- Flowers Foods invested an undisclosed amount in gluten-free and grain-free bread company Base Culture. The investment will help Base Culture increase its distribution, scale and marketing, as well as bolster its manufacturing capabilities. Flowers joins an existing investor group led by Emil Capital Partners.
- Base Culture was started in 2012 by Jordann Windschauer who was looking for snacks that aligned with a paleo lifestyle. The company’s manufacturing facility opened in 2017, and its products are available in nearly 15,000 retail locations today.
- As consumers look for new options to meet different dietary requirements, large CPGs are making investments and acquisitions in trendy, fast-growing brands that serve these needs.
While Flowers Foods is best known for its big bakery brands — including Wonder, Dave’s Killer Bread, Tastykake and Sunbeam — it’s also been working to acquire and invest in smaller brands with more niche consumers. Investing in a fast-growing brand that appeals to consumers avoiding wheat and other grains is a move that’s been in Flowers’ playbook during the last several years, and it fits into the company’s broader strategy.
Flowers has been active in M&A and investments. From expanding Dave’s Killer Bread into new categories to its 2018 acquisition of gluten-free bakery Canyon Bakehouse, the company has focused more attention on several brands that could be considered more niche.
In 2020, Flowers formalized its strategy of focusing on M&A opportunities and more premium brands. That’s paid off for the company in the last two years. In its most recent earnings report, branded product sales increased 11% compared to the same time last year. And while some of that comes from higher prices due to inflationary pressures, President and CEO Ryals McMullian said in prepared remarks that Flowers’ brands increased their market share by 30 basis points in the quarter.
While Base Culture isn’t an acquisition, the investment and partnership could be seen as setting the stage for one. Flowers has been known for using its infrastructure and capital to help relatively unknown brands reach more consumers and expand their sales. When Flowers bought Dave’s Killer Bread in 2015, it paid $275 million for a business that had 2016 sales of about $160 million to $170 million. Baking Business reported the brand had annual sales last year of about $875 million.
Even before Flowers’ investment, Base Culture was seeing growth, expansion and favorable consumer reviews. It has seven varieties of gluten-and-grain free, paleo and keto-certified sliced bread. But it also has buns, brownies, sweet bread, almond butter and baked breakfast squares, which were launched earlier this year.
There’s a lot of potential growth for Base Culture. Grandview Research estimated the global gluten-free food market was worth $5.9 billion in 2021, and is expected to increase at a compound annual growth rate of 9.8% through 2030. And a 2020 analysis of Google searches by Supplement Place found the keto diet was the most popular, not only in the United States, but throughout the Americas.