Hershey Spends Big on LesserEvil 🍿

GM and Happy Saturday, folks. Here’s what we’re covering this morning:

• Brynwood sells Harvest Hill 🍊

• 1686 Partners backs True Classic 👕

• Monte’s grabs $2M from Night 🍝

• Waterloo x Guy Fieri 🔥

• Mezcla launches at Sprouts 🍫

Hershey Spends Big on LesserEvil 🍿

The Hershey Company (NYSE: HSY) announced its intent to acquire LesserEvil Snacks, a fast-growing manufacturer of better-for-you popcorn and salty snacks. Terms of the deal weren’t disclosed but The Wall Street Journal placed the price tag around $750M.

This is Hershey’s largest snack purchase since 2021 when they acquired Dot’s Pretzels for $1.2B. They also added Amplify Snack Brands — the owner of popcorn brand SkinnyPop — for $1.6B in 2017. If there’s one thing we know about Hershey CEO Michele Buck, it’s that she’s bullish on popcorn. 

Charles Coristine, a former Wall Street executive, acquired the ailing LesserEvil business in 2011 for $250K plus an additional future payment of $100K. At the time, LesserEvil was losing money and doing less than $1M in annual revenue.

Things began to change for LesserEvil when Coristine revamped the management team, brought manufacturing in-house instead of relying on pricey co-packers, and invested in branding and marketing. The company chose to constantly iterate and in the process improved the product, ingredients, manufacturing processes, and packaging. Nowhere is this clearer than the evolution of their branding over the past 14 years (see below).

Nowadays, LesserEvil does well over $100M in annual revenue and has been profitable since 2021.

By acquiring LesserEvil Snacks for $750M, Hershey adds meaningful revenue and EBITDA to its salty snacks portfolio (its fastest-growing division), albeit at a painful price. 

One key risk factor for Hershey is the possible cannibalization of SkinnyPop sales moving forward. The confectionery giant acquired SkinnyPop for a king’s ransom in 2017, yet they also added a direct competitor in LesserEvil on Thursday. It’s possible these fears are unfounded — perhaps SkinnyPop and LesserEvil can coexist in the same aisle at Target, Kroger, and other retailers — but cannibalization remains a real possibility.

LesserEvil is the latest in a series of massive acquisitions in the better-for-you food & beverage space:

• PepsiCo acquired Poppi for $1.95B

• PepsiCo acquired Siete Foods for $1.2B

• Flowers Foods acquired Simple Mill for $795M

• Gryphon Investors acquired Spindrift for $650M

Deals 💰

Mergers & Acquisitions 

• Hailey Bieber is reportedly exploring a sale of Rhode, the skincare brand she launched in 2022. The company could fetch as much as $1B according to insiders. A number of other beauty brands like Kosas, Rare Beauty, Merit Beauty, and Glossier have also been exploring sales recently, so we’ll see if Rhode can cut through the noise and get a deal done. Reuters

• Brynwood Partners is selling Harvest Hill Beverage Company to Castillo Hermanos and Centerview Capital. Harvest Hill was established in 2014 when Brynwood purchased Juicy Juice from Nestle USA. Since then, they’ve added a number of other beverage brands to their portfolio like SunnyD, Little Hugs, Fruit2O, and Nutrament. PR Newswire

• Haircare brand Bread Beauty Supply has been acquired by Cost of Doing Business, a holding company founded by Olamide Olowe, the founder of Topicals. Bread Beauty Supply will expand its presence at Sephora and Ulta Beauty later this month. Business of Fashion

Fundraising

• Fast-growing apparel brand True Classic secured an undisclosed amount of funding from 1686 Partners, the private equity firm founded by Chanel heir David Wertheimer. True Classic launched in 2019 and did $207M in revenue and $19M of EBITDA in 2023. The company expects to exceed $300M in sales this year. Beast. Business of Fashion

• RTD cocktail brand Hello Soju relaunched with $6.8M in funding from Ted Schlein and THG. The company is returning to market with a new look, new flavors, and a new manufacturing partner. PR Newswire

• Brazilian body care brand Gente Beauty secured a significant investment from Webster Capital, an investment firm founded by former SPINS CEO Tony Olson. Brazilian supermodel Marianne Fonseca launched Gente Beauty in 2022. PR Newswire

• According to an SEC filing, clean infant formula manufacturer ByHeart raised $72M in equity funding from undisclosed investors. ByHeart's previous investors include D1 Capital Partners, Bellco Capital, Polaris Partners, AF Ventures, and others. The company was founded in 2016 and has manufacturing facilities in Pennsylvania, Oregon, and Iowa. SEC

• Monte’s Fine Foods, a New York-based purveyor of Italian pantry staples, raised $2M in funding from Night, a consumer venture studio. Night typically invests in creator or talent-led brands like Feastables. Monte’s Fine Foods is available at Erewhon, Target, Whole Foods, and a handful of smaller chains on the east coast. NOSH

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What’s New 🤩

Apparel, Cosmetics, and Wellness

• Popular Australian underwear brand Bonds made its U.S. debut and is now available via their website and on Amazon. Business Wire

• Justin Bieber is apparently launching a fashion brand called SKYLRK. The new brand will launch with apparel, accessories, and footwear. Hypebeast

• Skincare brand BYOMA launched a hydrating sunscreen solution called Ultralight Face Fluid SPF50. The new SKU is available at Target and Ulta and will retail for $18.99 or $19.99. PR Newswire

• Dussl is a new gender-neutral skincare brand from Scotland that prioritizes year-round sun protection (kind of ironic given the country of origin). All of their products are designed to be fast-absorbing, invisible, and non-greasy. Beauty News Daily

Food, Beverage, and Alcohol

• Waterloo Sparking Water teamed up with Guy Fieri on three limited edition flavors: Lemon Italian Ice, Huckleberry Cobbler, and Spiced Mango Sorbet. PR Newswire

• V, a New Zealand-based energy drink brand, launched a new line of slow-release energy drinks called V Riise. V uses fruit juice, isomaltulose, apple cider vinegar, and natural caffeine from tea to create the slow-release energy effect. Interesting. Stack3d

• Fancypants Baking Co. launched two limited edition flavors to celebrate spring: Lemon Tart and Strawberry Shortcake. The seasonal packaging looks fantastic. Fancypants has also been on a retail heater lately. Instagram

• Clif Bar, the nutrition bar brand that Mondelez acquired for $2.9B in 2022, launched a range of caffeinated protein bars. Each bar contains 10g of protein and a reasonable 65mg of caffeine. PR Newswire

• Innocent Drinks, the UK-based beverage brand that Coca-Cola bought in 2010, launched a range of children’s drinks called Juicy Water. FoodBev

• Pure Protein expanded its protein bar range with a new line called AMMMAZE. Each bar contains 20g of protein and 0g of added sugar. They’ve available exclusively at 7-Eleven and Speedway stores. PR Newswire

• Hidden Valley Ranch (owned by Clorox) expanded its lineup with seven new flavors like Sweet BBQ Ranch and Cilantro Lime Ranch. PR Newswire

Data 🖥️

• According to IWSR, total alcohol volumes across the world’s top 20 markets are down 2% compared to the pre-pandemic year of 2019. The Spirits Business

Distribution News 🚚

• Fishwife is launching at Costco soon.

• Pretty Tasty Tea launched at Gelson’s in California.

• Mela launched nationwide at Albertsons.

• Narra is now available at The Fresh Market.

• Just Ice Tea launched their multi-packs at Target.

• Mezcla launched nationwide at Sprouts Farmers Market.

• Mugsy Bakes launched at Market District in Ohio.