Secret Sauce: Bachan’s Raises $13M, Will Hit Profitability This Year

Condiment brand Bachan’s announced yesterday it has raised $13 million in capital, impressing investors with its plans to hit over $30 million in revenue this year.

The round, which closed earlier this summer, was led by investment firm Sonoma Brands Capital, which was founded by KRAVE jerky founder Jon Sebastiani. The round also saw participation from existing investors Prelude Growth Partners and New Fare Partners, along with RVCA founder and president Pat Tenore and filmmaker Destin Daniel Cretton.

“[In 2021] we took the approach of raising less, growing the brand, protecting shareholder value, and then racing down the road when we built more value,” Bachan’s founder and CEO Justin Gill said, “Then 2022, we essentially wanted to raise what we felt could get us to profitability and turn us into a self-sustaining organization”

Gill plans to use the capital to grow the company’s 16 person team as well as support new accounts. This summer the brand brought on new CFO David Lacy, formerly CFO at KRAVE. Some of the capital will also give early executives liquidity to pay back debt taken to launch the company.

Founded in 2019, Bachan’s produces a line of Japanese barbeque sauces available in Original, Hot & Spicy, Yuzu and Gluten-free varieties.

The three-year old company first attracted investors with its products’ unique taste profile and potential for revenue growth. Bachan’s previously raised $4 million in summer 2021 in a round that saw participation from former Whole Foods Market co-CEO Walter Robb alongside celebrity investors including Ryan Tedder, Aaron Paul, Whitney Port, Chase Utley and Abe Burns.

The sauces are sold in 11,000 stores including Whole Foods Market, Sprouts Farmers Market, Target Kroger and this fall, will reach Publix and Albertsons. Bachan’s expanded into the club channel in 2021 when it was picked up by Costco. Gill said that while foodservice is on the docket for next year for now, the company plans to focus on driving trial, velocities and ACV in retail. Though the brand has no plans to expand beyond its current set, he said the ultimate goal is to build a portfolio of shelf-stable, clean-label, Japanese-inspired products.

Maintaining a tight portfolio and focusing on sustainable growth have been part of Gill’s secret sauce from the start, he said, and it’s paid off. The company is on track to report over $30 million in revenue this year, 500% growth from 2021, and Gill said it will be profitable by year’s end. One key to success was a focus on growing natural, specialty, conventional grocery sales in tandem with D2C, rather than focusing on D2C before moving into brick and mortar.

Although comparable to a more traditional teriyaki sauce or glaze, the term “barbecue sauce” has allowed Bachan’s to get on shelf in the traditional condiment set alongside brands such as Rufus Teague, New Primal, Primal Kitchen and Kevin’s, rather than in the international aisle. Not only does the barbecue sauce category attract more shoppers, but it also helps position the sauce as a more versatile condiment like ketchup, Sebastiani said, rather than something that should be used only with Japanese dishes.

“We have become part of [our customer’s] household pantry,” Gill said. “[It] come down to having a really high-quality product that’s versatile and that people want to use in every meal, not just once a year.”

Overall, the condiment category has seen lasting growth as the popularity of at home cooking, spurred by the pandemic, has yet to wane. A survey by marketing firm Hunter last year found that not only were 51% of Americans cooking more than in 2020, 71% intended to continue cooking at home even after the pandemic ended.

While mealtime shortcuts such as sauces have risen, Bachan’s flavor profile has also given it an edge. According to research conducted by Whole Foods Market, “BBQ Goes Global” was the top condiment trend of the summer, and Kroger cited “umami” as its top flavor trend prediction for 2022.

Bachans is the number one selling shelf-stable barbecue sauce in the natural channel, Gill said, bringing in the highest dollars per store, per week, in the category. Online, the brand has found that the average shopper repurchases once every 45 days. That loyalty to the brand, as well as its unique cold fill process and lack of gums, is what’s helped Bachan’s maintain its top position, Gill said, and ward off competitors or private label offerings.

“[Justin] caught lightning in a bottle and now it’s just protecting the momentum,” Sebastiani said. “Bachan’s hits the data points that we think are highly relevant, it’s past a significant point of a proof of concept. It’s got very high margins, and it is wildly profitable already…[Justin is an] emotionally invested founder that we think has a story to tell and only just assists the fact that the product, the secret sauce in the bottle, is driving this virality right now.”