Ancient Nutrition, a manufacturer of chicken-based bone broth protein supplement products, announced it has sold a $103-million minority stake to VMG Partners, Hillhouse Capital, CONIQ Capital, and more than 100 members of a co-investor network. The company said it plans to use its first outside investment to accelerate growth through social media outreach, more in-store demos and continued support for direct-to-consumer e-commerce.
Ancient Nutrition achieved a 266% compound annual growth rate from 2013-2017 and contributed $10 million — or more than 40% — to total category growth, the company said. Its GMO- and gluten-free lineup of 80 products contains no dairy, soy, grains or nuts and are sold at Whole Foods Market, Sprouts, specialty retailers nationwide and online.
The company was co-founded in 2016 by Jordan Rubin, who also founded Garden of Life and Beyond Organic, and Dr. Josh Axe, a natural medicine and chiropractic physician and clinical nutritionist. Among the members of the co-investor network are personal trainer Jillian Michaels, Stonyfield Farm co-founder and chairman Gary Hirshberg, Brandless.com co-founder Ido Leffler and former Annie's Homegrown CEO John Foraker.
Demand for bone broth products is increasing. According to NPR, some source material went from $30 for a 50-pound case of butcher's bones a few years ago to up to $4 per pound in 2017.
Whether bone broth is a here-to-stay segment or merely a flash in the pan, it's clear that some heavy hitters in the food and beverage industry are interested in finding out.
Foraker is the former president of Annie's Homegrown, now a division of General Mills. When he left that position last year, it was to co-found and lead an organic baby foods startup in California called Once Upon a Farm, with the stated goal of helping it "grow big and fast into a highly disruptive force in the organic food space."
Foraker calls himself "an entrepreneur at heart" who isn't cut out for corporate life over the long term and is now applying his food industry background and knowledge to guiding and positioning Once Upon a Farm. He can bring that expertise to the team at Ancient Nutrition.
Leffler is an Israeli-Australian entrepreneur who helped launch Brandless.com last summer — an e-commerce site where everything costs $3. Also a co-founder behind Yoobi, an online store for school supplies; Cheeky, a colorful tableware supply company; and Yes To, an e-commerce purveyor of natural personal care products, Leffler's projects all donate part of their proceeds to causes in some way related to their products.
Leffler has said that to successfully start a company in an industry replete with already established options, the enterprise needs to be innovative, different, and, for him, focused on a cause. He brings out-of-the-box thinking and high energy to the company.
Ancient Nutrition co-founder Jordan Rubin has also been busy. Besides founding the Garden of Life organic line of vitamin supplements — Nestle acquired its parent company late last year for $2.3 billion — he is the author of "The Maker's Diet," a book extolling the health benefits of a 40-day "biblical diet" that made The New York Times best-seller list in 2005.
Rubin has big plans. According to Food Navigator, Ancient Nutrition debuted a line called Ancient Apothecary, which combines herbs in ways echoing ayurvedic and Chinese medicine, and he expects that its bone broth products, along with its collagen and keto ones, will end up leaving plant proteins behind in the next five years.
All this growth is likely to attract a buyer at some point, if it hasn't already. Keurig Green Mountain partnered in 2016 with LonoLife and the San Diego Coffee Co., on a single-serve bone broth product that worked with the Keurig system. And Campbell joined with Keurig on Campbell's Soup K-Cups in 2015. While Keurig will be busy for some time with its $19-billion merger with Dr Pepper Snapple, Campbell might be interested in taking a look at Ancient Nutrition since it would bring the iconic soup company an on-trend and innovative brand.
Other possibilities are poultry producers with a readily available and probably cheaper supply of chicken bones. Tyson Foods' CEO Tom Hayes recently said his company is interested in more M&A activity if the deals can add "more capacity in a growing category."
Such a scenario would require Ancient Nutrition to be on the block at the right price, however, and it's likely to take at least a year or two to find that out.