Yet Another Acquisition: CPG Investor Purchases Vegan Coffee Creamer Leader Nutpods

Amid a flurry of M&A activity in the plant-based space, US non-dairy coffee creamer brand Nutpods has been acquired by newly formed CPG investment arm MPearlRock

Bellevue, Washington-based Nutpods, which makes coffee creamers, barista oat milks and creamy cold brews, has been taken over by MPearlRock for an undisclosed sum (Forbes reporter Douglas Yu broke the story) in the latest of a growing list of plant-based acquisitions globally, with the latter stating they plan to continue driving growth and solidify its position as one of the leading businesses in the dairy alternatives sector.

A joint venture between Kroger’s PearlRock Partners and asset manager MidOcean Partners, MPearlRock was established last week as a platform to back high-growth, emerging CPG brands across the grocery, snacks, beverage, confectionery, and personal care categories.

The investment will help fuel Nutpods’ growth. The female-founded brand saw sales balloon by 30% annually over the past four years and says it is already the top plant-based creamer within the natural retail channel, and number two in the overall non-dairy creamer segment.

A female-led plant-based success story

Nutpods was founded in 2013 by Madeline Haydon, who was looking for tastier, healthier dairy-free creamers on account of her lactose intolerance. It began with an almond- and coconut-based French Vanilla creamer, and has since expanded into more flavours, a half-and-half alternative, oat creamers and barista oat milks, as well as creamy cold brews.

“We have been following Nutpods for the past few years and have been impressed with Madeline’s vision and disciplined approach and how she built strong customer loyalty by developing and marketing a truly superior product,” said MPearlRock CEO Brian Kelley.

The brand’s products can be found in over 15,000 retail locations (which make up 80% of its revenue), and are also available online at Amazon, Thrive Market and its D2C marketplace. In 2019, Nutpods closed a $33.61M funding round, with investors including VMG Partners, Sidekick Partners, Amberstone Ventures, Axle Impact Investment, and CircleUp. Since then, it has more than tripled its net sales.

It’s a success story for a woman-led brand in a space that is deprived of VC funding for female entrepreneurs. Despite an uptick, only 2.1% of the total venture capital went to startups founded solely by women in 2022, according to Pitchbook data.

“I am grateful for the support and guidance from the VMG team to help us navigate the unknown, grow nutpods into a formidable brand within a crowded category, and bring my dream to life,” said Haydon. On MPearlRock, she added: “Brian’s background with leading global consumer brands coupled with MPearlRock’s capabilities and resources makes them an ideal growth partner for us. We are excited to reach more consumers in new channels and new product verticals, who allow us to become part of their daily coffee rituals.”

Giving consumers what they want

Nutpods’ success lies in its focus on health, taste and texture – all important factors for consumers – as well as America’s sheer love for coffee creamers. Census data reveals that over 55% of US citizens used coffee creamers in 2020 alone, with that figure expected to rise by this year. By combining this population’s favourite milk – almond – with an ingredient that delivers the mouthfeel associated with coffee creamers better than most – coconut – Nutpods has made it to the top of its category.

A 1,328-person survey by Morning Consult last year revealed that almond milk is far more popular in terms of consumer preferences (opted by 70% as their top choice) than the next best, oat (31%) and coconut (23%). This is backed up by retail sales, with US SPINS data shared with AFN revealing that despite a much slower growth (+1.6%) than oat (+17.7%) or coconut (+36.5%), almond milk’s $1.56B sales dwarf the rest.

When looking specifically at coffee creamers, Nielsen IQ revealed that US sales reached $2.8B in 2022, up by 21.2% annually, highlighting non-dairy creamers as one of five future coffee trends to watch. This is reflected by SPINS data analysed by alt-protein think tank the Good Food Institute, which shows the category’s dollar and unit sales growth have doubled from 2019-22.

Plant-based alternatives – a segment populated by Nutpods, Nestlé, Danone, Chobani, Califia Farms and Elmhurst (among many others) – occupied 12% of the total creamers market in dollar share last year, and their growth (+119% over three years) has outpaced conventional creamers (+25%), albeit with a smaller base.

To do well in such a saturated market means really honing in on consumer needs. A four-country, 1,500-person survey by Kerry in 2022 revealed that sensorial attributes are the top area for improvement when it comes to alt-milks, cited by 34% of respondents. In fact, 76% of consumers prefer “a nice creamy mouthfeel without the dairy”, while 77% think these products are more appealing if they have “better body and texture”.

Kerry outlined a few major challenges for manufacturers to overcome, one of which was mouthfeel. People are after a cleaner taste experience with a creamy, fatty mouthfeel that replicates conventional dairy, something Nutpods aims to do with its coconut milk base. With more and more Americans drinking plant-based dairy alternatives – 49% consumed the same amount or more in 2023 than the year before, versus 12% who cut their intake – it’s a space with ripe opportunity for brands like Nutpods if you hit the right notes of health, flavour and texture.

Plant-based M&As ramp up across the globe

MPearlRock’s acquisition of Nutpods comes amid a rise in M&A activity across the international plant-based sector. Just this week, Australian alt-meat maker v2food acquired ready meal brands Soulara and MACROS, following US chain Next Level Burger’s purchase of Veggie Grill and UK-based VFC’s transformation into a holding company called the Vegan Food Group to step up its acquisitions earlier this month.

In December, Indian superfood brand Nourish You acquired alt-dairy startup One Good, in one of the country’s largest plant-based M&A deals. A month earlier, British artisanal vegan cheese maker Palace Culture was taken over by The Compleat Food Group, while Canada’s Protein Powered Farms bought plant protein extrusion facility Lovingly Made Ingredients.

There was an even larger number of deals in October. Finnish alt-dairy player Oddlygood acquired Nordic brand Planti, US company Superlatus entered an agreement to buy plant-based dairy and egg company Spero, German food conglomerate Pfeifer & Langen earned a majority stake in sausage-maker-turned-alt-meat brand Rügenwalder Mühle, and Austalia’s All G Foods spun off its vegan meat brand Love Buds, which merged with Fenn Foods’ vEEF to form The Aussie Plant-Based Co.

“We’re now at a stage where the sector is consolidating and poor-quality brands are coming out the market, with more brands consumers can trust and shelves that are way easier to navigate,” Andy Shovel, co-founder of UK plant-based meat brand THIS, told Green Queen in October.

Equipped with the backing of MPearlRock, Nutpods will continue to remain under Haydon’s leadership and now plans to grow its retail and B2B presence alongside its product offering. But it will stick to doing what it’s good at, as the founder told Forbes: “We’re not going into butter, ice cream, or novelties. We just want to continue to be amazing at what we do and categories adjacent to coffee.”