TruFood Manufacturing, Bar Bakers merge to scale nutritional snacks operations
With the merger, TruFood’s capabilities in nutrition bars, baked granola and chocolate are combined with Bar Bakers' expertise in snacks, including cookies, wafer cookies and various nutrition bars. TruFood’s CEO, Michael Buick, will lead the combined company, and Gary Jacobs, Bar Bakers’ president, will become the company’s chief operating officer.
Financial details on the merger were not disclosed, but private-equity firms Manna Tree and Mubadala Capital have invested in the combined company.
The firms invested in the combined company because of its growth potential in the better-for-you snack category, Steve Young, managing partner for Manna Tree, told FoodNavigator-USA.
“There are investments made where the thesis is: ‘Hey, we can save a lot of costs here. By combining companies you can reduce general and administrative expenses and reduce costs.’ That is a very common investment thesis. That is not why Manna Tree and Mubadala invested behind. What we are investing behind here is growth. These two companies have very little overlap in their customer base. And … they have very little overlap in terms of the types of products that they manufacture," Young said.
Are co-packer capacity constraints a barrier to nutritious food production?
Manna Tree has invested primarily in food and beverage brands - having current investments in Gotham Greens, Good Culture, Health-Ade Kombucha and The New Primal – but the firm found an opportunity to “advance [its] mission of improving human health” with the investment in TruFood, Young said.
By focusing on manufacturing, Manna Tree can invest in the infrastructure that ultimately creates healthier and more nutritious foods, Young explained. In the snack bar category, 75% of the capacity that exists in the industry is through co-manufacturers, he added.
“The reality is when it comes to the barriers to getting more nutrient-dense and better-for-you food to market often, one of the biggest barriers is in the manufacturing capabilities and capacity. There is so much capacity that is owned by the large and mid-sized companies that is used to prioritize the more ... mass offerings. And the reality is those companies rely on co-manufacturing partners to produce many of their emerging products.”
The funding landscape: ‘It is a return to basics’
Food and beverage startups are adjusting to a new reality of higher interest rates and a return to business basics, including a focus on profitability, unit economics, gross margins and other metrics, Young explained.
“Over the past couple of years, you have had an industry that has been in transition. There were some companies that really got that. And they had scale, and they really looked positive. I will tell you those companies did not need money over the last couple of years. Those companies are thriving today, and now they are in a really terrific position,” Young said.
He continued, “There were also companies that just could not make the pivot from a top-line focus to more of a holistic focus that included the bottom line. They could not pivot fast enough."
Many large CPG companies also are more critical of potential acquisitions, placing a heavier emphasis on companies that have a proven track record, Young said.
“I have looked at so many companies that have been brought to market, and it is a return to basics. The reality is that large companies are not interested in acquiring companies that they have to do all the work to drive profit. They want good self-sustaining businesses today," Young added.
