- Sovos Brands, a new food and beverage company, has agreed to acquire premium pasta sauce maker Rao Specialty Foods, according to Food Business News. The deal is expected to close later this year, though financial terms have not been disclosed.
- This is the second investment by Sovos Brands, which targets high-quality brands in trending categories. In January, the company bought frozen Italian entrees maker Michael Angelo's Gourmet Foods.
- "Rao's Specialty Foods is a great addition to the portfolio we are creating of one-of-a-kind brands in the food and beverage sector," Todd Lachman, president and CEO of Sovos Brands, said in a company statement. "Its unwavering commitment to authentic, delicious-tasting products using only the highest quality ingredients aligns with our strategy of partnering with unique brands that are in demand with discerning consumers."
Sovos Brands' focus on smaller, premium brands isn't surprising. Consumer interest is shifting from well-known legacy brands to companies that are family owned, mission-based or otherwise more "authentic" than massive CPG companies — a trend that's weighing on major manufacturers. To stay relevant in the eyes of the consumer, many of these bigger companies are snapping up niche brands with strong health halos.
Sovos Brands, recently created by Advent International private equity investors, is filling its portfolio with the kinds of premium brands that consumers are willing to pay more for. It will be interesting to see how quickly the company is able to grow the brands it acquires, whether through investments in distribution, marketing or product innovation.
Sovos doesn't have the same resources that a major company like General Mills does, but also isn't burdened by a swollen portfolio. The company's size will likely allow it to be more nimble and fast-moving than larger competitors, as it doesn't have to divide its attention between traditional products and up-and-coming brands. On its website, the company describes itself as having "the soul of a startup" and "the experience of an industry leader" — a combination that could threaten established businesses.
The company itself is made up of an intriguing combination of executives. Members of Sovos' leadership team have impressive experience at major CPG firms. including companies such as Mars, H.J. Heinz, Del Monte and Procter and Gamble. This kind of CPG experience in the c-suite makes Sovos a company worth watching closely.
It will be interesting to see the rate at which Sovos buys new brands, as well as what kind of brands it will pursue in the future. Both Rao's Specialty Foods and Michael Angelo's Gourmet Foods, the company's only investments so far, are Italian, though in different categories. It seems unlikely that Italian food will be the company's focus, but these two acquisitions could hint at a strategy of targeting premium ethnic foods brands to lure consumers seeking authentic flavor experiences.