Ultimate magazine theme for WordPress.

Sovos Brands applies for an initial public offering worth $ 100 million

Diving letter:

  • Sovos Brands has filed for an IPO that could raise $ 100 million. Founded in 2017 and based in Colorado, the company owns Rao’s homemade pasta sauces, Noosa yogurt, Michael Angelo’s frozen products, and Birch Bender’s pancake mixes. The number of shares and the price range have not yet been determined, said Sovos Brands in an email.
  • The company has seen strong growth since its inception, with net sales increasing from 2018 to 2020 at an average annual growth rate of 66%, as filed with the US Securities and Exchange Commission. Net sales for the 26 weeks ending June 26 were $ 351.2 million – an increase of 34% over the same period in 2020.
  • The IPO market for food and beverage companies has been relatively busy this year, with soda maker Zevia, oat milk titan Oatly, cell-based meat maker Meat-Tech 3D, and manufacturing giant Dole all having traditional IPOs. Several companies are rumored to be working toward IPOs, including yogurt maker Chobani, which was filed in confidential with the SEC last month.

Dive Insight:

According to the prospectus at the start of filing, Sovos Brands is the fastest growing food company in the United States. A $ 100 million IPO could certainly do a lot to further accelerate that growth.

Sovos Brands began when Todd Lachman, former CEO of Mars, Del Monte and Heinz, noticed how disruptive “one-of-a-kind” brands in the grocery sector were routinely stealing market share from much larger legacy brands. The company, which takes its name from the Latin word for “unique”, began with the acquisition of two high-end Italian food brands: Rao’s Specialty Foods and Michael Angelo’s Gourmet Foods in 2017.

Over the past four years, the number of portfolio brands has grown much more slowly – Noosa became part of Sovos in 2018 and Birch Benders was acquired last year – but sales haven’t. Sovos appears to have managed to find and buy four disruptors with great potential. Rao’s – which expanded from sauces to dry pasta, frozen appetizers, and soups under Sovos’ ownership – was the brand’s No. 3 pasta and pizza sauce brand by dollar according to statistics on the file for the 26 weeks to June 13th. Sales. The brand currently accounts for 55% of Sovos’ product sales, and over the past five years, household penetration of the sauce has skyrocketed from 1.3% in 2016 to 9.6% in the 52 weeks ending June 13th .

Statistics on the file also show that Noosa and Birch Benders are among the fastest growing brands of yogurt and pancake and waffle mixes, respectively. And Michael Angelo’s Frozen Dinners have a household penetration rate of 4.9% in the 52 weeks ending June 13th.

While Sovos has a portfolio of vibrant companies, the true picture of its success has not yet been clear. When you make your finances public, you can easily see the rapid growth of the various brands that the company owns. Since acquiring Sovos, Rao’s dollar sales have more than quadrupled, while Birch Benders saw sales grow 50% in the 52 weeks ending June 13.

“We believe that we are at the cross-section of scale, high growth and high margin, but still have room for further growth and improvement,” the filing states.

While prospective shareholders may pause given the small size of Sovos’ portfolio, the company has a growth story to tell. The IPO would immediately boost Sovos’ purchasing power and allow it to continue taking brands with disruptive potential under its wing. According to the filing, the company has reviewed more than 200 trademarks for acquisition since 2017. While some of these brands might not have been a good fit, others might have been priced too high. An IPO could remove that barrier – both by infusing cash for Sovos and by the mere fact that public companies have their financial books open. Sovos has a positive track record, and a start-up that’s on the fence about selling might feel moved by looking at the rest of its portfolio.

Comments are closed.