• 🍫 AWAKE Chocolate Brings in CAD $5M 
• ❌ Quaker Oats Closes Production Plant
• 📰 What We Are Reading
• 🛒 March eGrocery Sales Hold Steady at $8B

Silicon Valley-based product development firm Mattson announced an expansion into the Chicagoland area this morning via its acquisition of culinary-focused consultancy firm Hyde Park Group (HPG). Terms of the deal were not disclosed.

Mattson will acquire HPG’s Chicago location and its existing team will continue to run the Midwestern operations, but now backed by Mattson’s expertise and product commercialization capabilities. The Mattson team first opened up discussions about a potential acquisition with HPG founder and principal Mary Haderlein during last year’s Institute of Food Technologists (IFT) conference, held in Chicago, Justin Shimek, Mattson CEO, explained.

“Chicago was one of those places where we've always thought there would be an incredible opportunity to have another Matson location, in part because we have many clients there already,” said Shimek. “But there's also this really incredible, vibrant food community there… for us, it was just a natural expansion.”

According to Shimek, the acquisition will complement Mattson’s end-to-end product services with a greater focus on front-end development and culinary-first innovation. Shimek explained that HPG has a unique process that often engages with top chefs and ventured to call HPG and Mattson “kindred spirits” in the formulation world.

Per the deal, HPG will become “all Mattson,” Shimek explained, noting that there won’t be any changes to its team or current client roster. According to Shimek, existing HPG clients will gain access to more “downstream capabilities” including product development and commercialization expertise. 

HPG will also now be able to utilize Mattson’s suite of innovation technologies, including its new proprietary generative AI tools. Mattson’s AI bot Leo (formally, Leonardo DaVinci) is intended to help streamline the innovation process by assessing category and market fit, and ensure products are “operationally feasible, cost effective and most importantly, delicious and appealing to our targets,” Leo told Nosh, following a prompt from Mattson Chairman Steve Gundrum. 

But for Mattson overall, the acquisition is primarily a geographical gain Shimek emphasized:

“We still find it really important to physically get together with our clients – that's where some of the best ideas happen. Being able to actually take what we've done for many years here in the San Francisco Bay area and then have that presence in Chicago… we're just reducing barriers.”

Interested in how some startups ideate new products? Listen to this interview with Brazi Bites co-founder and CMO Junea Rocha.

After locking in significant distribution gains with Costco, Loblaws and Stop & Shop, caffeinated chocolate brand AWAKE has closed a CAD $5 million follow-on funding round from Btomorrow Ventures, the venture arm of British American Tobacco.

💵 The new capital will give AWAKE a 18 to 36 month runway to support recent retail expansion as well as upcoming product innovation, said co-founder and CEO Adam Deremo. 

👀 The company’s caffeinated chocolate lineup currently includes Bites, No Sugar Added Bites, and Bars, all of which are made with Fairtrade chocolate. The individually wrapped bites contain 50 mg of caffeine each while the bars pack 100 mg of caffeine.

💭 “Bars and snacks have become functionalized. Even yogurt has become functionalized. I don’t think there’s any reason for consumers to believe that chocolate can’t also do something else for you. We really want to lead the evolution of what we call Chocolate 3.0,” said Deremo. 

Check out the full story on Nosh.

Bad news for the 510 employees of the Quaker Oats facility in Danville, Illinois. Parent co PepsiCo has decided to close the plant after a series of salmonella outbreaks, leading to recalls in December 2023 and January 2024. Here’s what we know:

• Production has been paused since January; the facility will now close permanently by June 8.
• Employees were briefed on April 3 regarding the future of the plant and informed of the impending closure, but were told not to ask questions, according to Champaign, Illinois-based The News-Gazette.
• The December 15 recall began with “specific granola bars and granola cereals” but was expanded on January 11 to include about 60 different product types.
• The move may be a way for PepsiCo to more efficiently manage the legacy food brand, which reported a 19% decline in operating profits in FY2023.

It's time for another headline roundup from around the food space:

🌶️ First up: The AP reports that Momofuku has backed down from its trademark battle over the term “chili crunch.” The company said in a statement Friday that after hearing from the AAPI community it does not intend to defend the “chili  or chile crunch” marks.

💸 Next, CNBC recently uncovered that Brazilian PE firm 3G Capital sold its 16.1% stake in Kraft Heinz in 2023, completely and quietly exiting the business; the move comes nearly a decade after the firm largely orchestrated the merger between Kraft Foods and Heinz. 

🍽️ And last but not least, Forbes reported that high-end, London-based Indian restaurant Gymkhana Fine Foods has raised $3 million in new funds, which it allegedly plans to use for an expansion into the U.S. grocery scene later this year. 

The online grocery market rang in a total of $8 billion in sales during March – an improvement over last year when total monthly eGrocery sales dropped 8% year-over-year, according to the latest Brick Meets Click/Mercatus Grocery Shopping Survey. 

• Current eGrocery sales have grown 23% since March 2020 (the onset of the pandemic in the U.S.).
• Pickup and delivery share has grown at the expense of ship-to-home with pickup now accounting for 43.2% of sales this year.
• Delivery has increased 1,488 bps since 2019 and ended March 2024 with 39.1% share of sales. 
• Examining the past four years of sales results, total eGrocery sales for the month of March peaked in 2021 and have declined or been flat on a year-over-year basis since then. 
• In March, the cross-shopping rate between mass and grocery stood at nearly 27% as tighter budgets have driven consumers to change purchase habits.