• 🍄 Gut Sodas, Funding Woes and Mushrooms
• 🍦 Perfect Day Partners With Unilever
• 🆕 Gallery: This Week’s Notable New Products
• 🤝 Walmart and Wonder Bring Fine Fast Dining In-Store
• 🆕 KeHE Launches New Fresh Marketplace

The number of deals in consumer packaged goods (CPG) dropped last year to the lowest level in nearly a decade as interest rates remained high and fears of recession loomed, according to Bain & Company’s Global M&A Report 2024. If M&A is critical for market growth, could smaller deals reinvigorate the flow? 

👀 According to the report, most innovation in the market is coming from emerging, insurgent brands, not the large leading players; that makes smaller deals necessary. 

🤝 We’ve already seen a string of transactions in the small to mid-market space over the past few months including DayDayCook’s acquisition spree, Our Home’s purchase of two brands and production assets from Utz and, most recently, RIND Snacks’ acquisition of Small Batch Organics. 

Although these smaller transactions may carry a minimized risk compared to a large acquisition – they come with their own unique set of caveats, the Bain team notes. 

1.  It can be difficult to determine how to best scale capabilities across both the small brand and the acquirer’s portfolio.
2. Underinvested businesses or brands tucked into the portfolio of larger CPGs can be attractive divestiture opportunities, but managing the carve-out can be challenging and time-consuming.

📈 And CPGs will likely need to take more action than buying or selling off parts. The majority of the industry’s recent sales growth has been a result of inflation-driven price increases. As inflation eases, companies will be tasked with returning to profitable, volume-led growth models. 

👀 Against that backdrop, Mondelez and Stryve are using SKU rationalization to support margin recovery. But the report highlights that rebounds cannot always be achieved from within. 

🤔 They will also require disciplined divestments. Nearly 50% of CPG M&A practitioners told Bain they expect more divestitures in the market in 2024 if the right buyers can be found. 

Of note for entrepreneurs: The report claims the biggest dealmaking barrier in CPG wasn’t the cost of debt – it was the scarcity of “attractive” assets on the market – followed by a buyer-seller valuation gap and increased competition for assets. 

💭 “Integration of smaller assets must be more thoughtful. We have seen many fail because of overintegration, particularly in the early stages. Underintergation, however, can also stifle the generation of synergies. Buyers need to start with a clear articulation of what value needs to be created, leading to which areas need to be integrated (and which don’t),” the report states. 

⏩ Looking ahead, the practitioners don’t believe the landscape will change anytime soon. Roughly 35% expect fewer deals next year and 32% expect to see the same number. 

In this episode, the team is keeping tabs on the gut soda category, with senior reporter Brad Avery unpacking Poppi acquisition rumors and pondering the possibilities of Big Beverage entering the space. Editor-in-Chief Jeff Klineman discusses the current investment climate, and Nosh managing editor Monica Watrous questions the mainstream appeal of medicinal mushrooms.

Tune in here to this week’s episode and subscribe to get a fresh episode every week. 

Like what you hear? Please don’t hesitate to rate our show and leave a review on your podcast platform of choice.

Perfect Day announced it has brought its precision fermented lactose-free whey protein to Unilever-owned ice cream brand Breyer’s. The new Lactose-free Chocolate ice cream will roll out to retailers nationwide this month.

🐮❌ The product is not co-branded with Perfect Day, but does carry a “Animal-free Dairy Dessert” front label callout along the bottom of the tub. The product also highlights that it is “Lactose-free Plus” and cholesterol-free.

🍨 Perfect Day is working with other large CPGs including Nestle, Mars and Bel Group as well as startups such as Renewal Mill and Strive Nutrition. But ice cream may be where its expertise lies, having incubated the Brave Robot brand in addition to buying and operating Coolhaus for a little over a year. 

⏪ Reminder: Perfect Day sold off its CPG arm The Urgent Company last year to focus on scaling up its B2B ingredient business. Now that its lab-grown milk protein has been churned into one of the leading, conventional ice cream brands in the U.S., it seems like that strategy is paying off. 

Catch Up: The Urgent Company Acquired, Superlatus Ramps Up Biz Plans 

FriYAY! It’s our favorite day of the week because we are dropping the weekly new products gallery – giving you a taste of all the innovations hitting the market. Here’s a sneak peek at what’s in store:

🍿Angie’s Boomchickapop teamed up with Cinnabon to launch its new Cinnabon Drizzled Kettle Corn. According to the brand, the sweet snack features tasting notes of baked dough and warm spices with a cream cheese drizzle and hints of vanilla. 

🥒 Fermented food brand Cleveland Kitchen unveiled its new Kimchi Pickles in 466 Whole Foods Market stores across the country. With the launch, Cleveland Kitchen hopes to help the “kimchi-curious” try a kimchi-flavored product with a more familiar format. 

🍪 Siete Foods is expanding its lineup of sweets with the addition of grain-free cookies in Chocolate Chip, Fresas Con Crema, Mexican Wedding, Mexican Shortbread and Mexican Chocolate Varieties. 

Stay tuned for the full NPG on Nosh later today.

The first Wonder Food Hall opened in a Quakertown, Penn. Walmart store this week. The retailer and fast fine dining restaurant concept already have plans to open two more halls in New Jersey Walmarts with a fourth location also under discussion. 

💰 Wonder Group, the well-funded restaurant concept and new owner of Blue Apron, was founded by entrepreneur Marc Lore in 2018. The company has raised nearly $1 billion in capital (with $200 million coming from Lore himself). 

💻 ICYMI: Lore sold his last business, Jet.com, to Walmart and went on to oversee the retailer’s ecommerce business for four years before founding Wonder. Could this new venture follow a similar path with the superstore? 

🥗 The new 750 sq. ft. space inside Walmart offers eight different fast-casual style cuisines including Mexican, Greek, BBQ, Italian and more. 

🔽 That is a slightly slimmer menu than the nearly two dozen different “restaurants” Wonder hosts within its 10 brick-and-mortar New York City locations, some of which also include Blue Apron heat-and-eat meals. While it's not yet on the menu, maybe we will see Blue Apron heading into Walmart stores soon. 

KeHE has introduced its new Fresh Marketplace brand and in-store approach to help retailers revive their fresh assortments with over 24,000 products spanning cheese, meat and seafood, bakery, bulk, and deli items. 

🧀 The platform’s goal is to help "make stores worth leaving home for," a press release states, highlighting that fresh products help retailers “create a deeper connection with their customers.”

🥐 The expansion comes less than a year since the distributor acquired DPI Specialty Foods. KeHE stated in the release that this deal helped broaden its customer base, bolster warehouse infrastructure and allowed it to strengthen its Fresh product portfolio. 

🚚 KeHE is able to deliver all Fresh items on the same trucks as its center store products which it claims has allowed it to maximize the efficiency of its routes and lower costs for retail partners.