The natural food space can make for strange bedfellows.
Consider the case of Clayton Christopher, the co-founder of Sweet Leaf Tea, and Jesse Merrill, the former VP of Marketing at Honest Tea. Although they spent much of the mid-2000s competing for the dollars of consumers interested in organic tea, the two now have their interests aligned due to Christopher’s investment in the cottage cheese company Merrill co-founded, Good Culture.
“I have a ton of respect for Clayton,” Merrill said. “Obviously, I’m thrilled to be able to tap into his operator mindset and skillset. He was a great competitor because he was really good at what he did at Sweet Leaf.”
Christopher and his fellow investors are hoping that Merrill will be really good at disrupting the sleepy cottage cheese category behind Good Culture, which makes a grass-fed, organic, additive-free version of the diet staple — and possibly the yogurt category beyond. This morning, Good Culture announced that it had closed a $2.1 million Series A fundraising round, with Christopher’s new private equity fund, CAVU Venture Partners, and General Mills’ new venture fund 301 INC leading the investment.
Merrill started Good Culture in 2014 with Activate co-founder Anders Eisner, with whom he’d worked at the cap-dispensing, mix-to-drink beverage venture. Good Culture’s savory and sweet cottage cheese launched nationally in Whole Foods in January and it’s currently in about 700 stores. It comes in five varieties thus far, two sweet, two savory, and “classic.”
“Cottage Cheese is something I personally consume because of the protein content,” said Merrill, who was named to Ad Age’s Marketing 50 for his work marketing Honest Tea. “I ate it but I was never thrilled with what was out there. The flavor options weren’t great… I saw from a personal perspective a big opportunity to make something better.”
The cottage cheese category is about $1.2 billion while yogurt is closer to $8 billion in the U.S. — providing a lot of growth opportunities for a product that has more protein and less sugar than the fast growing yogurt category, Merrill said. Much of the investment will go toward building capacity and brand awareness through field marketing in the natural and specialty channel, he added.
“We’re really excited about this space,” noted John Haugen, the VP and general manager of 301 INC., of the opportunity to work with Good Culture. “We’re really excited about the innovation, the protein, the expanded use occasion.”
Christopher said he’d been an investor in Good Culture even before he’d partnered in CAVU, but with the launch of the new fund he was eager to get it involved in the company.
“It’s always fun when you see the chance to disrupt these existing categories,” Christopher said.
Such was the case with Sweet Leaf and Honest Tea, which were both eventually sold to larger beverage companies, (Nestle Waters and Coke, respectively) as part of two-stage venture deals.
There is not a similar path to purchase for General Mills in its investment in Good Culture, according to Christopher. But there is a lot of enthusiasm from both investors and the operator in the potential assistance that the larger company can supply. While General Mills doesn’t own a cottage cheese brand, it does have Yoplait, one of the largest yogurt brands in the world.
“We are a significant global player in dairy,” Haugen said. “It’s extremely important to us to be a partner in this great new company — and I need to say that we’re excited to put our team and all of our resources at play to help them grow.”