VMG’s Wayne Wu on Fund Growth and E-Commerce

Carol Ortenberg
Wayne Wu

Consumer-focused private equity firm VMG Partners kicked off 2016 by announcing the promotion of Wayne Wu to Managing Director.

Wu, who has shown the skills of a master networker and trendspotter, serves on the boards of food brands Babyganics, Justin’s and Perfect Bar. He joined the firm in 2008 as an associate in what was the firm’s first “non-founder” hire, arriving after serving as the CFO of Thomason Autogroup.

“It was in the automotive industry that the power of brands struck me. The car is almost the biggest badge that people carry around about who they want to portray and who they are” noted Wu. “The brand on the car means so much more to that consumer then just a means of transportation.”

When Wu joined VMG the firm had just closed its first round of $325 million dollars, and it was, at the time, the “largest first-time consumer fund,” he said. That fund saw investments in Pretzel Crisps, Pirate’s Booty, Mighty Leaf Tea, VEGA and KIND — all of which the firm has now exited, following the acquisition of VEGA by WhiteWave Foods last summer.

In speaking with Wu it becomes clear that while titles may change, his devotion to the VMG family of brands and the CPG industry remains constant. A favorite investment right now is Perfect Bar, a refrigerated snack bar line.

“Perfect Bar really epitomizes a number of key trends happening in the industry,” Wu said. “The consumer’s desire for fresh, the consumer equating fresh with refrigerated, the consumer’s desire for on-the-go protein snacking, the consumer’s desire for clean label snacking… plant based protein and clean labeling with no preservatives.”

Wu says although he’s no longer able to touch every investment the firm has, the promotion doesn’t mean he’s not actively involved in the day to day work with investments.

“We’re a very flat organization. I’ve had a voice here since the beginning just as everybody today, regardless of title, has a voice here. We’re all about teamwork and collaboration. Not only with our portfolio companies but amongst ourselves.”

So what does the future hold for Wu and VMG? One area that he’s looking into is e-commerce and the effect its growth is having on food and beverage brands.

While retailers such as Amazon and Thrive have all increased their assortment in recent years, he said, consumer habits surrounding fresh produce purchases haven’t changed yet.

“There’s some channel shift occurring that’s already happened in other categories within CPG, where food and beverage is the last piece of that puzzle,” Wu said. “I think there was a halo effect to the perishability of some food products, where consumers are still used to going to a store to look at the piece of fruit or vegetables that they’re looking to buy and assess what they deem to be the freshness or not of that item and then do the rest of their shopping as well since they’re already there.”

That said, the tides are changing and ecommerce is becoming a valuable part of any company’s strategy.

“What’s interesting about online” says Wu “is the line that’s drawn between what’s digital marketing and what’s digital ecommerce, there’s not a black and white line. So our digital focus is not only through selling online but also building our brands online, whether that be maximizing our presence on social media to the right influencers online.”

As a result, VMG is investing time into their partnership with Amazon Launchpad (a program for funded, smaller startups) and working with Instacart on their new digital couponing and sampling program.

But, Wu cautions, you can’t just treat online retailers just like any other brick and mortar shop. For example, Amazon orders more in a “pulse” style every week so producers end up sending many smaller orders (unlike larger orders normally sent to distributors or traditional retailers). Amazon also puts a higher focus on having 100 percent fill rate.

“Convenience is the name of the game and convenience online is really the ultimate convenience tool,” he said. “If assortment and availability of the full basket is there.”

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