With the sale of Yasso (with more than $200 million in revenue) and KDP’s recent investment in La Colombe ($300 mil for ⅓ of the company), as well as a pair of recent acquisitions by Mars, Kevin’s and TruFru, it looks like some of the shackles are coming off the M&A game, at least at the strategic level.

So who is next in line and what are the factors affecting whether there’s a deal to be found in the months to come? One well-positioned brand that’s always ready to listen to offers is King Juice, the makers of Calypso Lemonade and other juice drinks. 

As attendees of last year’s BevNET Live know, after PE firm Mason Wells acquired the company in 2017, Calypso’s been growing, deliberately and profitably. With CEO David Klavson at the helm, it has reached more than $100 million in sales (about $120 million for the past 52 weeks dating from June 18, according to Circana), a growing international business, and lots of runway. 

Recently there was an insider tip that Calypso had retained an investment banker to try to “run the process” and see what kind of sale could be made for the company, so we called Klavsons. 

Klavsons made it clear that with the brand ticking a lot of boxes for potential acquirers, and Mason Wells deserving to cash out on the deal, “there’s always a process going on with us.”

According to Klavson, the brand’s C-Store ACV is sitting at just 30%, while it just recently began its first Costco launch, in Northern California. That leaves a lot of room to grow for the brand, which started in the Midwest but counts powerful NYC distributor Big Geyser as one of its partners. And if it’s profitable, that means there’s no rush to do a deal, except that the Mason Wells investment is getting pretty mature.

But the economy is affecting dealmaking, he noted. Other PE firms represent a large slice of the potential acquirer community, but those buyers tend to use a mix of debt and fund dollars to make a deal – and high interest rates mean that it’s tougher to fund a deal, meaning that firms are tougher on valuations than in recent years. Plus, risk is a factor.

“It’s hard to tell what banks would give up,” he said, adding that there just doesn’t seem to be a desire to lend big money for a deal. 

There’s no desperation, but at this point, Calypso is kind of a canary in a coal mine for the economic environment, and any deal is going to offer a lens on the near term.

“When you’re 6 years in, with all this gyration and turmoil, it’s never going to be perfect,” Klavsons said. “Always looking at the markets and trying to find what is the right time."

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Vita Coco’s brand is strong, though the company is set for some short-term adjustments with the forthcoming departure of its largest private label client. That was the big takeaway from yesterday’s Q2 earnings report by the natural beverage maker, to which Wall Street reacted positively. 

• Net sales were up 21% to $140 million in Q2, with brand Vita Coco powering the majority of that momentum (+35% to $95 million). 
• Gross profit was $51 million, or 37% of net sales (last year was 25%), a sequential improvement of over 500 basis points from Q1, thanks to falling transportation costs, net sales growth and higher pricing.
• Year-to-date, net sales have risen 18% ($249 million); brand Vita Coco made up 20% of sales growth and 17% of volume growth. 
• Updated 2023 full-year guidance now stands at +10-12% net sales growth and adjusted EBITDA of $56-60 million. 
• The company is set to lose its largest private label client; though the unnamed customer will still purchase branded products, CEO Mike Kirban said to expect a net revenue loss in the immediate term. “We believe that we can deliver mid-teens adjusted EBITDA growth in 2024” he said, though “with improved gross margins over 2023 levels”
• PWR Lift, the company’s in-house developed protein water brand, remains in limited trial in Texas via Keurig Dr Pepper (KDP) distribution.

Ready-to-drink and serve products have surpassed $10 billion dollar sales in off-premise channels in the latest 52 weeks, according to NIQ. We broke down the top changes in the category, including what segments are leading and the challenges they face. 

• Spirits-based RTDs and FMBs are gaining share at the expense of hard seltzer: dollar share for FMBs has grown 21% versus the same 52-week period last year, and spirit-based RTDs are up 55%.
• Speaking of FMBs, the segment is trending well above year-ago comparisons, with hard tea and hard soda leading growth and consumers shifting to the segment from hard seltzer and beer.

Convenience represents the biggest opportunity for RTDs, but spirits-based cocktails face limitations due to legal restraints— that’s why opening up more channels state-by-state is a priority for the spirits industry.

Read the full story today on BevNET

Matt Matros, the founder of Limitless sparkling water and Protein Bar and Kitchen, has had two exits and the past 10 years. Now, the serial entrepreneur is running three new business projects focused on the backend services of CPG, including a specialty insurance agency tailored towards protecting brands.

• Matros is gearing up to launch BrandRock this month, a CPG-focused insurance firm he’s co-founding with ForceBrands founder Josh Wand and former Hu and Sir Kensington’s CEO Mark Ramadan.
• BrandRock is partnered with Marsh McLennan to provide brands with full insurance protections for issues like product recall, stock throughput, tail coverage and more.
• Matros said the project was based on his own experiences, discovering his insurance package at Limitless did not cover manufacturing defects after losing around $2 million worth of products to defective cans.
• BrandRock is just one of three projects Matros is now taking on. We previously covered in the newsletter (July 14 edition) his new affiliate marketing project Test Dryve, which helps develop sampling and promotional programs for D2C CPG brands. He also has launched an advisory firm, M2 Advisors, specializing in helping brands prepare for exits.

Read the full story on BevNET

When quarterbacks win the Super Bowl, they go to Disney World. When a chef wins the title of World All-Star Champion on the 20th season of Top Chef, they get a brand partnership, or so it seems. Buddha Lo, fresh off his victory in the famed TV cooking competition, is teaming with high-end water brand Saratoga Spring as the brand’s Fine Dining Tastemaker, where he’ll be charged with “creating eye-popping content featuring his delectable dishes as well as appearing on behalf of the brand,” per a press release. It’s only right: Saratoga is a sponsor of the show’s $250,000 Grand Prize.

Are you planning a fundraise and interested in exploring the pluses and minuses of crowdfunding? Today on Community Call, we'll be chatting with Todd Gibson of Yerbaé, Sean Ross of Pureboost, and Alex Bayer of Genius Juice to discuss their success using various platforms, what's required to do it well, and what brands need to know before they launch a campaign. Register for free.