Catterton takes $18m stake in Sweet Leaf

The mid-market consumer specialist adds to its food and beverage portfolio with ready-to-drink tea maker.

Catterton Partners, a mid-market growth specialist focusing exclusively on the consumer industry, has purchased an $18 million (€11 million) stake in Texas-based beverage maker Sweet Leaf Tea.

“This is going to be used to aggressively enter new channels of business, more mainstream stores basically, throughout the US,” Clayton Christopher, Sweet Leaf Tea founder and chief executive officer, told PEO.

Both Catterton and Sweet Leaf Tea declined to disclose other financial details of the transaction. However, Christopher did say that Sweet Leaf Tea’s valuation was comparable to those of other ready-to-drink beverage companies. Last year, Coca-Cola purchased a 40 percent stake in organic tea maker Honest Tea for $43 million.

This is going to be used to aggressively enter new channels of business.

Clayton Christopher

Catterton partner Michael Farello will join Sweet Leaf Tea’s board of directors. Prior to joining Catterton, Farello held several executive posts at Dell Computers, including vice president of consumer marketing and e-business.

Catterton was not the highest bidder for Sweet Leaf Tea in terms of valuation, according to Christopher. However, Christopher said he was attracted to the Connecticut-based private equity firm’s wealth of operational experience in the consumer industry.  

Venture capital firm Freestone Partners invested in Sweet Leaf tea in February of last year.

Catterton currently manages more than $2 billion in assets after the 2006 closing of Catterton Partners VI on $1 billion. Founded in 1990, the firm is well known for its buyout and growth investments within the consumer sector, including investments in high-profile companies such as Breyers Yogurt, Build-A-Bear Workshop, and organic juice maker Odwalla.

Catterton is currently raising Catterton Partners VII, a $300 million mid-market growth and buyout fund, according to the Probitas Partners 2008 Private Equity Deskbook.