Sovos Brands acquires better-for-you pancake brand Birch Benders – Food Dive

Dive Brief:

  • Food company Sovos Brands signed an agreement to acquire better-for-you baking brand Birch Benders. The terms of the transaction were not disclosed and the deal is expected to be finalized by the end of October.
  • Birch Benders makes pancake and waffle mixes, toaster waffles and baking cups. Sovos said in a press release that the acquisition will strengthen the company’s presence in the breakfast and snacking categories.  With Birch Benders under its umbrella, Sovos’ annual retail sales will be above $750 million.
  • Birch Benders is the fourth brand in Sovos’ portfolio, which also includes Rao’s, a line of pasta sauces, soups, frozen entrées and dry pasta; Noosa yogurt; and Michael Angelo’s frozen entrées. 

Dive Insight:

While the pandemic hobbled certain aspects of internal R&D, investment-fueled growth has forged ahead in recent months. Sovos’ purchase of Birch Benders is the latest acquisition as companies look to expand into segments that cater to consumers spending more time in their kitchens.

The Colorado-based brand, which was founded in 2011, is known for bringing easy-to-prepare formulations and healthy alternatives to grocery store shelves under its Birch Benders’ flagship mix. The product is available at 19,000 retailers, including Target, Safeway, Kroger, Sprouts and Walmart. Its just-add-water pancake mixes typically have low or no fat and are cholesterol-free. To add to its roster of better-for-you products and expand its reach, the company has unveiled paleo, keto and protein-heavy mixes. Most recently, the company introduced microwaveable keto-friendly cups that make snack-friendly muffins, baked goods or pancakes and frozen keto-friendly waffles, which launched in June.

In total, Raj Babu, the company’s chief operating officer, previously said in an interview that Birch Benders has released seven first-to-market products. This sort of innovation is appealing to Big Food that looks to keep pace with changing consumer preferences. Rather than invest in internal R&D, larger companies like Sovos rely on M&A to grow their portfolios and market share. 

Sovos is making a play for the breakfast and snacks space with this acquisition. Snacking has increased in popularity over the last several years, but the pandemic supercharged that trend. A Mondelez report from May showed that since lockdowns began, 40% of people said they were eating more snacks. Breakfast too has seen a sort of renaissance as on-the-go rushed meals have transformed into more frequent prepared breakfast occasions. Chicory data reported by Food Navigator showed online queries for pancake recipes and buttermilk substitute options jumped massively in the first month of the pandemic.

Birch Benders will likewise benefit from this acquisition by gaining access to a company that has proven its ability to grow brands, as well as a steady stream of funding. Sovos is backed by the global private equity firm Advent International, which has $49 billion of assets under management. 

Not only will Birch Benders have to innovate for the sake of responding to customer demand, but it will need to continue to differentiate itself from competitors. Traditional players in the space include Quaker’s Aunt Jemima brand and General Mills’ Betty Crocker Bisquick. However, Birch Benders is more directly in competition with some of the smaller, healthier brands including Bob’s Red Mill, Simple Mills and Purely Elizabeth, in which General Mills has a $3 million stake.