Dean Foods will take a minority stake in Good Karma Foods, the US producer of flaxseed-based milk and yogurt alternatives.
The US dairy firm said that the partnership would “allow Good Karma to more quickly expand distribution across the US, as well as increase investments in brand building and product innovation”.
It will be seen by outsiders as a vote of confidence in the promising dairy alternative yogurt category – and in particular for flaxseed, which has managed to forge a niche for itself alongside more mainstream offerings like almond milk yogurt and, more recently, coconut milk yogurt.
Dean Foods CEO Ralph Scozzafava said: “We love Good Karma as a fit for Dean Foods as we focus on diversification both within and beyond dairy. This opportunity with Good Karma is a way for us to build a platform for a larger plant-based portfolio. The management team has deep category expertise; the brand is a disruptor in the plant-based, non-dairy space; and we believe we can support its growth.
“One of the pillars of our strategic plan is to build and buy strong brands, and Good Karma embodies the exact type of opportunity we’re interested in as we look to add leading and high potential brands in adjacent growing categories such as plant-based beverages.”
After initially resisting an expansion into alternatives, dairy companies – like Arla – have slowly been experimenting with non-dairy products. This latest move from Dean Foods is a similar kind of deal to the acquisition in February from Maple Leaf Foods: the traditional meat company agreed to acquire plant-based protein manufacturer Lightlife Foods for $140 million, signalling its intent to do more in the plant-based protein market.
“Good Karma isn’t just our name, it’s the inspiration for everything we do,” said Doug Radi, CEO of Good Karma Foods. “This partnership validates that Good Karma has become one of the leading and fastest-growing brands to watch in the plant-based category. We are excited about how this partnership will give us the opportunity to advance our mission of inspiring goodness by making our flax-based non-dairy beverages and yogurts more accessible across the US.”
Non-dairy foods have slowly grown in popularity, with more people claiming to be lactose intolerance and many consumers dropping dairy for health reasons.
That’s despite warnings from a UK charity that dairy-free diets could be bad for consumers’ bone health in later life.
Good Karma will continue to operate as an independent company, based in Boulder, Colorado and led by its existing leadership team. As part of the investment, Dean Foods will lend support to Good Karma’s growth plans in the conventional retail channel through its experienced sales team. Terms of the deal were not disclosed.
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