Good Karma Announces Buyout of Majority Ownership from Dean Foods

As the assets of dairy conglomerate Dean Foods continued to be divided up following the company’s bankruptcy filing, plant-based dairy brand Good Karma announced today that it has repurchased the majority of the company once owned by Dean and also closed a “significant” amount of capital through new strategic partners.

The round included both a new investor, Valor Siren Ventures, as well as existing backers 2x Consumer Products Growth Partners and a variety of other individual, current, shareholders. The purchase price along with the size of the investment round were not disclosed.

Following its November bankruptcy, Dean received approval in April to sell the bulk of its assets to national cooperative Dairy Farmers of America (DFA) for $433 million — of which Good Karma was not included. Soon after Dean-owned brand Uncle Matt’s Organics announced that its founders, along with a consortium of new investors, had repurchased the brand for $7.25 million under newly formed company Harmoni.

Good Karma followed a similar path: The shares were repurchased from Dean and then subsequently retired as the new investors came into the business. Despite being majority owned by Dean for over two years, Good Karma was run as an independent business out of Boulder, with a separate leadership team and board of directors. The company also did not use Dean’s DSD network, a spokesperson said. As a result, the ownership changes will not materially impact Good Karma’s distribution or operations, CEO Doug Radi said.

The company plans to continue using its existing copacker for its dips and beverages.

“We’re incredibly fortunate to be able to continue running our business from here in Boulder with our experienced and passionate team,” Radi added. “[We] feel grateful for the continued support of our talented stable of supply chain partners, and strong working relationships with our distributor partners and retail customers.”

However, the portfolio has been trimmed with Good Karma discontinuing its Dairy-Free Yogurts, Drinkable Yogurts and 10 oz. Flaxmilk + Protein Grab-And-Go bottles. The company plans to launch new items in 2021, Radi said. The company’s current roster of flax-based dips and beverages are sold in over 10,000 stores.

Plant-based dairy remains a competitive category, with numerous new alternatives for fluid milk, yogurt, cheese and butter emerging weekly, as brands and investors seek to become the Beyond Meat or Impossible Foods of the dairy set. Good Karma has tried to differentiate itself from the pack by relying exclusively on flax as its main ingredient.

Dean acknowledged changing consumer preferences as one reason for its financial struggles, citing “continuing declines in consumer milk consumption.” The opportunity to diversify into plant-based dairy was part of the reason the company first made a minority investment in Good Karma.

Yet despite Dean’s own struggles, both Good Karma and the company’s investors see a bright future for the brand and the opportunity for plant-based dairy.

“We saw the potential in Good Karma early on due to its category-leading growth and high levels of differentiation set against other plant-based brands,” said Sharon Kieffer, Managing Partner at 2x Consumer Products Growth Partners, said. “We feel bullish about how [the partnerships with Valor Siren Ventures] will further accelerate Good Karma’s growth.”