- Post Holdings Inc. is leading a $12.5 million Series B funding round for PeaTos, the cheeky challenger to Frito-Lay that makes pea-based versions of Cheetos and Funyuns, according to a press release. No additional investors were named. This builds on PeaTos’ $7 million Series A funding round that closed in September. PeaTos plans to use the funds to develop its humorous brand voice, forge new partnerships and strengthen relationships with its online customer base, which it says has been growing during the pandemic.
- PeaTos also plans to use the capital to expand its reach to traditional retailers. Its product is currently sold at more than 4,700 grocery locations. Last May, Peatos launched a direct-to-consumer site, and has since added a subscription service and a loyalty program.
- Post, best known for its cereal lineup, has recently been pushing into the plant-based space. In January, it forged a deal with Hungry Planet to distribute the startup's plant-based meats in retail and foodservice. Last May, Post's Michael Foods division agreed to distribute Just Egg's mung bean-based egg substitute to restaurants, cafeterias, hotels and stadiums nationwide. This latest investment in PeaTos expands Post's reach into the growing plant-based snack segment, where competition is growing quickly and attracting Big Food dollars.
PeaTos marks Post Holdings’ first investment in the plant-based foods space. Previously, the company had made partnerships with startups to help expand production and distribution capabilities.
“We are very excited to begin our partnership with [PeaTos founder and CEO] Nick [Desai] and the PeaTos brand," Howard Friedman, president and CEO of Post Consumer Brands, said in a statement. "We believe it has a bright future and we can learn a lot from their entrepreneurial culture and gain an understanding of the fast-growing snack space.”
Post’s investment also gives a significant boost to PeaTos, which, like its plant-based peers Hippeas and Outstanding Foods, seeks to disrupt the giants of the $1.2 trillion snacking segment. In January, Hippeas gained a $50 million investment from The Craftory Limited, which it will use toward expanding production and distribution, and evolving beyond puffed chickpeas into multiple snacking categories. Outstanding Foods, a maker of plant-based pork rinds, recently raised $10 million in funding, which it plans to use to expand its retail footprint, grow DTC retail and develop new products.
PeaTos, meanwhile, has experienced "massive growth" through its new DTC site, according to the company, and “explosive growth” for its Cheetos and Funyuns copycats through all channels. Desai expects revenue to double in 2021 to reach $10 million, according to Forbes.
Post is also PeaTos' first Big Food investor, although it has received funding from executives with former ties to snack giants Conagra, Mars, Frito-Lay and Snyder's-Lance, not to mention celebrity investors that include a UFC heavyweight champion.
The new funding round for PeaTos will give it more ammunition for what it describes as a "David vs. Goliath battle" with Frito-Lay, with which it already has a history of confrontations. And the investment will be sorely needed: Last month, Frito-Lay parent company PepsiCo announced it is partnering with Beyond Meat to create a new line of plant-based snacks.
Although PeaTos remains a relatively small player in the broader market, this infusion from Post is likely to give it better chances in the crowded better-for-you snack space. And if it continues its tongue-in-cheek imitation of Frito-Lay, it may gain enough attention to stand out and keep the momentum going.
Correction: In a previous version, the headline misstated the amount of Post Holdings' investments. It led the $12.5 million funding round.