OpEx Awards 2018: Riverside tastes success with cookies

The Riverside Company picks up the lower mid-market/small-cap award for the Americas for Tate’s Bake Shop.

The Riverside Company picks up the lower mid-market/small-cap award for the Americas for Tate’s, the fastest-growing premium cookie brand in the US

Judge Steve Kaplan described this as the toughest category in the Americas section, with all entrants putting forward compelling cases for the top spot. In the end it was Tate’s Bake Shop, producer of America’s number one cookie (in the view of celebrity chef Rachael Ray, among other arbiters of taste), which won out.

Founded in Southampton, New York, by lifelong baker Kathleen King, who opened the first branch in 1980, Tate’s has experienced turbocharged growth since the entry of The Riverside Company as an investor four years ago. What started as a highly regarded but small operation on the East Coast is now part of the empire of confectionary giant Mondolez, which snapped it up for a cool $500 million in June of this year.

“With a unique and authentic brand and truly delicious products, this acquisition gives us an attractive entry point into the fast growing premium cookie segment,” said Dirk Van de Put, chairman and chief executive of Mondelez, at the time.

When Riverside came along in June 2014, Tate’s Bake Shop was looking to take the good work it had done in its local market and replicate it nationally. Most important, it wanted to do this without losing any of the special touches that had helped it stand out from the crowd in the first place.

King stayed with the firm to focus on product development and public relations, the functions she had performed so well up to that point. Within two days of the investment closing she was joined by a new chief financial officer, with a new chief executive following three months later.

Vice-presidents of sales, marketing and operations, a plant manager and a raft of other more junior hires joined in quick succession, creating a strong basis for growth. Between entry and exit, the firm’s staff expanded from 187 to 383 employees.

Tate’s Bake Shop started about expanding its output by moving into a new warehouse and management offices, putting in an ERP system and adding two new automated manufacturing lines. Over the course of the hold period, the company’s manufacturing capacity increased by 64 percent.

Realising the strength of Tate’s brand and the loyalty of its customer base, the new management introduced fresh packaging, more than 10 new flavours and formats, and raised prices on existing products in order to bolster profitability.

Distribution expanded to include more than 70 percent of the grocery channel, with the company making dents in the convenience market and gaining contracts with a number of superstore chains.

The result was Tate’s Bake Shop becoming the fastest-growing premium cookie brand in the US, top-line revenue growth in the hundreds of percent, and Riverside achieving a gross cash-on-cash exit multiple in the mid-single-digits.