- Plant-based frozen food maker Tattooed Chef is acquiring New Mexico Food Distributors, Inc. and Karsten Tortilla Factory, which operate collectively as Foods of New Mexico, for $35 million, according to a press release. The transactions are expected to close in early May.
- Foods of New Mexico currently produces ready-to-eat Mexican dishes for retail and foodservice at its Albuquerque, New Mexico, facility including quesadillas, burritos and sauces. A new plant in Karsten, New Mexico, makes tortillas. Combined, the two facilities total 118,000 square feet.
- Tattooed Chef plans to use the acquisitions to expand deeper into the $20 billion Hispanic and Southwest food segment, as well as ambient foods and snacks, according to the press release. The deals are taking place as frozen food sales have increased during the COVID-19 pandemic, while plant-based foods continue to capture consumers' interest.
The frozen food aisle is making a comeback during COVID-19 as consumers spend substantially more time dining at home and looking for products that they can stockpile. Frozen food sales jumped 17.4% between November 2020 and the same month in 2019, according to data from IRI and the International Dairy Deli Bakery Association.
Tattooed Chef, formed through a SPAC deal last year, saw a 363% increase in revenue over the past year, according to the company. It is hoping to merge consumers' rekindled interest in frozen dishes with plant-based eating and Mexican cuisine. Some of the Tattooed Chef’s current offerings include an enchilada bowl with riced cauliflower and Mexican style street corn, as well as zucchini spirals, acai and smoothie bowls, and frozen cauliflower pizza crusts. Acquiring a company that already has expertise in frozen food manufacturing and Mexican cuisine offers the Tattooed Chef a quicker expansion into the segment.
“We see an opportunity to introduce nostalgic innovation into the plant-based food space and we believe we can leverage Foods of New Mexico's manufacturing capabilities to do so," said Sarah Galletti, chief creative officer and the “Tattooed Chef” behind the brand, in a statement. "We are confident in creating new products, pushing past our existing product line and into new spaces and we are comfortable producing food in any category."
Frozen food sales are expected to remain elevated even after pandemic subsides. According to a survey from American Frozen Food Institute, many consumers view prepared frozen food as an economical, convenient option. And as consumers grow tired of cooking three meals a day at home, ready-to-eat options become even more attractive. A February survey commissioned by Nestlé found once consumers return to the office, 35% are likely to bring a frozen meal to work for lunch, including 49% of millennials.
Along with frozen food sales, plant-based foods are experiencing a surge in popularity, with 57% of U.S. households purchasing plant-based products during 2020, according to SPINS data released by the Good Food Institute and the Plant Based Foods Association, up from 53% in 2019. COVID-19 has only spurred interest in plant-based foods as consumers purchase more better-for-you items and explore new brands on store shelves.
As Tattooed Chef expands it portfolio, it will face competition from a number of other food manufacturers eyeing the frozen plant-based and Hispanic food segments. These include privately owned Amy's Kitchen, which offers frozen vegetarian and vegan burritos, enchiladas and bowls. Conagra's lineup includes Evol Foods' plant-based burritos and burrito bowls, Gardein Southwest-inspired bowls and skillet meals, and Healthy Choice vegan and vegetarian Power Bowls. Sweet Earth has debuted more than 50 vegetarian and plant-based products since it was acquired by Nestlé in 2017, including bowls and burritos. Other brands with plant-based frozen offerings include MorningStar Farms and Kellogg's Kashi.