Ka-Pop, Bubba’s Merge to Form Awakened Foods, Launch Co-Packing Division

Colorado-based brands Ka-Pop! Snacks and Bubba’s Fine Foods announced a merger agreement this week, forming holding company Awakened Foods which will include the two brands as well as a new co-packing division, Awakened Food Crafters.

The deal will allow the two brands, which will continue to operate independently, to leverage their branding, R&D and operational expertise to grow their own businesses while also offering food companies co-packing by experienced CPG leaders familiar with the potential manufacturing pain points, Ka-Pop founder and Awakened Foods CEO Dustin Finkel said.

Ka-Pop, launched in 2018, markets Ancient Grain Popped Chips and Puffs, while Bubba’s, launched in 2014, offers keto-friendly snacks and granolas. With Finkel in Awakened’s CEO role, Bubba’s founder and CEO Jeff Schmidgall will serve as the company’s COO. Ka-Pop will now manufacture its products at the Loveland, Colorado-based Awakened Food Crafters facility, where Schmidgall has been manufacturing Bubba’s products while also running a smaller scale co-packing and private label business.

While the two had known each other for several years, Finkel and Schmidgall came to the idea of a merger at a Naturally Boulder event focusing on navigating the COVID pandemic.

“In today’s world of COVID, there’s a challenge in ensuring that you can get the right funding for your business, ensuring stability in manufacturing and ensuring consistent resources,” Finkel said. “This is a huge opportunity for both brands to really accelerate our growth in a way that I think independently would be much more difficult.”

The company is leveraging equity financing and SBA loans to fund the new venture and is currently in the process of raising funding, Finkel said. Many of Ka-Pop’s previous investors, such as Sunrise Strategic’s founder Steve Hughes and Pacific Foods founder Jon Gehrs, now own equity in Awakened Foods and have already committed to back the new funding round, he said. Finkel said the fact that the business is profitable on its manufacturing side has helped it garner interest from potential investors.

The facility already has the ability to manufacture products like granola, nut mixes, cereal, baked goods, puffs, popped chips and other salty snacks, Finkel said, but is also willing to invest in equipment for other product types if the “opportunity is right for both sides,” he said. In addition to co-packing, Awakened Food Crafters also offers R&D support and strategic consulting, Finkel said. To support the growth, the company has hired new staff and added a significant amount of new equipment to the co-packing facility, establishing a separate section of the facility to cater to allergen-free brands.

While the co-packing facility has the capacity to work with larger national brands, Finkel said that he believes it will be a particularly appealing partner for emerging brands looking to innovate quickly. It’s a need the Awakened team feels other co-packers are unable to meet.

“One of the challenges for small brands using co-manufacturing is the lack of flexibility and speed to innovate quickly and do it in a nimble fashion so that they can throw it on the wall and see what sticks online,” Finkel said. “Versus a traditional launch that requires a big production, a big banner to accept your product, we can do a quick test through our own manufacturing facility, get it online, see if it resonates with consumers and keep that funnel moving quickly.”

This ability to innovate quickly will also be beneficial to Ka-Pop, which now has the means to produce seasonal and LTO products and leverage trends at a faster pace. For 2021 the brand will also work to build its retail footprint, launching in seven new Kroger banners since October, including three this month. Bubba’s, whose sales are primarily done through ecommerce, will also be making a retail push this year, and will work on creating product offerings and packaging more optimized for this channel, Finkel said.

As a holding company, Awakened Foods was “built to be as flexible as possible,” Finkel said, and looking ahead, he said he sees opportunities to create or incubate new brands and be a strategic partner with co-packing clients for further growth. Finkel said Awakened Foods’ message of “brands helping other brands” has already resonated with potential clients.

“When someone calls and shares their struggles or their issues or their wants and desires, I can approach it from having done this for 15 to 17 years and starting my own company,” he said. “I understand every struggle that they are going through, I’ve seen it, I’ve done it, I’ve been there, I’m still going through it. So that understanding allows us to offer a better solution than I think most of our competition.”