Andy Coyne speaks to Amit Pandhi, the man charged with building up a better-for-you snacking portfolio at new, private-equity-owned, US snacks group Velocity Snack Brands.
Trade buyers and investment houses in the US keen to snap up interesting and innovative snack brands are set to face more competition from a new kid on the block.
Velocity Snack Brands (VSB) has been established by US private-equity firm VMG to “acquire, incubate and grow a portfolio of leading snack brands”.
It kicked off its portfolio with the purchase this month of local brand Popchips’ operation in North America – and most international markets outside of the UK and Europe – for an undisclosed sum.
The man charged with leading VSB is Amit Pandhi, who will be familiar to many in the US food space as the former CEO of healthier ice-cream brand Arctic Zero.
Pandhi’s experience with Arctic Zero is likely to stand him in good stead at VSB, which has an acquisition strategy of looking for better-for you snacking brands.
Not that VMG is a stranger to this part of the market. VMG’s investments in the past have included chia seed bar company Health Warrior, fruit chips firm Bare Snacks (now both owned by PepsiCo), while the private-equity firm’s current investments include fig bar company Nature’s Bakery and lower-sugar confectionery brand Lily’s.
Whether any of VMG’s existing healthy snack brands will be moved across to the newly-created VSB platform is not yet clear but Pandhi is excited by the potential the new VSB acquisition vehicle offers. “For me the VSB proposal was a unique concept, an opportunity to work with so many brands and to grow them,” he tells just-food.
The statistics would seem to back up Pandhi’s optimism about the category generally and the healthier end of it in particular. According to research and analysis company GlobalData’s US Savoury Snack Report, produced last month, the category is expected to grow from US$36.8bn in 2018 to $45bn by 2023.
And it suggests better-for-you snacks are leading that charge with popcorn linked to health and wellness claims expected to grow as a category segment by 11.1% over that period. “I believe this is the future of the food and beverage space,” Pandhi says.
Pandhi has a background in both private equity and banking and the food industry, specialising in disruptive brands, and he thinks this will stand him in good stead for his new role.
“I have been fortunate to be able to bridge both sides as an operator and an investor,” he says.
Aside from his work at Arctic Zero, Pandhi has been a board member at nut-butter business Nutista and coconut-chips purveyor Dang Foods and remains on the board at healthy fruit-bar firm Bright Foods.
“It’s always been a part of what I am to take the knowledge I’ve learned and play it forward,” he says, saying he thought the time was right to leave Arctic Zero. “I felt good about the team there,” he says.
He is suggests the nascent VSB will be a good fit for the firms in which it invests and retailers.
“People think very small brands have to struggle. We want to be the leading destination for exceptional talent and brand building,” he says.
“Frankly we have had such tremendous feedback from retailers that we will launch some [brands] directly with them. We want to create a one stop shop for better-for-you snacks for retailers.”
Asked what type of business VSB will look to invest in, Pandhi says: “We will be looking at salty snacks and confectionery bars, as well as the nutrition category. But everything will be better-for-you.
“I’m really looking for brands that solve a pain point in the marketplace”
“I’m really looking for brands that solve a pain point in the marketplace, brands that have clear consumer demand. And there needs to be real emotional connectivity between the brands and the consumer.”
Will he and VSB be looking at some of the more fledgling snacking segments, around CBD or edible insects, perhaps?
“It’s not about any one specific ingredient or product. It’s about a brand as a whole and what makes it special and attractive,” he says.
And will it include start-ups? “It will focus on both ends of the spectrum. Some companies we will incubate,” Pandhi says.
Popchips clearly doesn’t come into that category. VSB is now operating out of the newly-acquired company’s Los Angeles base and Pandhi says its new owner will augment and add to the Popchips team as necessary.
“L.A. is a hotbed for talent and brands and product innovation,” he says.
When the acquisition of Popchips was announced earlier this month, Wayne Wu, general partner at VMG Partners, said: “I couldn’t think of a better starting point for VSB than the acquisition of Popchips. Building platforms in categories where VMG has been actively investing for nearly 15 years has been something we have been contemplating for some time and we are thrilled to kick off our first consumer products platform with Popchips as a partner.”
Pandhi has also been made CEO of Popchips. Is he spreading himself too thinly?
“That was more for clarification when we acquired it but I am focused on both – Popchips and VSB,” he says. “Popchips has 89% brand awareness but there is also a tremendous amount of white space in terms of building distribution and pushing out innovation.”
Most of VMG’s investment have been in the US but there has been the occasional foray overseas – such as UK organic baby-food brand Little Freddie. VSB is likely to follow suit, although Pandhi says there is no remit to stop it acquiring non-US businesses.
He is acutely aware, though, that whether at home or abroad there is going to be a lot of competition to snap up the best up-and-coming brands.
“I think there is a lot of competition but also a lot of white space. What makes VSB attractive is that we are as nimble as a small brand. That allows us to be an efficient one-stop-shop,” Pandhi says.
And he sees no sign of the better-for-you trend disappearing. “Consumers have got smart about what they put in their bodies,” he says, pointing out new brands with innovative new concepts are springing up all the time. “While we were announcing Popchips a number of other brands were already coming to us. We are open to these opportunities,” he says.
Popchips founder Keith Belling sees the logic of it joining VSG’s new snacking portfolio.
When the acquisition was announced he said: “VSB’s mission is so well aligned with Popchips’ commitment to innovation and leadership in the better-for-you snack category, and I look forward to seeing how they leverage the expertise and operating synergies of the snack platform they are building to take Popchips to the next level.”
But who will have the final say on which businesses VSB acquires: Pandhi or the VMG hierarchy?
“It will be collaborative but it will be about leveraging their [VMG’s] expertise and knowledge to determine what we can do,” he says.
Sensibly Pandhi won’t discuss the size of his acquisition war chest but says: “We have VMG’s support as we build the platform.”
Quizzed on what the private-equity firm’s exit strategy might be, Pandhi points out that it is only his eleventh day on the job. “I need to focus on the job at hand. Exits will work themselves out,” he says.
He is excited about the potential of his new venture and is undaunted about some of the food giants, such as PepsiCo and Campbell Soup Co.’s Snyder’s-Lance – who will – potentially – be his rivals in the snack deals stakes.
“While there are some very large players in this space, which have dominated, there is a very real opportunity as a platform for us to democratise health and wellness and to work with retailers to bring these brands to fruition,” he says.