CPG Week: BetterBrand’s Founder Goes AWOL. Plus, Momofuku’s Fresh Funding

[00:00:05] Monica Watrous: Welcome to the CPG Week podcast by BevNET and Nosh. I'm Monica Watrous, here with my co-host, Lukas Southard. Now, here is the latest in food and beverage industry news. Where in the world is Amy Yang? The Better Brand founder and her company have been sued for a half million dollars by a company lender that hasn't been able to find her since last fall. Meanwhile, the low-carb bread producer and its consumers remain in limbo. Let's get into it. The struggling company, known initially for its low-carb bagels, was sued by Oklahoma-based lender JSD Management and Consulting for breach of contract as well as potential unjust enrichment after defaulting on payments for a $500,000 loan, per a complaint entered in the District Court of Tulsa County for the state of Oklahoma back in November. The lender claims Yang secured the revolving credit loan totaling $500,000 from the firm on May 3, 2024, and the filing notes that Yang personally guaranteed the debt on irrevocable, absolute, and unconditional basis, per the loan documents guarantee agreement. But now, Yang can't be located. JSD claims that Yang owes the firm $499,999.54, not including, quote, accrued interest, costs, and other fees. The filing notes that interest is continuing to accrue. Per court records, multiple attempts were made to serve Yang at her address in Florida, as well as her parents' home in that state, but she has not yet been located. Better Brand has been in hot water virtually since its launch in 2021. The much-anticipated brand quickly garnered consumer complaints after receiving orders that featured moldy products. The company, which has raised $10 million in venture funding to date, laid off its entire staff in September and its Shopify site was temporarily down in early October, sparking rumors the business was shutting down. However, at the time, Yang told Nosh there was no truth to the shutdown rumors and instead blamed the downside on a group of former employees she claimed conspired to steal money and inventory from the company. Numerous businesses, including branding firms, ingredient and packaging suppliers, logistics providers, and others have reached out to Nosh over the past eight months, stating that Better Brand and Yang owe them significant sums, ranging from a few hundred thousand dollars to millions. In January, Better Brands sent a notice to all of its former suppliers stating that it was conducting a comprehensive audit to ensure it was up-to-date on all payments and requested that vendors send all contracts, supporting documents, and relevant communications with past and present Better Brand employees to Yang. In April, the company said in an Instagram post it was no longer accepting new orders as it worked to meet a rapid increase in demand for its product. The company has not posted since, and its Shopify site is no longer active. Of course, we'll continue to follow this developing story and readers can get the full scoop at Nosh.com.

[00:03:03] Lukas Southard: In other news, Momofuku pulled in some serious noodle money recently. The Asian pantry staple brand spun off from the popular restaurant group founded by restaurateur David Chang has raised $27 million of a $30 million round, according to a Securities and Exchange Commission filing. The round was led by Alliance Consumer Growth and Citi Capital. Previous key investors in the brand are RSE Ventures and Magic Spoon founder Gabby Lewis. The brand raised back-to-back rounds in 2023 netting $17 million and then a later $11.5 million. In February of this year, the business added long-time CPG executive, Patrick or Patty Spence, as its CEO. Spence has previously led better for you soda brand Zevia, after he founded and led market research firm Spence. Spence took over from Marguerite Mariscal, who co-founded Momofuku Goods, alongside Chang and the restaurant team in 2019. Mariscal remains on the brand's board and CEO of the restaurant business.

[00:04:08] Monica Watrous: It seems like Momofuku has come a long way since last year's trademark drama that kind of landed the brand in hot water.

[00:04:15] Lukas Southard: Yeah, they're in over 11,000 retail doors. And they also announced that 2024 was the first year that the majority of their business is coming from retail as opposed to e-commerce. So they're definitely making a push into grocery stores and just generally the retail set. Seems to be successful for them. So I'm imagining that this 30 million dollar round they're raising is just gonna support all of that growth Yeah, and it's a hot category.

[00:04:48] Monica Watrous: We're seeing a lot of movement around noodles as well as Chili crunch or chili crisp careful what you call that you might get sued

[00:04:57] Lukas Southard: Yeah, they are definitely riding the tailwinds of a really hot set right now in terms of Asian pantry staples, whether it's the dried noodles or it's the chili crisps or any other kind of toppings or condiments or even, you know, noodle kits that we've seen from a variety of different brands. So I imagine they will continue to grow and the name value alone of Momofuku carries a lot of weight. So good for them.

[00:05:25] Monica Watrous: In more transaction news, Once Upon a Farm is rumored to be heading towards an initial public offering with a valuation at about $1 billion. The kids' nutrition brand, co-founded by Jennifer Garner and John Foraker, could hit the public market as early as this year, per a Reuters story citing anonymous sources familiar with the matter, after confidentially filing its IPO earlier this month. The company has engaged a group of investment banks, including Goldman Sachs and J.P. Morgan as lead underwriters, according to the report. Those same sources noted that plans could change based on market conditions. Now, this isn't the first time rumors have begun to swirl about an IPO around Once Upon a Farm. In February of 2024, Fortune reported that the company was pulling in over $100 million in annual revenue and had its eye on taking the company public. It's funny, John and Jen didn't mention this to me when they were on stage at Nosh Live last year.

