The Checkout: Whole Foods Settles $15M Dairy Supplier Case; Del Monte Acquires Kitchen Basics

Welcome to The Checkout: an express lane for the weekly news you need to know, always 10 items or less.

Whole Foods Market Settles For $15 Million Case Alleging It Bankrupted Local Yogurt Supplier

Five years after the dispute first began, Whole Foods Market has agreed to pay $15 million to settle a breach of contract suit brought by now-defunct dairy supplier, AtlantaFresh Artisan Creamery. Asset Recovery Associates LLC served as the assignee for creditors of the bankrupt dairy business which alleges that the forgone contract forced the company to go out of business.

Terms of the deal have not been disclosed and the agreement is still being finalized. The case and pending settlement agreement was filed in Georgia federal court.

The dispute began in 2017 when Whole Foods expanded its relationship with AtlantaFresh and signed a seven year agreement to purchase 30,000 gallons of milk weekly from the dairy supplier. A year-and-a-half after signing the contract, AtlantaFresh had invested over $2 million to expand operations and meet the increased demand when Whole Foods “abruptly” broke the agreement due to “weak product sales.”

Earlier this year, the judge rejected the grocer’s motion to dismiss the case on the grounds that Asset Recovery had not included a comprehensive list of assigned assets in the original filing. The suit was amended and the judge said that AtlantaFresh’s claims were sufficient for the case to move forward.

Whole Foods also made an attempt early on to have the case dismissed. The natural grocer argued that the suit should never have been filed claiming that, since the yogurt maker was a limited liability company, it could not assign over its assets for the benefit of the creditors. This motion was also struck down.

Del Monte Acquires Kitchen Basics

Amid booming global demand for soup, Del Monte foods is ramping up its presence in the category, announcing this week its acquisition of ready-to-use stocks and broths business Kitchen Basics from McCormick & Company.

“Del Monte Foods has gone through a positive transformation over the past five years, and we have become a leading innovative CPG growth company,” said Greg Longstreet, president and CEO of Del Monte Foods, in a press release. “As we plan for the next decade of growth, we’re committed to strengthening our branded product portfolio to meet consumers’ changing needs. Building on our regional College Inn brand, the acquisition of Kitchen Basics will provide synergies across our business to scale our broth and stock portfolio across North America.”

The portfolio includes both conventional and organic lines, available with a range of sodium levels and varieties such as Chicken, Beef, Vegetable, Turkey, Seafood and Creamy Bean & Vegetable. According to a recent market report, demand for soup spiked during the pandemic and is expected to continue trending upward. The category is currently valued over $16 billion and is expected to grow 2.7%, reaching nearly $21 billion by 2027.

“We’ve seen heightened interest in broth and stocks over the last few years as consumers double down on home meal preparation, health and wellness,” said Bibie Wu, CMO of Del Monte Foods, in a press release. “Kitchen Basics is well-known for its culinary quality. We’re excited to bring Kitchen Basics into the Del Monte family of brands to help people create healthful meals they love.”

Naturally Network And NielsenIQ Launch Minority-owned CPG Brand Fellowship Program

Natural food industry community Naturally Network and market analytics firm NielsenIQ are launching a fellowship program to support minority-owned CPG companies, according to an announcement made earlier this week. Selected fellows will participate in a 12-week program that “supports the success of racially and ethnically underrepresented business entrepreneurs in the organic and natural sector.” Applications for the M/O fellowship are now open with 16 spots available.

“Breaking into the natural and organic CPG industry today is not an easy feat, and the Naturally Network supports a thriving diversity of entrepreneurs through programming and community building. We recognize that there are additional systemic barriers that underrepresented founders face,” said Naturally Network Executive Director Katrina Tolentino, in a press release. “With NielsenIQ we can expand the M/O Fellowship to address some of these issues head-on and bring more diversity, equity, and inclusion to our industry.”

The program was test launched in Naturally’s Austin chapter last year, where it was supported by CGP accelerator SKU. With NielsenIQ now as the main sponsor, the program has been expanded for all diverse, minority founders nationwide. The program is free for participants due to Nielsen’s sponsorship.

Tabasco, Instacart Foray Into Fashion

Tabasco and Instacart each launched new lines of swag this week, with the hot sauce maker debuting a limited-edition collection of grilling-inspired fashion and accessories while the grocery delivery platform introduced a tote bag, water bottle, long sleeve tee-shirt, and bucket hat, designed by Anwar Carrots.

The hot sauce maker’s lineup includes items like Not Your Dad’s Bucket Hat, which comes with a Tabasco Sauce mini bottle holder; a Hawaiian-style button down shirt; a pair of red slides; tear and share temporary tattoos; and a Tabasco Brand jersey. Both collections are available for purchase online for a limited time.