Oats Overnight’s Cash Strategy & Tilray’s Acquisition/Snack Game Plan
The Latest Pickup by King’s Hawaiian; Van Leeuwen's Scoop Shop Expansion; The FTC's Investigation into Grocery Pricing Tactics; Foxtrot Promises to Make Good
Hello all! After a brief health-related interlude (all is good), I’m back with a packed newsletter filled with deals, new products, and industry insights.
In this edition, you'll find out:
Why Oats Overnight had another large round of funding just 18 months after its last one.
The CPG equivalent of posting your vacation photos from Greece.
How snacking fits into Tilray’s portfolio of cannabis and craft beer.
The latest messaging coming from Foxtrot.
Why Garlic Banana is the hottest flavor combination right now (just checking if you’re paying attention).
Why Oats Overnight Raised Millions….Again
Oats Overnight recently raised another $35 million, just over a year after their last $21 million round. The size alone might raise eyebrows, but the quick succession of these raises definitely caught my attention. Rather than rehash the deal details, I sat down with the team to understand why.
If you want the full story, head over to my larger article, but here’s the TLDR from the team:
First off, let’s look at the company’s finances and customer base:
With $160 million in expected net revenue for 2024, the company projects a “very profitable” year ahead.
Brick-and-mortar retail sales have grown 200% in the last year, even surpassing Amazon in gross sales. In-store velocities are up an average of 30%, and in some accounts, by as much as 125%.
Despite the retail growth, D2C remains their biggest channel, with 250,000+ online customers who average $55 per order and a 60% reorder rate.
Overall, a whopping 72% of its customers eat Oats Overnight products three to six times per week.
So, where did that $21 million from the last raise go? Infrastructure. The company opened a 68,000-square-foot facility in Arizona and another production and distribution center in Ohio. These investments are lowering costs, increasing margins, and adding redundancy to their supply chain, executives said.
But does the second raise indicate the company is just burning through cash? CEO Brian Tate says not at all, and that they’re being smart about it. Prior to this round, the company raised about $30 million and yet recorded roughly $29 million in assets on their balance sheet. In fact, Chief Strategy Officer Nina McKinney told me, “Since inception, losses are pretty immaterial relative to the size and scale that we've got on direct-to-consumer.”
Still, Tate declined to delve into too many details about the cadence other than noting 2023 was a “challenging” year to raise capital.
My take? Investors are getting more cautious, and by splitting the raise, Oats Overnight could show progress and secure a better valuation this time around. The team wouldn’t confirm or deny this, but they did mention it was a competitive process with multiple offers on the table.
Meanwhile, though distribution growth (think club, multipacks and more grocery) is a big focus, the Oats Overnight team is also looking at entering entirely new categories. Earlier this year the brand launched a line of instant high-protein coffee (sans oats, no less).
Could Tilray Acquire Your Snack Business?
Last year, cannabis company Tilray made headlines by diving into the craft beer market with the acquisition of eight beer brands from Anheuser-Busch. Now, they’re dipping their toes further into snacks, starting with the acquisition of Humble Seed.
While you may have read about the deal already, what you need to pay attention to is what’s coming next. While the Humble Seed acquisition was smaller, it signals Tilray's broader strategy and Jared Simon, Tilray’s President of Wellness, told me this is just the beginning.
Acquisitions have long been a significant part of Tilray’s growth strategy. Other notable deals including the aforementioned craft beer purchase (which also brought Tilray the energy drink brand Hiball), the pickup of Hexo and merger with Aphria. The core of their wellness segment is Manitoba Harvest, the hemp brand they acquired back in 2019.
This time, Simon said, Tilray considered starting a new brand from scratch but saw the benefits of speed to market and R&D cost savings by acquiring Humble Seed instead. Going forward, he added, expect a mix of innovation and more brand acquisitions.
The longer term goal: Expand beyond hemp. While Humble Seed uses hemp in its crackers, Tilray has no plans to heavily push that attribute. Some of the American market is still confused by hemp (some people still think it’ll get them high), Simon said, and federal regulations around CBD are pretty much stalled.
So, if you have a seedy snack brand to sell, Tilray might just be the strategic buyer you’ve been looking for.
News Bites:
King’s Hawaiian parent company, Irresistible Foods Group, Inc. (IFG), announced a “partnership” with gourmet brownie brand Killer Brownie. With its packaged line and e-commerce gifting business, Killer Brownie is an interesting addition to IFG. The group’s original goal was to build a platform of brands to complement King’s Hawaiian (think similar category managers or sets in stores) but given pickups have included Shaka Tea and now Killer Brownie, are we seeing an strategy change underway?
Ice Cream company Van Leeuwen is on an expansion kick of its ice cream stores. After moving into Massachusetts and Florida, according to new job listings, Georgia is next on the docket. It’ll be interesting to see where their priorities lie: CPG lines or scoop shops?
