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August 31, 2021

Sovos Brands moves forward with IPO plans

The US cooking sauces and frozen meals business was set up with the backing of private-equity firm Advent International four years ago.

US food group Sovos Brands has filed documents for a stock-exchange listing.

The company, set up in 2017, intends to list on the Nasdaq exchange under the ticker symbol SOVO.

Sovos Brands has lodged its plans with the US Securities and Exchange Commission. In February, Bloomberg reported Advent International was considering an IPO of the business, which owns Rao’s pasta sauce, Michael Angelo’s frozen meals and Noosa yogurt.

Outlining the IPO plans, Sovos Brands said it had yet to determine how many shares will be offered and the price range for the proposed offering.

The company was formed by CEO Todd Lachman and chairman Bill Johnson, the former president and CEO of H. J. Heinz (the ketchup giant that is now part of Kraft Heinz). With the backing of Advent International, they set out to create a “scale player” in the US food industry.

Sovos Brands’ most recent acquisition came in the summer of 2020, when it snapped up Birch Benders, a US producer of pancake and waffle mixes.

In the S-1 form the company has filed with the SEC, it said it had generated net sales of US$560.1m in the 52 weeks to 26 December, up from $388m a year earlier. The business booked an operating income of $37.4m, versus an operating loss of $22.8m 12 months previously. It made a net income of $10.8m, against a net loss of $27.1m the year before.

Sovos Brands’ largest brand by sales is Rao’s, under which the company sells pasta sauces, pizza sauces, dry pastas, frozen entrées and soups.

In the documents lodged with the SEC, the company says “despite our success, we believe significant opportunities remain for additional growth”. The business points to Rao’s “household penetration”, which the company said stood at 9.6% in the 52 weeks to 13 June, compared to the – unnamed – number one and two brands in the sauce category, which had household penetration of “over 30%”.

“In the same time period, the household penetration of Noosa yogurts stood at 7.8% (compared to the yogurt category at 82%), Michael Angelo’s frozen dinners stood at 4.9% (compared to frozen dinner category at 71.5%) and Birch Benders pancake and waffle mixes and frozen waffles stood at 2.9% and 1%, respectively (compared to 50.6% and 43.5% for the pancake and waffle mix and frozen waffle categories, respectively),” Sovos Brands wrote.

Lachman, who is also Sovos Brands’ president, added: “Sovos is exactly what we set out to create – a high-growth, purposefully-built food platform and growth accelerator with a portfolio of ‘one-of-a-kind’ brands. We still have a long runway in each of these brands that supports our algorithm for sustainable long-term profitable growth.”

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