VMG Partners acquires popchips to anchor new branded snacking platform

By Elaine Watson contact

- Last updated on GMT

VMG Partners acquires popchips to anchor new branded snacking platform

Related tags: VMG Partners, popchips, Snacks

Private equity firm VMG Partners is betting big on the snacks category with the formation of a new division – Velocity Snacks Brands (VSB) – set up to buy, incubate and grow snack brands, beginning with the acquisition of the popchips* brand from majority investor Verlinvest for an undisclosed sum.

Based in Los Angeles and led by CEO Amit Pandhi (most recently president and CEO of frozen desserts brand Arctic Zero), VSB​ will acquire additional brands “from taking a majority stake to full acquisition​,” and create and incubate new brands in-house, potentially via collaborations with retailers, VMG general partner Wayne Wu told FoodNavigator-USA.

“We’ll launch and incubate brands and products on a de novo basis in house, either based on our own perspective on opportunities we see in the marketplace, or in collaboration with retail partners. A retailer may come to us and say, ‘Hey, I need a product and brand that serves this need state, can you quickly create this for me?’ and we’ll have the resources to support its growth on the front and back end ​[brands will use shared resources for sales and operations].”

A third way?

As for acquisition opportunities, successful CPG brands often end up selling to a strategic acquirer (eg. a big CPG company) because they are short on cash to grow, even if the acquiring company is not the perfect fit at that stage of their development, noted Wu, who has worked with a clutch of high-profile snack brands over the years including KIND, Health Warrior, Quest and Perfect Bar.

“But there should be options for entrepreneurs and brands other than staying perpetually independent or selling to a big multinational. Some of the time these brands are resource constrained, and they sell to a big CPG, but they end up getting lost in the shuffle and it may be a sub optimal situation for that brand.

“There should be another option where there are more resources than what most independent brands can access on their own, but that enables them to be more nimble than they can be within a larger CPG multinational conglomerate. With VSB we’re providing another solution, a shared resource platform that has the nimbleness of a startup but the sophistication of resources that a large CPG could provide a brand.”

VSB is seeking 'brands with material retail traction that have created an emotional connection with the consumer'

Put another way, VSB aims to combine the agility of startups with the expertise of larger corporate entities, “without the cumbersome standards and processes that can hinder growth potential​,” claimed Wu, who said the firm is assessing opportunities in salty, sweet and nutrition bar categories [the capital to launch the platform is currently coming from the firm’s Fund IV, and its respective limited partners].

“Over the next 12 months, we wouldn’t be surprised if we made one or two more additional acquisitions and we could also end up launching a [new] brand over that time period."

Asked what the criteria would be for acquisitions, he said: "We have no minimum or maximum in terms of financial metrics, but we're looking for brands with material retail traction that have created an emotional connection with the consumer, that serve distinct need states and day parts."

vsb

Velocity Snack Brands​ seeks to assemble a portfolio of ​[shelf-stable] brands across the salty, sweet, and nutrition bar categories leveraging a common infrastructure and suite of resources that are capable of building multiple growth brands.  In the years to come, VSB will invest broadly in snacking across salty, sweet and nutrition bar categories.”

VMG Partners

'We’re not moving away from our core business model'

The new division should be seen as an incremental growth opportunity for VMG rather than a reflection of a change in strategy for the firm, which will continue to provide early stage and growth capital for CPG brands in snacks and other categories, stressed Wu.  

“We’re not moving away from our core business model, which is to help entrepreneurs  build iconic brands with the goal of exiting to a large multinational strategic buyer. VSB is a new innovation for VMG which will be incremental, we’re just providing another option for brands where their goal is not to exit to a large multinational but they need additional resources to help them get to the next level.

“We’ve had a lot of conversations with founders over the years, and frankly entrepreneurs have convinced us that this is something that’s really needed in the marketplace.”

VMG’s endgame

But what is VMG’s endgame? Will it keep hold of these acquired companies indefinitely, take them to IPO, or is the plan to sell them off to a CPG acquirer a couple of years down the road?

Said Wu: “In terms of the back end exit​ [for VMG], we frankly haven’t put a lot of time and thought into that yet other than the thought that if we build a platform of iconic snack brands we’ll have plenty of optionality at the end.”

VMG investments
VMG Partners has invested in a clutch of high-profile snack businesses over the years including Health Warrior (recently sold to PepsiCo), Quest Nutrition (recently sold toThe Simply Good Foods Co), and Perfect Snacks (recently sold to Mondelēz International).,

Popchips has 89% brand awareness

So does popchips – which was founded in 2007 by Keith Belling and Patrick Turpin using heat and pressure to ‘pop’ (rather than fry) potato and rice – still have significant growth potential?

Wu would not provide any details about the performance of the brand or the success of some of its more recent innovations such as Nutter Puffs, Ridges, and Yes Peas, but said popchips was growing year on year.

He added: “I’ve been a fan of popchips from the beginning and we’ve been good friends with the founders and investors along the way. It has 89% brand awareness and we couldn’t think of a brand that better represents what we’re trying to build than popchips.”

VSB also sees significant growth opportunities for popchips both under its existing platforms (core popchips, Ridges, Nutter Puffs and Yes Peas) but also in new platforms and categories, said Wu.

“We have a robust innovation pipeline for 2020 and beyond.”

* in North America and most international markets outside Europe. 

popchips ridges

Founded in 2007 by Keith Belling and Patrick Turpin, the popchips brand debuted with ‘popped’ potato and rice chips (‘popped’ using heat and pressure, with some oil and seasoning added afterwards) and has since expanded into ridged chips (‘Ridges’), puffed peanut extruded snacks (‘Nutter Puffs’), and popped pea chips (‘Yes Peas’).

The brand is now sold in 30,000+ stores across North America in retailers including Albertson’s-Safeway, select Costco locations, Kroger, Sprouts, Target, Walmart, Wegmans and Amazon.com.  The European business (UK, Belgium, The Netherlands, Ireland)  is not part of the acquisition.

amit pandhi

“I've been friends with Amit Pandhi for close to a decade and I've always been impressed by how he operates. He has a brand vision as well as a very data driven approach, so he's great at being strategic and detail oriented at the same time, and more importantly he's a great human being." 

Wayne Wu, general partner, VMG Partners

 

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