Bolthouse Restructures, Creating New CPG Division Generous Brands
Los Angeles-based private equity firm Butterfly is restructuring Bolthouse Farms, separating its produce segment from its fresh juice and salad dressing business.
Under the new setup, Bolthouse Fresh Foods will operate as the standalone produce provider dealing in the 100-year-old company’s carrot business, while a new entity, Generous Brands, will manage the beverage, juice and salad dressing portfolio (still under the Bolthouse Farms and Evolution Fresh branding) with an eye towards growing its drinks with possible acquisitions.
The move was facilitated by separate debt recapitalizations of each new entity.
Although announced this morning, Bolthouse Farms has been operating as two separate companies for about nine months already, said Jeff Dunn, Butterfly operating partner and executive chairman of both new businesses(who previously served as president and CEO of Bolthouse Farms from 2008 until 2012).
Butterfly acquired Bolthouse Farms from Campbell Soup Company in April 2019 for $510 million (Campbell originally purchased the brand in 2012 for $1.55 billion).
“We started working on [this split] two years ago, but I started contemplating it before we sold to Campbell’s…These two businesses just don’t naturally go together,” Dunn said.
Carving out the CPG brands from the agricultural company was “always part of our investment thesis” and makes sense to optimize value-creation, Butterfly co-founder and co-CEO Adam Waglay said. The two companies will operate respectively out of either end of Bolthouse’ Bakersfield, California production facility and share distribution space just like a 3PL business.
“We just created two separate capital structures to give them the most flexibility for growth,” he added. “Those are two different businesses. They have different capital needs. They have different acquisitions that they might pursue.”
What categories might Butterfly be looking to grow its portfolio into?
Bolthouse added fresh-pressed juice brand Evolution Fresh in May 2022 and is now “very interested” in moving into canned beverages like “alt soda,”, Dunn said.
“When we start thinking about acquiring brands, we want to plug them into our scale system.” Dunn said. “We’re low-cost manufacturing, distribution and selling. Many of these kinds of $100 million brands are co-manufactured, so you get immediate accretion to margins. In our system we’re going to be able to do it faster and more efficiently.”
Leading the two new entities will be former Dole Fresh Vegetables president Timothy Escamilla (who has been working for Bolthouse for about a year) and former Kraft Heinz president of Fresh, Beverages and Desserts Steve Cornell, who will lead Bolthouse Fresh Foods and Generous Brands respectively.
Butterfly has grown its “seed to fork” strategy of food-focused investments by acquiring majority stakes in Pete and Gerry’s Organics, condiment and sauce brand Chosen Foods, wellness company MaryRuth Organics and nutritional shake maker Orgain (which it subsequently sold to Nestlé Health Science in 2021). Rounding out its investments in food, Butterfly added a business-to-business angle with vertically integrated dairy ingredient maker Milk Specialities Global in December 2022.
Though on a different scale, Kellogg’s initiated a similar strategy last year with its split into Kellanova and the WK Kellogg’s company. The move siloed the lower growth cereal brands into WK Kelloggs from the faster moving segments in snacks, frozen and international.
Most importantly for Butterfly, splitting Bolthouse up into two entities allows it to spread its debt over two businesses while focusing on the differing needs that come from operating an agricultural company and consumer-facing brands.
“The farming business needs a lot of cash, it’s more capital-intensive. Beverages are very capital efficient,” Dunn said. “We took the one mortgage on the house and split the house into a duplex and got two different mortgages.”
