CPG Week Podcast: It’s Time For Recess. Plus, A Bourbon Brand On the Block

[00:00:05] Monica Watrous: Welcome to the CPG Week podcast by BevNET and Nosh. I'm Monica Watrous, here with my co-host Brad Avery. Now here is the latest in food and beverage industry news. We kicked off the week with some big news from our friends at Recess.

[00:00:20] Brad Avery: Yes, Recess Drinks has closed a $30 million Series B round led by Cavu and other repeat investors, CEO and founder Ben Witte told us. Alongside the funding, Kyle Thomas, the chief commercial officer at C4, is going to be joining Witte as Recess' co-CEO and president. Witte cited Thomas' leadership in development of platform brands. A longtime argument the founder has made around Recess is one of the main reasons for the hire. And Thomas also helped build Nutribolt, the parent company of C4, up into the multi-million dollar energy drink brand that it is today. So this is a big move for Recess, which is a relaxation beverage. It initially started as a CBD-based drink and now is focused on mood functionality and mocktails. And it's a big cash windfall in a time where funding has continued to be difficult for brands.

[00:01:16] Monica Watrous: Any idea what they're going to do with that 30 million?

[00:01:20] Brad Avery: They are building out the sales team. They are going to be working on DSD, expanding up and down the street in a lot of the traditional ways. This is definitely a scaling round in addition to bringing on the new leadership. I think it just shows a real get down to business type of moment for the company.

[00:01:37] Monica Watrous: Well, recess is definitely one of the winners in the non-alcoholic beverage space as we're seeing more consumers slipping away from their drinking ways. Japan's Curen Holdings is looking to unload bourbon brand Four Roses for $1 billion as part of a shift towards healthcare. Kieran, which owns Fuji Japanese Whiskey and New Belgium Brewing, has been testing interest from potential buyers in recent weeks, with bids expected to roll in next month, according to a report by the Financial Times. For Roses is produced in Lawrenceburg, Kentucky. Kieran acquired the business in 2002 and quickly reestablished the brand as a premium bourbon company after a tumultuous period in the portfolios of other multinational spirits companies. The bourbon brand generates about $70 million in adjusted earnings annually. The move comes as whiskey sales struggle at home and abroad. American whiskey sales declined 1.8% to $5.2 billion in 2024, according to the Distilled Spirits Council of the United States. Additionally, pressure on American whiskey suppliers has further mounted after a roller coaster year of new tariffs and negotiations that have at times entangled US spirits and particularly bourbon in a trade war. American whiskey exports fell 13 percent in the second quarter of this year.

[00:02:57] Brad Avery: I would be curious to see what Kirin does with its other alcohol holdings, given this shift towards health care and this move away from alcohol that definitely is, as you outlined, going with trends. Now, the one billion dollars is an asking price. That's their goal for this. But I'll be curious to see what they do end up getting from a potential buyer.

[00:03:19] Monica Watrous: Yes, so Kirin has operated in the pharmaceutical sector since the 1980s and has accelerated its push into that space in recent years. It also, in addition to New Belgium and Four Roses, owns Bell's Brewery and Kirin Ichiban, the Japanese beer. And of course, we will continue to follow any developments on a potential sale at BevNET.

[00:03:39] Brad Avery: Taste Tomorrow Ventures, the venture capital arm of beverage incubator L.A. Libations, has taken a minority investment in Happy Products, the coffee brand co-founded by CPG industry veteran Craig Dubitsky and actor Robert Downey Jr. Financial terms were not disclosed. The deal is the firm's fourth investment after the closing of its $30 million Fund One back in May, and it's also invested in Better For You Iced Tea brand, Just Iced Tea, Gummy Candy brand, Better Sour, and functional beverage, Juni. So we heard from LA Libation's co-founder and CEO, Danny Stepper. He told us, we bet on founders. When you invest early, the brands are still emerging, pivoting, and changing. So the only through line for us is the founder. In this case, one of the founders is Iron Man.

[00:04:29] Monica Watrous: But also Craig Dubitsky.

[00:04:31] Brad Avery: Yes, who has a strong track record in CPG. And Danny did call out Craig by name. What I find interesting about this is RTD Coffee has been a bit of a sleepy category the past few years. Its sales have been down. Some people, though, have said that really it's Starbucks that is down, and we've seen growth from brands like La Cologne and others in this space. There's also been a rise of functionality in coffee and whether Happy can crack into the latte space, I'll be curious to see because they're going for a new type of branding in this space that we haven't seen much of. And it's nice to see some innovation moving again in the coffee category.

