Birkenstock is a Juggernaut 🚀

Welcome back to This Week in CPG, folks. Hope y’all had a fun weekend and a productive Monday.

We have lots to cover this morning so here’s a quick preview:

• Birkenstock readies for IPO 📈

• Heineken bets on canned cocktails 🍸

• L Catterton backs luxury skincare brand 💰

• Shake Shack x Zero Acre Farms 🍔

• Blenders sells a lot of shades 😎

• Bala heads to Target 🎯

The Big Story 📰

Birkenstock, the popular German footwear brand that’s known for their iconic cork footbeds and dividing consumers — they’re beloved by some, despised by others — will make its debut on the New York Stock Exchange early next month. The company, which will celebrate its 250th anniversary in 2024, will float 10-15% of its shares and could be valued as high as $8.7B.

Though Birkenstock remained a largely family-owned operation since Johann Adam Birkenstock first began making shoes in 1774, that changed in 2021 when L Catterton purchased a majority stake in the company at a valuation of $4.35B. The acquisition made heirs Alex & Christian Birkenstock worth an estimated $1.7B each.

Anyways, now that Birkenstock’s Form F-1 with the SEC is public, we can take a look under the hood and see why Birkenstock effectively doubled in value since 2021. The short answer is that Birkenstock is an absolute juggernaut, and you’ll find out why below.

First, Birkenstock is growing really fast. Their revenue performance from 2014 thru 2022 is something to behold. See below.

There’s a slight but common misconception that Bernard Arnault and L Catterton were the forces that changed Birkenstock’s fate, but that honor actually belongs to Oliver Reichert, the current CEO of Birkenstock. Reichert took over in 2008 and is responsible for making Birkenstock the global lifestyle brand that it is today. He settled internecine family squabbles, restructured the company, dialed up innovation, and personally closed the L Catterton deal.

Though L Catterton will be critical for Birkenstock’s next phase of growth, they most definitely can’t take credit for the glow-up.

Second, and more enticingly, Birkenstock has a lot of runway left for growth. In 2022, 54% of their revenue came from the Americas, while 36% came from Europe. APAC only represented 10% of their revenue, which is an enormous opportunity for the brand.

L Catterton has been active in APAC since 2009, so their connections and retail know-how will be instrumental in making Birkenstock a serious footwear player in the region.

Third, Birkenstock is one of the few footwear brands that actually manufactures their products. They’re a vertically integrated operation that last year produced 95% of their own products. By controlling manufacturing, they can ensure greater product quality and, subsequently, greater customer satisfaction. Interestingly, Birkenstock has also begun taking greater control of distribution, ensuring that their products are in the right stores, in front of the right people, and merchandised properly.

In the famous words of Bernard Arnault, “if you control your factories, you control your quality; if you control your distribution, you control your image.”

Lastly, the folks who buy Birkenstocks are repeat customers and, more importantly, brand evangelists. According to a recent consumer survey, the average Birkenstock customer owns 3.6 pairs today. Additionally, 90% of recent purchasers indicated a desire to purchase again. That kind of loyalty is immensely hard to come by outside of laundry detergent and toothpaste.

Anecdotally speaking, I recently purchased my first-ever pair of Birkenstocks and without even realizing it, I’ve been pushing the product on family and friends. They’re extremely comfortable, pretty stylish (depending on the model), and I’ll likely purchase one or more pairs per year for the rest of my days.

Deals 💰

Mergers & Acquisitions 

• Dutch brewing giant Heineken acquired a significant minority interest in Served, the hard seltzer and canned cocktail brand co-founded by Ellie Goulding. Served launched in 2020. The deal with Heineken will enable the brand to become a larger player in the UK RTD category. The Spirits Business

• British apparel retailer Frasers Group is in advanced talks to sell fashion label Missguided to Chinese fast-fashion firm Shein. Frasers Group acquired Missguided out of bankruptcy last year for around £20M. This would be another major win for Mike Ashley who’s known for buying and turning around distressed assets in the retail space. BBC

• The Honey Pot Company, an Atlanta-based feminine care brand known for its menstrual and sexual wellness products, is reportedly exploring a sale. The brand has more than $100M in annual revenue and could be valued upwards of $500M. Bloomberg

