- Mexico-based Sesajal, a producer of oils, grains and seeds, took a minority stake in plant-based snack brand Rhythm Superfoods, according to a release sent to Food Dive. Terms of the deal were not disclosed.
- Rhythm Superfoods intends to use the investment to drive growth and expand capacity, as well as increase marketing and product innovation.
- General Mills’ venture arm 301 Inc, Blueberry Ventures and the CircleUp Growth Fund are other investors in the plant-based snack company.
With its stake in Rhythm Superfoods, Sesajal takes a step further into the health and wellness space, which is growing along with consumer interest in free-from, organic and better-for-you products. With the snacking sector, in particular, 47% of consumers are looking for functionality to meet their nutritional needs when buying snacks, according to the Mondelez State of Snacking Report.
Rhythm Superfoods caters to this segment with its organic and non-GMO plant-based snacks that feature clean label options like dehydrated beets, carrots and kale alongside sweeter options like mango bites, crunchy pineapple and chewy watermelon slices. The investment by Sesajal could help both companies.
Sesajal is focused on ingredients sourcing, something that is important to Rhythm Superfoods since the company uses minimal ingredients to craft its snacks. The Cauliflower Bites feature a short list of ingredients, including organic cauliflower, organic high oleic sunflower oil and sea salt. Its Naked Beet Chips boast just one ingredient: organic beets. Having a partnership with a company that has 30 years of experience sourcing high-quality ingredients is an attractive relationship for a brand looking to expand capacity and increase product innovation but is dependent primarily on the quality of one vegetable to make its product.
Rhythm Superfoods, which is based in Austin, Texas, already does business with Mexico and sources many of its ingredients from the country. The startup’s proximity to the southern border of the U.S. as well as its familiarity with the Mexican business landscape will help facilitate the relationship between the two countries as well as open the door to a potential expansion.
Sesajal has experience taking minority stakes in companies and helping develop them to the point where it is able to make an acquisition. The Mexican corporation took a 50% stake in Chosen Foods in 2015 before fully acquiring them in 2017. Rhythm Superfoods, although it hasn't made a mention of aspirations to be subsumed by another company, appears to be ripe for an acquisition.
General Mills’ VC arm already invested twice in the brand. In 2016, 301 Inc led the $3 million Series C financing round for Rhythm Superfoods before committing to leading an even larger $6 million Series D funding round in 2017. Although to date General Mills has not acquired any of the brands that it has made investments in through its VC arm, the parent company is known for making acquisitions to help reorient its portfolio to align with the evolving consumer preferences. The CPG giant scooped up Annie’s in 2014, Epic Provisions in 2016 and Blue Buffalo in 2018. The company did, however, recently tell Food Dive that it has put its M&A on hold.
As it stands, Rhythm Superfoods now has access to a large, international network of suppliers and distributors in addition to a pile of investment cash. The company has the opportunity to expand its presence, by beginning to build an even larger fan base for its better-for-you products and potentially making itself a more attractive target for a future acquisition.