K18 Considers Sale, BetterBrand Raises 🥯💰

Welcome back to This Week in CPG. Thursday’s newsletter typically only goes out to Premium Members, but I decided to open up today’s for laughs. If you’d like to become a Premium Member, you can do so here.

Here’s what we’re getting into this morning:

• BetterBrand closes round 🥯

• K18 explores deal options 💰

• Gallo’s acquisition spree continues 🍷

• DedCool collabs with Starface 🌟

• Apothekary on pace for $25m 📈

• Chewsy heads to Target 🎯

The Big Story 📰

BetterBrand, a consumer food tech startup that produces low-carb, high-protein baked goods like The Better Bagel, closed on $6m in Series A funding. VERSO Capital led the round, while existing investors Gaingels, Seven Seven Six, and Craft Lane tagged along. Thus far, BetterBrand has raised a total of $10m in venture funding.

The more eye-catching detail, however, is that they raised at a pre-money valuation of $170m, a whopping figure for a baked goods company. The valuation is baffling for a few different reasons.

First, in order to succeed in the baked goods category, you have to win at retail, and as of now BetterBrand has a very limited retail presence. Besides Whole Foods Market, BetterBrand doesn’t have another national retail account. The brand is performing well at Whole Foods, though. In five months they’ve generated over $1m in sales.

Second, BetterBrand is priced such that it’s prohibitively expensive for most consumers. Unless economies of scale kick in — a 4-pack currently retails online for an absurd $16 — BetterBrand will likely remain a fringe premium brand in the category.

Third, there’s quite a bit of competition in the low-carb baked goods space. BetterBrand’s biggest threat, Hero Bread, recently raised $15m in Series B funding and has a considerable retail head start.

It’s certainly not impossible, but it will be difficult for BetterBrand to justify its $170m valuation. Like the first wave of plant-based meat startups – Beyond Meat, Impossible Foods, etc. — market realities will inevitably be quite humbling.

Deals 💰

Mergers & Acquisitions 

• K18, the popular science-backed haircare brand that launched in 2020, is reportedly exploring its acquisition options. The brand is on pace to cross $100m in revenue this year. K18 could very well be the next Olaplex. WWD

• VFC, the UK-based vegan fried chicken brand, acquired Meatless Farm and saved it from bankruptcy. For 2021, Meatless Farm posted revenue of £12m and a loss of £22.9m. Food Navigator 

• The acquisition spree for E. & J. Gallo continues with its purchase of Hahn Family Wines, the owner of Smith & Hook, Hahn, and Hahn SLH. Earlier this month Gallo acquired Bev — a canned wine & spritzers brand — and in May they purchased Fishers Island Lemonade, a RTD cocktail brand. PR Newswire

• Nature’s Path, a Canadian producer of organic cereals & snacks, acquired Love Child Organics, a baby food and children’s snacks brand. Terms weren’t disclosed. FoodBev

Fundraising

• Brand Velocity Group (BVG) made a strategic investment in Jaya Apparel Group, a contemporary fashion firm that owns Cinq a Sept and Likely. Previously BVG has backed BBQGuys and Original Footwear Co. Business Wire

• LA-based wellness brand Beekeeper’s Naturals closed a $14m funding round that was co-led by Devonshire Partners and CAVU Consumer Partners. Benzinga

What’s New 🤩

Apparel, Cosmetics, and Wellness

• Popular honey infused haircare brand Gisou launched a stunning new product — Honey Infused Lip Oil. Gisou

• Fragrance brand DedCool collaborated with Starface on very fun collection of air fresheners. DedCool

• Sofia Vergara of Modern Family fame launched her own suncare brand called Toty. Curious how this performs given how well newcomers like Dune and Vacation are doing. Instagram

• Vans, the iconic footwear brand owned by VF Corp, will launch a premium label called OTW by Vans at Paris Fashion Week. WWD

Food, Beverage, and Alcohol

• Chamberlain Coffee unveiled another gorgeous new product — Lavender Matcha Latte with Oat Milk. Chamberlain Coffee

• De Soi, the non-alcoholic beverage brand founded by Katy Perry, launched a new flavor — Très Rosé. Beautiful can. Celebrity Packaged Goods

• GOOD Meat, the cultivated meat division of Eat Just, received regulatory approval for its lab grown chicken from the U.S. Department of Agriculture. In short, GOOD Meat’s cultivated chicken can now be sold to consumers in the U.S. Celebrity chef and activist José Andrés will be the first to put it on a menu. Business Wire

• Seattle-based South 40 Snacks launched a new line of protein bars that differentiate by focusing on simplicity. The crunchy, four ingredient bars will launch nationwide at Kroger soon. Josh Schroeter, the co-founder of Sahale Snacks, is behind South 40 Snacks. Food Business News

• Liquid I.V., the hydration brand that Unilever acquired in 2020, introduced a new line of sugar-free drink mixes. I recently switched to LMNT because they offer sugar-free drink mixes, so it looks like Liquid I.V. is course correcting. PR Newswire

• Chickpea pasta brand Banza launched a bucatini which is available at Whole Foods Market. Instagram

Data 🖥️

• Wellness brand Apothekary is on pace for $25m in revenue this year. Beauty Independent

Distribution News 🚚

• Essentia Water (Nestle) is launching in Canada.

• Neuro Gum launched at 250 Albertsons stores, bringing their retail footprint to 10,000 PODs.

• Chewsy launched their Kids Multi Vitamin exclusively at Target.

• Epres, the high-performance haircare brand founded by Olaplex’s Eric Pressly, is now available in select international markets like the UK, Spain, Ireland, and many others.