Weekly Headlines: Are Smaller Footprint & Plant-Based Key To Driving Food Service Growth?

Hello everyone, in this week’s consumer headlines, we’re taking a look at what’s driving the growth of food service as the sector is ramping up funding to support vendors with smaller footprint and more meat alternative options. On the macro level, inflation will likely continue driving the pricing of consumer goods next year, according to big food executives. Check out key insights and exclusive deals below:

Price hikes likely to continue in 2022:

• PepsiCo‘s CFO Hugh Johnston says the company is preparing for another round of increased prices in 2022. The company has been gradually raising its beverage prices and is upping the cost of its snacks to offset its higher input costs during Q3. Sector rivals, like Coca-Cola, have been doing the same. PepsiCo saw an increase in its operating costs as a result of inflation in labor, commodities and transportation, the company reported, which led to a 3% net income drop, even despite an 11.6% net revenue growth. In the quarter ending Sept. 4, PepsiCo’s year-over-year profit fell to $2.22 billion from $2.29 billion, and its operating expenses grew to $7.64 billion from $6.92 billion. – FoodDive

More money going into food service:

• New York-based coffee startup Blank Street, launched just about a year ago, announced a $25 million Series A investment led by General Catalyst and Tiger Global, along with additional strategic investors including Neil Blumenthal and Dave Gilboa (Founders, Warby Parker), Jeff Raider (Founder, Warby Parker and Harry’s) and Joey Zwillinger (Founder, Allbirds). Following a $7M Seed raise earlier this year. The new Series A funding will help fuel Blank Street’s rapid retail expansion, with a focus on evolving its vendor partnerships and technology capabilities. Founders told me their margin is 4-5x higher than mainstream coffee chains due to smaller footprint and more efficient operations, and big institutions are ready to fund their series B. – Embargoed Release

• Kingdom Supercultures – the biodesign startup behind the secret sauce at Eleven Madison Park’s new vegan menu – has raised $25 Million Series A to create new plant-based foods, fermented beverages, and personal care products using natural microbial cultures. Kingdom Supercultures is pioneering a new field of science – by re-assembling nature’s microbes into new combinations, creating Supercultures-based foods – such as plant-based yogurts and cheeses that are supposed to taste indistinguishable from dairy versions, low-alcohol wines and beers with the same flavor as regular ones and natural preservatives that work better than artificial ones. The business has seen major growth over the last year and expects to continue that trajectory working hand-in-hand with key CPG players. – PR

Female founder highlights:

• Just three months after launch, food tech startup Better Brand announces the close of an additional $2.5 million funding round, led by Alexis Ohanian’s Seven Seven Six. The company broke records earlier this year when its founder, Aimee Yang, became the first sole female founder to raise over $1 million in a venture-led pre-seed round across food tech, consumer, and food & beverage industries. Seven Seven Six was joined by a number of prominent tech players including Soma Capital, VERSO Capital, Cruise founder Kyle Vogt, and actor Patrick Schwartzennegar, bringing the total amount raised by the company this year to over $4 million.

• Agua Bonita announced today its oversubscribed $1 million raise with key participants including Convivialite Ventures, Cedar Capital, Supply Change Capital and prominent celebrity backing. This puts founders Erin PonTell and Kayla Castañeda in an elite group becoming only the 59th Latina-founded company to raise over $1 million in venture capital and Castañeda the 2nd Black founder in the food & beverage CPG category to raise more than $1 million. This is a monumental moment for the brand and their category as Latina founders have historically been severely underrepresented receiving only 4% of total venture capital funding.

Big CPG’s acquisition spree:

• NexPhase Capital, LP, an operationally-focused private equity firm, announced today the sale of Popcornopolis to Barcel USA, the US snack division of Grupo Bimbo, S.A.B. de C.V. and manufacturer of leading snack brand Takis. Terms of the investment were not disclosed. NexPhase invested in Popcornopolis in 2019 with a focus on expanding distribution in the food, drug and mass channels and growing its direct-to-consumer business. Key to this strategy was the launch of a new line of everyday snack products to complement the company’s legacy portfolio of indulgent, giftable items. As a result, Popcornopolis is now the fastest growing ready-to-eat popcorn brand at retail and saw record e-commerce growth in 2021. – Embargoed Release

• LVMH has acquired Officine Universelle Buly 1803, which specializes in perfumes and cosmetics. Officine Universelle Buly 1803 is a Parisian brand inspired by Jean-Vincent Bully, an emblematic perfumer of the 19th century. The brand relaunched in 2014 by Ramdane Touhami and Victoire de Taillac. For the last four years, it has been supported and assisted by LVMH Luxury Ventures, a minority investment fund.

• E-Commerce firm Branded is acquiring Puracy, a manufacturer of plant-based natural cleaning and personal care products. A portion of every Puracy sale is donated to charity, and the acquisition allows the Puracy founders the opportunity to focus its core values in natural product development, brand awareness and customer acquisition. Branded is reportedly set to grow 50x in 2021, having acquired more than 40 brands and expanded in the United States, Europe, the Middle East and Asia.

Thank you all!