- Private equity firm VMG Partners acquired Popchips as the inaugural brand for its new Velocity Snack Brands accelerator platform, according to a press release sent to Food Dive. Financial details were not disclosed.
- Velocity Snack Brands (VSB) is a new platform the firm created to invest in and partner with entrepreneurial companies to help them scale their businesses. The platform will invest broadly in snacking across salty, sweet and nutrition bar categories, the release says.
- VSB will be headquartered in Los Angeles and headed by Amit Pandhi, the former president and CEO of low-calorie ice cream brand Arctic Zero. He led the brand from its creation to becoming the #6 pint brand in the category.
Popchips has come a long way from its heyday of ballooning earnings and celebrity endorsements. After being named by Forbes as one of America’s top 100 most promising companies, investor Ashton Kutcher became the face of the brand and produced an off-color ad where he was accused of blatant racism after darkening his complexion. Then consumers filed a lawsuit in which the brand was accused of falsely employing the term “natural.” The suit was settled for $2.1 million in cash and $300,000 in vouchers to compensate all customers included in the suit.
Following that, things quieted down for Popchips.
Now the air-popped potato chips are being handed off to VMG Partners in hopes of returning them to their former glory. VMG has been investing in the CPG category for more than 15 years and has placed bets on some big winners — including Spindrift, Smashmallow, Pirate Brands, Justin’s, Ancient Nutrition and Bare Snacks. It is said that history repeats itself, and if that is the case, Popchips looks like it will be set up for success.
Not only does the brand now have the backing of VMG, but it is a snack that checks many of the trendy boxes in the category. The product is gluten-free with no preservatives, artificial colors or GMO ingredients. If VMG can find a way to bring consumers’ attention back to the basics, the brand has a good chance of popping back to the top of the highly competitive snack space.
Furthermore, the private equity company is making Popchips the inaugural brand in its new Velocity Snack Brands platform. Beyond the financial support that VMG offers brands, VSB will operate more like an incubator, giving brands access to knowledge capital to help speed along innovation as well as know-how in achieving an omni-channel retailer presence. Although Popchips already managed to grow independently, perhaps a refresh is exactly what it needs to split from the issues in its past.
By offering growth resources in a private equity setting, brands are sheltered from the demands of shareholders. Unlike CPGs that operate their own incubators and accelerators in hopes of uncovering the next hot brand to introduce into their own portfolio, private equity is looking to cash in on its investment. Therefore, there is a better chance that VMG will be content with developing its acquired investments at a slower pace to ensure they are mature enough to sell and will command the highest valuation. Doing so could produce more stable brands that are equipped to retain their identity and consumer base, even if they are sold to a larger company.
In a press release, VMG says it is considering other platform concepts for the future. While this initial incubator concept from VMG focuses on snacks, going forward the private equity firm could perhaps begin to look into the environmentally conscious, non-GMO or free-from space — all currently red hot with consumers.
Before moving into the future, VMG first has to test out the concept and see if its strategy is successful — and Popchips is up.