EnWave Sells Moon Cheese Snack Brand To Focus On Licensing

Food processing company EnWave Corporation has sold its Moon Cheese snack brand to Creations Foods as part of a strategic shift from retail CPG to commercial food drying technology and equipment licensing.

As part of the deal, Creations Foods, part of private equity firm Rio Investment Partners’ agri-food portfolio, is entering a royalty-bearing commercial license agreement to produce cheese snacks in the U.S. using EnWave’s 100kW Radiant Energy Vacuum food drying machine. EnWave will receive $2 million for the various assets, licenses and equipment associated with the Moon Cheese brand.

Based in British Columbia, Canada, EnWave develops vacuum microwave dehydration technology that can be used in freeze-dried, air-dried or rack-dried food applications like jerky or fruit and veggie chips. Moon Cheese, part of EnWave’s subsidiary NutraDried Food Company, was initially launched as a way to de-risk EnWave’s large-scale drying equipment business and provide a proof of concept of its technology, EnWave CEO and president Brent Charleton told NOSH.

“We thought that if we could prove that certain products – in this case cheese snacks – would be commercially viable, and show some operating history with the larger units, that perhaps we would gain further licensed partners and sell more machines,” Charleton said.

Moon Cheese enjoyed some initial success after launching in 2013, landing in major retailers like Costco and Kroger as a better-for-you salad or soup topper and, eventually, relaunched as a ready-to-eat snack with new packaging at Expo East 2019. At its peak, the distribution was greater than 20,000 placement in grocery, foodservice and club channels, Charleton said.

“It got to the point where it was basically half our balance sheet, half our P&L,” Charleton told NOSH. “And then there was this conundrum. Originally we were a high technology business and now we’ve got this subsidiary, which is theoretically competing with some of our licensed partners.”

In addition to its flagship line of cheese bites, the brand’s portfolio includes Crumbles (a bread crumb alternative), Blitz Mix (nut and cheese trail mixes), and, most recently, Cheese Sticks.

EnWave brought on CPG exec Brad Lahrman as CEO in June 2021 to manage the NutraDried business. According to Lahrman’s LinkedIn profile, the subsidiary was valued at $15 million and, at the time of his appointment, was “plagued by financial and operational underperformance.” Under his tenure, his profile notes, Lahrman “refocused the company strategy behind expanding into bulk and private label cheese sales, as well as utilizing the manufacturing technology in other verticals,” and “repositioned the Moon Cheese brand from a keto cracker to the only high protein 100% cheese snack within the alternate snacks set.”

In the past year and a half, Lahrman wrote on LinkedIn, the company generated $1.5 million in contracted business with “three of the largest US snack manufacturers,” eliminated over $1 million in annual COGs and increased profit on Amazon sales by 17%.

Still, when the pandemic hit commodity prices rose, margins for the snack brand eroded and EnWave began to realize it needed to offload the CPG business in order to focus on the core of the company’s platform, Charleton said, licensing its equipment and technology to food and cannabis brands.

In a January press release, EnWave announced that it was beginning “an orderly wind-down and value maximization process” as NutraDried’s financial performance had “deteriorated significantly” in the last three fiscal years. The company attributed NutraDried’s “negative performance” to abnormally high pricing for cheese combined with overall lower sales.

Additionally, other cheese and snack brands have created, and in some cases sold, their own baked cheese snacks, leading to increased competition. Kainos Capital led a carve out of snack brand Whisps from Schuman Cheese in 2019, while Hain Celestial acquired Parm Crisps from Clearlake Capital in December 2021 as part of a $259 million deal.

Creations Foods became an obvious choice as EnWave looked for a buyer of Moon Cheese, Charleton said. The Washington-based food company had experience operating in the better-for-you snacking category with its gluten-free, keto-friendly Chewma Protein Bites and plant-based cookie Toatzy and was interested in the opportunity presented by becoming a licensing partner with EnWave, which will receive a royalty on Moon Cheese commercial sales.

Along with Creations Foods, EnWave has commercial licensing agreements with food conglomerates like Dole Sunshine (which produces dehydrated, crunchy pineapple and banana snacks Good Crunch), PepsiCo and Dutch dairy business FrieslandCampina as well as the U.S. Army providing dehydrating technology to create shelf-stable field rations for soldiers.

Charleton sees the sale of Moon Cheese as a win-win for EnWave and Creations Foods. It will allow the brand to continue on under management whose expertise lies in CPG food snacks and EnWave can continue to devote its attention towards royalty-bearing licensing business.

“We’re linked to their success, as we are with all of our other licensed partners,” Charleton said. “We’re hopeful that not only will we see Moon Cheese on the shelves going forward and competing in that particular category but also a number of other larger branded businesses leveraging the drying capabilities of Creations on a go-forward basis.”