New York-based Solera Capital has expanded its organic-food platform Homegrown Naturals, acquiring Annie’s Naturals, a maker of salad dressings and condiments. Terms of the deal were not disclosed.
Homegrown Naturals was launched in 1989 by co-founder Annie Withey, who had previously created Smartfood popcorn. Homegrown is probably best known for its Annie’s Homegrown brand of natural pastas and snacks, but the company also controls the Consorzio lines of flavoured oils and dressings and the Fantastic Foods line of vegetarian meals.
Solera acquired a majority stake in the company in August 2002. The firm, according to a report in the Wall Street Journal, gained its majority position through a roughly $20 million (€17 million) investment out of its debut fund.
This latest addition of Annie’s Naturals is a natural fit for the Homegrown platform. For one, both companies already overlap in their branding, as both companies sell products under the “Annie’s” name. (Annie’s Naturals uses the peapod as its trademark, while Annie’s Homegrown is known for the rabbit on its packaging).
Perhaps more important, though, the acquisition of Annie’s Naturals will augment the platform’s current presence in the salad dressing segment and give the company an even larger presence on store shelves.
Solera has previously pursued growth for Homegrown through acquisition and product line expansion. In 2003, the company added onto the platform with the purchase of certain product lines from Frontier Natural Products Co-op, and the company has continued to roll out new products such as Bunny Grahams.
This has resulted in a roughly 25 percent jump in revenues, and in 2004, Homegrown Naturals reported approximately $30 million in sales.
Molly Ashby, the chief executive of Solera Capital, credits the strong brand for helping the company capture that growth. “There’s so much value to a strong brand name,” she said. “It serves as a passport to introducing new product lines and products.”
This latest deal by Solera also reflects private equity’s ongoing march into the organic marketplace. Firms have been particularly keen on companies that participate in the natural food and personal care areas of the organic market.
North Castle Partners, for example, is an investor in the Naked Juice Co., while TSG Consumer Partners has seen early success in its investment in Energy Brands, the maker of glaceau vitaminwater.
Specific to organic foods, the market is currently growing at a roughly 20 percent clip, according to industry research firm Datamonitor, which conversely reports a torpid three percent growth rate for conventional foods.
Speaking to the growth in the market, Homegrown CEO John Foraker cited a confluence of factors that contribute to the sector’s expansion. “It really comes from a combination of different things. One of the keys was the introduction of the USDA organic seal a couple years back” he noted.
Since then, he added that the market has experienced a synergy that starts with the grocers stocking the natural products. “The increasing availability of the products drives awareness, which then drives demand. And underneath all of that you have a broad pattern of people ageing that are looking for ways to eat healthier.”