A few days ago, Kellogg’s — the company behind iconic brands like Fruit Loops, Frosted Flakes and Pop-Tarts — gobbled up a tiny start-up for $600 million.
The start-up’s name is RXBAR.
RXBAR makes protein bars with no added sugar, and no dairy, soy, or gluten.
Based on those ingredients, I’d imagine that its products taste like cardboard.
But RXBAR has been a huge success, and its early investors made a fortune.
When I saw this news, I asked myself two questions:
- What the heck is going on here?
- How can I — and all my readers — get in on it?
So that’s what I’m going to dive into today.
Rise of the Organics
Here’s what RXBARs look like:
As you can see, its bars contain just a handful of 100% natural ingredients.
As a comparison, look at the ingredients in Kellogg’s Fruit Loops:
This strategy of emphasizing pure, natural ingredients worked very well for RXBAR — and it’s worked well for other health-focused brands, too.
For example:
Pacific Foods, an organic soup maker, was recently acquired by Campbell’s for $700 million…
ConAgra paid a bundle to buy “Boomchickapop,” a whole grain, gluten-free, non-GMO popcorn…
And General Mill’s picked up Angie’s Homegrown, a maker of organic and natural pastas, meals and snacks for $820 million.
New Gorillas of the Grocery Store
You see, as consumers’ interest in “natural” and organic foods keeps rising, the iconic brands we grew up with are struggling:
Kellogg’s is down 27% this year…
Campbell Soup is down 30%...
Even Hershey’s has taken a tumble.
According to consultancy A.T. Kearney, the twenty-five largest food and beverage companies have lost billions of dollars in market share in recent years.
One particularly fierce area of competition is coming from the e-commerce giants, Walmart and Amazon.
Amazon, for example, has created its own line of “quality” food products like its Wickedly Prime snacks and its “Single Cow” burgers.
And Walmart is soon launching a line of upscale groceries called “Uniquely J.” These products will come in “arty” boxes that look like a hipster’s tattoos, and according to Walmart, will feature “fun, witty label copy and quality ingredients.”
According to Credit Suisse analyst Robert Moskov, market share for these upscale, private-label brands will increase by more than 20% by 2020.
But these new gorillas of the grocery store aren’t just creating new brands…
They’re also buying brands:
Amazon, for example, has spent $15 billion buying upstart food brands since 2015, including the $13.7 billion it spent for Whole Foods.
And Walmart has spent $4 billion.
And all this activity hasn’t gone unnoticed…
Tasty Profits from the Food & Beverage Sector
When professional investors saw that start-ups focused on natural foods were becoming prime M&A targets, they increased their investments in this sector.
In the first half of 2017, for example, venture capitalists invested $1.7 billion into these start-ups. That’s up about 100% from the $1 billion they usually invest in this sector annually.
Long-time Crowdability readers already know that the Food and Beverage sector can make for attractive start-up investments:
Naked Juice, for example, was a tiny start-up putting all-natural juice into a bottle — then it got snatched up by Pepsi for about $450 million…
Chobani, the Greek-style yogurt start-up, quickly reached a valuation of several billion dollars…
And one of the most profitable investments of all time (a whopping 10,868x) came from the sale of Coca-Cola.
It used to be difficult to find high-quality start-up investments in this sector…
But thanks to equity crowdfunding, now it’s easier than ever.
Three Food & Beverage Start-ups You Can Invest in Now
Let’s take a look at just a few of the Food & Beverage start-ups that are currently raising money from investors like you:
Soupure — Soupure creates “nutrient-dense” products fueled by superfoods in convenient grab-and-go bottles. Its products are organic, fresh, and free of dairy, GMOs, gluten, and preservatives. As the company says, “Souping is the new Juicing.”
Eliot’s Adult Nut Butter — These are small-batch, high-quality nut butters in “grown-up” flavors like Honey Chipotle and Spicy Thai. Food & Wine recently named these products “Must Buy” Condiments.
Vampire Gourmet Bloody Mary — This ready-to-drink gourmet Bloody Mary Cocktail features real tomatoes, triple-distilled vodka, and all-natural and organic ingredients.
As always, you’ll need to do significant research on these opportunities before you decide to take the plunge to invest…
But when your research involves eating and drinking, who’s complaining?
Happy Investing
Best Regards,
Founder
Crowdability.com
