Wells will remain a standalone business. It has offices in Le Mars, Iowa, and production operations in Le Mars, Henderson, Nevada, and Dunkirk, New York. Going forward, current Wells CEO Mike Wells will become an advisor during the transition, while current Wells President Liam Killeen will become CEO, with the rest of the leadership team remaining in place. Terms were not disclosed.
RH launches 3 new divisions with acquisitions, hires
Luxury design firm RH made a pair of acquisitions that will allow it to launch new divisions.
The company is acquiring Dmitriy & Co, a custom upholstery atelier. It is also hiring Dmitriy founders Donna and David Feldman. This will allow the company to create RH Couture Upholstery.
RH is also acquiring Jeup, Inc, which is another custom upholstery atelier, and hiring entrepreneur Joseph Jeup. This will allow the company to launch RH Bespoke Furniture.
In turn, the company is launching RH Media, an editorial content platform that will celebrate leaders in architecture and design. It will be led by Margaret Russell, the former editor in chief of Architectural Digest and Elle Decor.
“Today’s announcements, plus our previous acquisition of Waterworks, firmly plant four RH flags at the very top of the luxury mountain, and clearly state our intention of establishing RH as an arbiter of taste and design in the To-the-Trade, luxury home furnishings market,” said Gary Friedman, RH Chairman and Chief Executive Officer, in a statement.
Second Nature acquires Brownie Brittle
Second Nature Brands, a creator of nutritional snacks and treats, acquired snack brand Brownie Brittle from Consumer Capital. Terms were not disclosed.
Second Nature Brands, which is controlled by CapVest Partners, is planning to grow into a diverse snacking platform, and the deal furthers that goal.
“We have ambitious plans to become a US leader in snacks and treats and the acquisition of Brownie Brittle is an exciting step on this journey, which expands our presence into baking and unlocks a new growth stream for us,” said Victor Mehren, CEO of Second Nature Brands, in a statement.
Trending in Retail Channels
Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
After months of elevated inflation and interest rate hikes that have the potential to cool demand, consumers are showing more signs of shifting behavior.
It’s showing up in retail sales data, but there’s also evidence in the observations of the brands responsible for grocery store staples.
The latest example came this week from Campbell Soup Company. CEO Mark Clouse told analysts that the consumer continues to be “resilient” despite continued price increases on food, but found that “consumers are beginning to feel that pressure” as time goes on.
This shows up in the categories they are buying. Overall, Clouse said Campbell sees a shift toward shelf-stable items, and away from more expensive prepared foods.
There is also change in when they make purchases. People are buying more at the beginning of the month. That’s because they are stretching paychecks as long as possible.
These shifts change how the company is communicating with consumers.
Clouse said the changes in behavior are an opportunity to “focus on value within our messaging without necessarily having to chase pricing all the way down.”
“No question that it's important that we protect affordability and that we make that relevant in the categories that we're in," Clouse said. "But I also think there's a lot of ways to frame value in different ways, right?”
A meal cooked with condensed soup may be cheaper than picking up a frozen item or ordering out. Consumers just need a reminder. Even within Campbell’s own portfolio, the company can elevate brands that have more value now, even if they may not always get the limelight.
The open question is whether the shift in behavior will begin to show up in the results of the companies that have raised prices. Campbell’s overall net sales grew 5% for the quarter ended April 30, while gross profit margins held steady around 30%. But the category-level results were more uneven. U.S. soup sales declined 11%, though the company said that was owed to comparisons with the quarter when supply chains reopened a year ago and expressed confidence that the category is seeing a longer-term resurgence as more people cook at home following the pandemic. Snacks, which includes Goldfish and Pepperidge Farm, were up 12% And while net sales increased overall, the amount of products people are buying is declining. Volumes were down 7%.
These are trends happening across the grocery store. Campbell is continuing to compete. It is leading with iconic brands, and a host of different ways to consume them. It is following that up with innovation that makes the products stand out. Then, it is driving home messaging that shows consumers how to fit the products into their lives, and even their tightening spending plans.
Campbell Soup is more than 150 years old, and has seen plenty of difficult economic environments. It is also a different business today, and will continue to evolve. At the end of the day, continued execution is what’s required.
“If it's good food, people are going to buy it, especially if it's a great value,” Clouse said.