HumanCo, the holding company for the Hu snacking brand and restaurant, took a majority stake in plant-based frozen dessert company Coconut Bliss, which makes pints of ice cream as well as frozen sandwiches and bars. Financial terms of the deal were not disclosed.
The partnership is intended to grow the Oregon-based ice cream producer into a global brand through furthering product innovation, increasing marketing efforts and expanding distribution. The brands will also continue their mission to use “ethical, sustainable and non-exploitative processes” to produce clean, organic products for consumers.
HumanCo, which was created by Jason Karp, the founder and CEO of Hu snacks and the Hu Kitchen restaurant in New York, said in a statement the holding company is committed to investing in brands that espouse its values for healthier living, transparency and sustainability. “We love ice cream, but most of the plant-based options don’t taste like delicious ice cream or are filled with weird, questionable ingredients. Coconut Bliss does things the right way,” he said.
HumanCo is making a move in the plant-based dessert space after some time in stealth mode. Although the firm’s website says it is searching for partnerships in beauty and technology as well as food and beverage, it makes sense they are starting in familiar territory.
Hu Kitchen found its success with its Greenwich Village restaurant and the launch of its vegan, paleo chocolate into the CPG space. Demand for the product grew in the trendy better-for-you arena and eventually attracted the attention of Mondelez, which took a minority stake in the company through its SnackFutures unit last year. When Hu announced the Mondelez investment, it said its goal was to continue expanding the Hu proposition into a broad health-focused snacking platform across categories. Now the company’s founder is looking toward M&A.
According to Austin Business Journal, HumanCo closed a $15 million series A funding round in January. Although the firm has deployed just a small amount of cash so far, it said it is looking to make big investments where the company can add value. Karp told the publication that HumanCo also acquired New York City-based Monty’s, a brand of plant-based cheese made from cashews, in November.
Prior to Mondelez taking a minority stake in Hu, the company secured under $10 million in a funding round with 43 investors, led by Sonoma Brands. And since Karp started Hu with his wife and brother-in-law as a way for him to deal with health disorders brought on by eating industrially processed foods, the brand’s founder knows about scaling up a family-owned small business.
Coconut Bliss said in a statement it wants to retain its ethical and better-for-you commitments through its partnership with HumanCo, which will be providing shared resources to help the company operate on a larger scale.
M&A has become a popular expansion strategy in recent years. In many cases, it is more economical to go out and buy another business than spend the time and money to develop technical expertise in-house. By bolting on another company that has research and development in place as well as a ready consumer base, it can be an appealing way for companies to test out new products or industry segments without committing anything more than money. Such a technique can be especially appealing in the rapidly changing health and wellness space where consumer demand is continuously in flux.
While consumer demand is becoming more pronounced in the health and wellness space, it is also something that is evolving with fresh functional ingredients grabbing the spotlight and novel products jumping into the already-crowded segment. While sales numbers are not available for the private company, Coconut Bliss has been around since 2005 and has proved its staying power on the market. The brand is organic, non-GMO, vegan and gluten free, which aligns with Hu’s clean-label ethos.
Both brands also straddle the intersection of health and indulgence, two trends that have been converging in recent years. Better-for-you snack food has grabbed consumer attention even as the industry pushes toward healthier alternatives that feature cleaner labels and transparency. Hu rode the wave and was successful in marketing its better-for-you indulgence. It now wants to help Coconut Bliss do so as well.