Market investment

‘True disruptor’ in vegan and paleo foods: Sonoma Brands invests in Hu Chocolate

By Douglas Yu

- Last updated on GMT

Hu Products anticipates a tripe-digit sales growth this year. Pic: Hu Products
Hu Products anticipates a tripe-digit sales growth this year. Pic: Hu Products
Private equity firm Sonoma Brands has invested an undisclosed sum in vegan and paleo chocolate maker Hu Products for its US national expansion.

This is the California-based company’s second confectionery brand in its portfolio after SmashMallow​. Jonathan Sebastiani, the founder of Sonoma Brands, also created Krave Jerky​, which was purchased by Hershey in 2015.

Sebastiani said Hu Products is “right on par”​ with Sonoma Brands’ background – “exclusively dedicated to disruptive and high-growth consumer brands.”

“Providing unique experiences with 100% vegan products, Hu chocolate is a true category disrupter in the vegan and paleo world, showcasing ingredient integrity and culinary influence that resonates deeply with our team,”​ he said.

“We believe that Hu will change brand standards across a variety of product verticals by delivering its rigorous ingredient integrity and transparency, and we’re excited to be a part of that future and the Hu story,”​ added Sebastiani.

He said it is possible that Sonoma will target more confectionery companies as investment opportunities because “sweet tooths aren’t going anywhere, they’re just evolving to reach for better-for-you options.”

Created out of a ‘veggie forward’ restaurant

Hu was created by Jason Karp along with his wife Jessica Karp and brother-in-law Jordan Brown in 2012 out of a “veggie forward and paleo concept restaurant – Hu Kitchen in New York City,”​ said Rita Hudetz, the company’s CEO.

Hudetz, who now supervises the operations of both the restaurant and the chocolate company, told ConfectioneryNews that her team originally wanted to develop a clean-label chocolate for their baked goods.

“Then we realized we have something special about selling it in the bar form at our restaurant,”​ she said. “It was quickly gaining popularity in food circles in New York City, and it was later picked by Whole Foods and some of the local grocery chains and independent stores.”

The 70% stone ground (learn about the stone grinding process here​) dark chocolates are made with organic and fair-trade ingredients, and are available in eight flavors including almond butter and puffed quinoa, and crunchy banana.

In addition to being sold in several thousand retail stores, Hu is also available online via its website​ for $25 for four bars.

Hudetz said Hu was at an inflection point where it spent the last few years developing operations, and it really needed to start building its brand awareness – that was when she started looking for external funding.

Hudetz later met with Jennifer Berliner, her former co-worker at PepsiCo and the current president of ZÜPA NOMA (also a Sonoma brand), to learn about the equity firm’s operations.

“We’ve had discussions for over two years, and now they officially raised their first round,”​ she said.

Targeting 150% growth in sales

Even though the paleo chocolate was invented for baked goods, Hudetz said Hu is competing in the broader confectionery category. (Read more about the baking chocolate category here​.)

She said some food categories such as “free from”​ have seen dramatic growth, and in terms of diet trends, “paleo has definitely become something people are looking for… they also want lower sugar in chocolate or natural sweeteners like honey, maple syrup and coconut sugar.”

Because of the healthy diet trend, Hu is expecting another 150% growth in sales in 2018, similar to last year, said Hudetz.

“We’re also looking to expand our team, bringing more sales and marketing associates to really drive the business forward,”​ she added.

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