• Canadian cannabis and consumer goods firm Canopy Growth is seeking a buyer for clean hydration brand BioSteel. BioSteel accounted for 60% of the company’s adjusted EBITDA loss in Q1 and they’re eager to offload the brand. Curious who buys it. My guess is that a smaller firm like Splash Beverage Group makes a move for it, but perhaps a larger player like Coca-Cola or Keurig Dr Pepper will scoop up the IP for next to nothing. Reuters

Fundraising

• Eighth Day, a luxury skincare brand based in Newport Beach, secured an undisclosed amount of funding from L Catterton. The company was founded by renowned dermatologist Dr. Antony Nakhla and retails at Violet Grey, Bergdorf Goodman, and Neiman Marcus. Business of Fashion

• Unfold Ventures, a new consumer venture fund, launched with $300M in funding. Partners include Scott Norton, Suzanne Agnello, and Shamez Kanji. Thus far they’ve made a handful of investments in consumer brands like Beekeeper’s Naturals and Live Tinted. Bloomberg

A Message From Numeral

If you’re running an ecommerce business in the US, you know how frustrating and complicated it is to manage your sales tax. Your average bookkeeper wouldn’t touch it with a ten-foot pole.

That’s where Numeral comes in. Numeral is the most comprehensive sales tax compliance solution for ecommerce brands. Brands spend less than five minutes a month thinking about sales tax once Numeral takes over.

Find out how Numeral helped DTC footwear brand Amberjack achieve 95% time savings plus zero late fees and penalties here.

What’s New 🤩

Apparel, Cosmetics, and Wellness

• Adidas is preparing to launch a $500 pair of running shoes next week. The shoes only weigh 4.87 oz which is staggeringly low compared to other running shoes on the market. These are cool but I’m quite happy with my 9 oz Brooks runners that retail for $140. Gear Patrol

• Wild, the leading refillable deodorant brand in the UK, will launch their new refillable body wash line later today. The refill bottle is made of 70% bamboo starch and 30% plant starch, making it 100% plastic-free and compostable. Both the dispenser and refill bottle are beautifully designed ⬇️ Wild

• Vaseline, the skincare and healing jelly brand owned by Unilever, introduced a new body care brand for melanated skin called Radiant X. Happi

• Luxury lifestyle brand Goop just launched their first-ever makeup products with Colorblur Glow Balm. It’s available in five shades and retails for $34. Global Cosmetics News

• There’s a new herbal sexual wellness brand called Sexpot Apothecary. Beauty Independent 

Food, Beverage, and Alcohol

• Shake Shack announced a partnership with Zero Acre Farms to pilot their healthier, more eco-friendly cooking oil at two locations in NYC. Zero Acre’s cooking oil will be used to fry select products at the Hudson Yards and Battery Park City locations. Very cool. PR Newswire

• Flowerhead Tea, a Los Angeles-based tea brand known for their loose leaf teas and chai kits, just launched a new line of tea bags. Six flavors are currently available. The tea bags look good, but IMO they lost some of the charm that made their loose leaf teas so enticing. Instagram

• Avaline, the organic, additive-free wine brand founded by Cameron Diaz and Katherine Power, introduced a new pinot noir. Gorgeous. Avaline has been on a retail tear lately. Curious if a firm like E. & J. Gallo buys them fairly soon. Avaline

• ZOA Energy, the energy drink brand founded by Dwayne “The Rock” Johnson, launched their first powder supplement with ZOA+ Powder. The new pre-workout supplement comes in three flavors. PR Newswire

• Rapper Wiz Khalifa launched a new grow-your-own mushroom brand called Mistercaps. The brand enables consumers to easily grow oyster, shitake, and lion’s mane mushrooms from the comfort of home. The branding is brilliant ⬇️ Fast Company

Data 🖥️

• Blenders Eyewear announced a partnership with star college football coach Deion Sanders and together they’ve sold more than $4.5M worth of glasses. Wild ⬇️ Front Office Sports

Distribution News 🚚

• Popular fitness brand Bala officially launched at Target.

• Non-alc beer brand Athletic Brewing is heading to the UK.

• Wellness tech brand HigherDOSE launched a number of products at Sephora.

• Popular sex toy brand Smile Makers also launched at Sephora.