[00:06:22] Lukas Southard: It's funny you mention that, Monica, because I had a little behind-the-curtain conversation with Jennifer Garner's bodyguard, and he mentioned it to me, but you know what? It just slipped my mind. I didn't think it was really newsworthy.

[00:06:34] Monica Watrous: You talked to her bodyguard?

[00:06:35] Lukas Southard: Yeah, he was a nice guy.

[00:06:37] Monica Watrous: I'm sure he was.

[00:06:42] Lukas Southard: We learned this week that making juice into popsicles appears to be easier than the other way around. Frozen Novelty's brand, Good Pop, has decided to discontinue its line of kid-positioned sparkling juice drinks after launching the mini-can format two years ago. When the brand conceptualized the idea to move into the beverage case, there was a belief that the fruit juice supply chain they used for their popsicles would fit nicely into a better-for-you children's drink format. That proved to be a more challenging endeavor than expected, GoodPop founder Daniel Goetz told BevNET recently. Quote, it took us years to recalibrate taste buds in the frozen novelties. In beverages, we underestimate how long that takes. We couldn't jump to the front of the line, he said. Along with the supply chain challenges, Goodpop faced unforeseen hurdles in navigating bottle deposit laws, a differing distribution approach, freight charges, and the elevated cost of aluminum as a result of tariffs and inflation. Now the brand is refocusing itself on its core offerings in frozen treats, where its electrolyte pops have been one of its most recent innovation successes.

[00:07:52] Monica Watrous: Well, I thought it was a pretty interesting move at the time. The name certainly suggests it could play in both categories, but the reality of the market suggests otherwise.

[00:08:01] Lukas Southard: Yeah, they're not the first ones to try this. There's been a slew of different startups and along with larger beverage strategics that have tried to make a play for sparkling beverages for kids or just other iterations of adult drinks targeting children. Now, a lot of them haven't been that successful, but a lot of them are still on the market. Polar still has one and Sparkling Ice just released their own little mini can, Cuties. So there is an opportunity there. It just seems to be really hard to muscle out some of the incumbent brands that operate in juice boxes, pouches, and even soda.

[00:08:41] Monica Watrous: On a lighter note, Mars is launching a Snickers pecan flatware-worthy set that includes a Snickers pecan-sized platter, a fork and knife, and of course, a Snickers pecan bar. I don't know what to say about that.

[00:08:57] Lukas Southard: I'm trying to imagine it in my head and I can't really imagine it, but it sounds good. I guess this is kind of an ode to the Seinfeld bit where you eat a candy bar with a fork and knife.

[00:09:11] Monica Watrous: That's what I thought of too, but I don't know that this generation is going to appreciate that. But it's meant to elevate the little treat moment and I guess keep your fingers free of melty chocolate.

[00:09:22] Lukas Southard: Coors Light aims to keep wedding parties cool with the Cold Tux and Burr Tie, a refrigerated neck accessory designed to target one of the body's key temperature regulation zones. When chilled, the Burr Tie delivers up to 40 minutes of refreshing cool. And I think when you pronounce it or when you introduce your new accessory at weddings, you have to say, Burr Tie.

[00:09:47] Monica Watrous: Yeah, I mean, that's part of it. But I do want to know what you're supposed to do if you have cold feet for a wedding day.

[00:09:53] Lukas Southard: Wear an extra pair of socks, I guess.

[00:09:55] Monica Watrous: Oh. Well, the Summer Fancy Food Show kicks off this weekend and we will both be in attendance. Lucas, what are you looking forward to seeing there?

[00:10:05] Lukas Southard: Well, I will say that I always enjoy walking through the Italian and French sections, not so much for reporting, but just to stuff my face full of charcuterie and cheese, usually before I get on the train back home. But otherwise I've been talking to a couple of different brands that are going to be there looking forward to, you know, just generally touching base with people in real life, which we don't get to do as much. A lot of it's through a screen, like I'm talking to you right now.

[00:10:32] Monica Watrous: Yeah, I'm looking forward to that as well. It looks like there's going to be some pretty cool new brands there. We're going to be reporting on that ahead of the show. And our colleague Adrianne DeLuca will be joining us. So excited to see you guys this weekend in New York.

[00:10:45] Lukas Southard: Yeah. Give us a shout out via LinkedIn or email, or if you've got my phone number, you can give me a text. Love to come by your booth and check out what you got and see everyone there.

[00:10:55] Monica Watrous: That's right. And here are some other notable bits of news from the week. Jones Soda is offloading its Mary Jones marijuana beverage brand to privately held cannabis business MJ Reg Distributors LLC as the drink maker streamlines operations and focuses on core soda offerings. Goodall's is launching single-serve microwavable cups, capturing an important segment of the mac and cheese category. And finally, CNS Wholesale Grocers has agreed to purchase food solutions company Spartan Nash for a total consideration of $1.77 billion, including debt. For these stories and more, become an insider at BevNET and Osh. And if you're enjoying the show, please subscribe on your listening platform of choice. That wraps up this edition of CPG Week by BevNET and Nosh. Thank you to our audio engineer, Joshua Pratt, our director is Mike Schneider, and our designer is Aaron Willette. If you enjoyed the podcast, please subscribe on your listening platform of choice, and we will see you next time.