Indie retailer Foxtrot (I’m going to assume I don’t need to rehash the drama here) posted what almost seems like a mea culpa on Instagram. CPG brands have loudly expressed their anger with the abruptness of the retailer’s closing and its subsequent sale to an investor group — all of which has resulted in thousands of dollars in losses for companies. This week Foxtot appeared to try to address the criticism, posting “This Foxtrot is about…being the first “yes” to small makers so we can help them to get noticed and prosper…We can’t make everything right from the past, and we know there’s work to be done. But we also know opening our doors again is the best way to provide the most opportunities for all.”
Frozen brand Quebracho Empanadas is shutting down, as announced by founder and CEO Belén Rodríguez today. It’s always tough to see a brand go, especially one that was bringing something unique (and delicious) to the table.
The FTC is investigating surveillance pricing practices — essentially, charging customers more based on their digital footprints and demographics — and the grocery sector isn’t escaping scrutiny. To start, the agency is focusing on the middlemen enabling these algorithmic tweaks and is seeking uncover the data companies are using as well as where it’s coming from.
Aunt Fannie’s founder and former CEO Mat Franken is launching Beam, a “full spectrum buttcare brand, covering cheeks to crevice and everything in between.” Definitely one to keep an eye on — no ifs, ands, or buts about it!
Forget family vacation photos, the latest social media trend is posting your Costco sampling programs. Founders and execs from brands like Banza and Mid-Day Squares spent their summers hitting the road to connect with consumers face-to-face. My favorite so far? Ithaca Hummus’ new social media star, Toni. (I’ve been urging Ithaca founder and CEO Chris Kirby to get this woman a partnership deal ASAP.) However, one thing I think brands need to be wary of is telling consumers they NEED to go to a Costco roadshow in order to prove they have a loyal following. Yes, showing the power of your brand is important, but you also don’t want to set false expectations for your velocities — Thats a recipe to get kicked off shelf.
El Nacho chips appears to be undertaking a PR push to announce its “launch.” (The brand was founded in 2022 and hit stores over a year ago.) The El Nacho team is emphasizing its chips’ bold flavors, but will that work? It’s a crowded segment with competitors like Siete, Zack’s Mighty and Late July all pursuing a flavor-first, better-for-you Dorito/Takis positioning. It’s a local Boston brand, so I’m rooting for them.
Miami-based Gelaty’s launched its gelato-based popsicles at The Fresh Market. The fun shapes (think giant chocolate bars and cat-shaped popsicles) could be a big point of differentiation on the shelf and a hit on social media. Who wouldn’t want a photo with a cat-shaped popsicle? But, at the same time, what does scaling production look like? Not too many co-mans making bear-shaped ice cream bars.
Movers and Shakers: Laoban, a frozen dumpling brand, has hired Amy Boysen as its new VP of Sales. Boysen previously held sales leadership roles at Mason Dixie, Ghetto Gastro, and Levain Bakery; Meredith Madden has been promoted to CEO of The Kraft Heinz Not Company, stepping in for Lucho Lopez-May, who moved to Mondelez as Chief Sales Officer. Madden was previously General Manager for NotCo’s North American business.; Sauce specialist Eric Strickland has been promoted to VP of Sales at DayDayCook, where he’ll oversee the sales strategy for brands including Yai’s Thai, Omsom and Nona Lim. Strickland was formerly the head of sales at Yai’s Thai before its acquisition by DayDayCook.
New on Shelf:
Surely, the non-alcoholic “wine” brand, is launching Arlow, a line of low-alcohol wines with 6.5% ABV. The company said on LinkedIn that there aren’t many low-alcohol options in the wine space. When I hear reasoning like this, the first thing I ask is “why aren’t there more brands doing X?” I know of at least one national brand that dipped its toes into this category only to quietly discontinue the line. It’ll be interesting to see how Surely performs — especially as they navigate the complexities of the three-tier system.
Juice bar chain Juice Generation rolled out a line of gelatos made from their cold-pressed juices, positioning it as a new way to get your daily fruits and veg. It’s also potentially a way to reduce food waste, given the short shelf life of cold-pressed juice. One interesting element not getting as much attention? Their new “cold-pressed” Crispy Cones made from leftover juice pulp. Other brands such as The Forager Project have tried using juice pulp in products but found the process too labor-intensive. Let’s see if Juice Generation has cracked the code.
Hershey’s Ice Cream Shoppe candy bars, previously exclusive to Hershey’s Chocolate World, are now available in Walgreens. Flavors like Strawberries ‘N’ Creme, Cookies ‘N’ Mint, and Salted Caramel are sure to catch the eye of anyone with a sweet tooth.
Anything but Chilly: Cometeer is shaking up their D2C business by offering customers the ability to build their own box of frozen coffee concentrates rather than choosing from specific roaster-based selections. It may look like a small change, but its one that could make a big difference for customer satisfaction.
Forbes reporter Douglas Yu has officially launched Diamond Brew, a line of “brewless” instant coffee. If you missed my exclusive coverage of the launch earlier this year, no worries—you can catch up right here!
Garlic Banana! 😂