[00:05:14] Monica Watrous: Moving on. This week, our colleague Adrianne DeLuca reported on the closure of Stockeld Dreamery, a Swedish producer of cultured cashew-based cheese and cream cheese alternatives. Over the course of its six years in business, the startup had raised over $20 million in venture capital funding and landed shelf space at Whole Foods Market in New York City. This month, founder and CEO Soros Tavakoli decided to wind down operations after ultimately recognizing that the demand for the category is simply much smaller than he and others initially anticipated. He said the entire StockGel team stayed on board and were paid their final salaries as they helped sell off equipment, sell through inventory, and close up the offices. While a few of its team members have already secured new gigs, a handful, including Tavakoli, are still weighing what's next. In the meantime, he said all suppliers have been paid in full, and he is currently having conversations about selling the brand's IP, including its cream cheese formulation. Insiders can read the full story on Nosh. On a lighter note, gut-friendly nutrition brand Belly Welly is diving into one of the hottest supplement formats via a new Walmart exclusive. This week, Belly Welly fiber gummies debuted in a single flavor, watermelon, and they were in development for a long time before the brand's Walmart buyer pushed the team to solidify the innovation and bring it to market. Co-founder Katie Wilson told us, the gummy supplement market is on fire and reached a valuation of $10.5 billion in 2024.

[00:06:50] Brad Avery: Would you like to find some gummy supplements in your trick-or-treat bin? We used to use pillowcases when we were kids.

[00:06:57] Monica Watrous: Oh, I used an old Walmart shopping bag. Oh, that's easy. Hell yeah, I would like some gummies in my trick-or-treat bag.

[00:07:07] Brad Avery: So it's Halloween week, candy sales are popping off, and it does seem the gummies are hot and getting hotter as they have been for several years now. The New York Times reported this weekend that while Reese's Peanut Butter Cups are still the top choice of Halloween shoppers, gummies are only continuing to grow in popularity with Gen Z and Alpha. Well, alongside a growth in gummies, they're also more expensive. CNN reported that candy is 10.8% more expensive this Halloween season than last year. That is citing an analysis of Nielsen IQ data from Progressive Think Tank Groundwork Collaborative. In 2024, Halloween candy prices only rose 2.1%. So it's a pretty steep spike.

[00:07:47] Monica Watrous: Guess we're all handing out potatoes to trick-or-treaters this year. Potatoes? Yeah, it's a thing.

[00:07:53] Brad Avery: I've never heard of this.

[00:07:54] Monica Watrous: Look it up.

[00:07:55] Brad Avery: Explain. Explain. Have you gotten potatoes for Halloween? Or given potatoes for Halloween?

[00:08:00] Monica Watrous: No, but I read about it a couple years ago. It was this novelty thing. People started putting potatoes in their buckets of candy, and the kids were choosing the potatoes because they thought it was funny. Okay, I guess that's fair. It is kind of funny. Yeah, it is funny.

[00:08:13] Brad Avery: Well, speaking of gummies, we've all seen a lot of innovation in the space and in sugar confections in general. At NACS, where I was a couple weeks ago now, saw a lot of unique candy innovations. A lot of freeze-dried, sweet tarts, Skittles, M&Ms even. I wrote about that for Nosh, which you can read on the site. Or spicy Skittles gummies, which I was really surprised had some genuine spice and kick to them. One of the biggest, most hyped innovations from Ferrera, which produces the Nerds brand, was Nerds Juicy Gummy Clusters, which they're going pretty big on. I got to say, the mascot that they had for the Nerds Gummy Clusters was terrifying. Good Halloween costume because it was a jump scare. He was a freak. How do I describe it? Nightmare fuel. I know. There are some good mascots at NACS here and some good innovations.

[00:09:13] Monica Watrous: If you missed last episode of CPG Week, we talked about other trends and innovations at the NAC show. Lukas Southard, our colleague and co-host of this podcast was also on the ground in Chicago and talked about meat snacks and tea and all kinds of fun things. So be sure to tune in if you missed it. Here are some other notable bits of news from the week. Doubling down on its portfolio restructuring efforts, B&G Foods has agreed to sell the Green Giant and Lassure frozen and shelf-stable vegetable product lines in Canada to Norterra Foods. Better for you soda startup NoCap is raising the ante on its co-branded collaboration strategy by partnering with The Icy Company for a three-year licensing deal to license the slush brand's name and flavors. And finally, organic frozen fruit pop purveyor Hundi has secured $350,000 in fresh equity funding, according to a filing with the US Securities and Exchange Commission. For these stories and more, become an insider at BevNET and Nosh. 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.