Zarbee’s Naturals is a paediatrician-founded brand focused on producing natural, ‘better-for-you’ products in the OTC category. L Catterton invested in June 2011 and leveraged its knowledge of the ‘better-for-you’ adoption being witnessed across various consumer packaged goods categories in light of its successful investments in a range of baby food, pet food and beverage companies.
L Catterton built Zarbee’s beyond its flagship product – chemical-free children’s cough syrup – into a suite of all-natural products covering the entire family. By targeting other age groups and expanding into broader natural health and wellness, Zarbee’s rocketed from a small player with negligible market share when L Catterton invested in 2011, to a clear market leader by 2018.
“L Catterton’s investment in Zarbee’s Naturals was impressive in proactively identifying the opportunity in kid’s cough syrup, helping in expanding distribution, expanding into adult products and other SKUs, and transforming Zarbees’ supply chain. This work resulted in an almost unheard of 30x growth in revenues and almost a 10x cash-on-cash,” says judge Steven Kaplan.
Dramatically expanding the company’s product line took it to 47 percent market share in 2018. All of this was achieved while establishing best-in-class R&D, a flexible and scalable supply chain, a global trademark and intellectual property portfolio, an asset-light manufacturing model and an internal demand planning function.
A new management team was built, with Bret Furio, who was known to L Catterton previously, appointed as CEO. Other critical new hires were added to the team, including the chief customer officer, chief marketing officer and chief product and strategy officer.
Under L Catterton’s stewardship, Zarbee’s grew from four employees to 50 at exit, and from one regional product to a national presence, with the beginnings of international expansion. Gross revenue grew from $3 million to $109 million, with gross margin of over 60 percent.
The growth took Zarbee’s past Reckitt Benckiser-owned Mucinex as the market share leader before agreeing a sale to Johnson & Johnson at a price that represents a 9.7x cash-on-cash return and 43 percent gross internal rate of return for L Catterton.
“Zarbee’s is a story of true value creation. L Catterton saw an opportunity to grow the market for ‘natural, better for you’ OTC meds for children. They identified a good product offering, and built the sales and marketing, manufacturing and distribution, and back office infrastructure needed,” says awards judge Michael McKenna.
“While many companies have great ideas and great products, Catterton was able to execute the growth plan to create a valuable company where there had only been a good product years earlier. That operational execution success is the epitome of the OpEx awards.”
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