- Plant-based dairy maker Good Karma Foods bought back its majority ownership from Dean Foods, according to a release. Good Karma will operate as an independent company led by its current leadership team and CEO Doug Radi.
- The brand also said it raised "significant" new capital in a funding round from Valor Siren Ventures and existing investor 2x Consumer Products Growth Partners. Terms of both transactions were not disclosed.
- Good Karma, which sells flaxseed milk and plant-based dips, said it plans to use the new funding to accelerate its distribution expansion, innovate in different plant-based categories and grow its consumer awareness programs.
Since 2017, Dean Foods made several investments in Good Karma. Eventually, Dean took a majority stake in the company, allowing the milk giant to take a step into the alternative dairy space at a time when traditional milk was on the decline.
The original intent of Dean's investment in Good Karma was to help the plant-based brand expand its distribution with the dairy giant's many resources, while also giving Dean the chance to test the waters of the plant-based category. At the time, Dean was on a M&A spree to diversify its portfolio. Dean acquired the retail ice cream business of Friendly's for $155 million, entered into a joint venture with Organic Valley and bought beverage company Uncle Matt's Organic.
But these moves weren't enough to save the company. Facing increased competition from private-label offerings, other alternative dairy items and less consumer interest in its staple product, Dean Foods filed for Chapter 11 bankruptcy protection in November. Dean ended up selling the majority of its assets to Dairy Farmers of America for $433 million earlier this year, even though the deal raised antitrust concerns. But DFA reportedly wasn't interested in buying Good Karma.
Since Dean's majority ownership of Good Karma didn't work out as intended, the brand said it was presented with a "unique situation" to buy out Dean's interests and refocus the company with support from new investors.
Good Karma Foods isn't the only company in Dean's portfolio that repurchased itself after the bankruptcy. Matt McLean, the founder of Uncle Matt's Organic, bought his family business back earlier this year for about $7.25 million after the milk giant went bankrupt.
With this latest round of funding and its new ownership, Good Karma is looking to expand its reach in the increasingly crowded but rapidly growing plant-based dairy space. Plant-based food retail sales reached $5 billion last year, increasing 11.4% over the previous year, according to data from SPINS. Specifically, plant-based milk sales jumped 5% in 2019 and comprised 14% of the milk category, while sales of cow's milk were nearly flat, the report found.
At a time when food allergies impact one in four consumers, Good Karma stands out among the more common almond and soy milk varieties in the category as an allergen-friendly brand. When it started in 2012, Good Karma was the first company to create a flax-based milk alternative. The company said it was developed based on the demand for a milk alternative that was free of all major allergens. The brand's portfolio has since expanded to include other plant-based dairy options like dips and sour creams and more products are expected from this new funding round.