Frozen Food Brand Red’s Sells to Bansk Group
Private equity firm Bansk Group today announced its majority acquisition of frozen food brand Red’s All Natural.
Terms of the deal were not disclosed. Red’s Founder and CEO Mike Adair will continue to lead the company, a press release noted, and will maintain a significant minority interest.
“I am incredibly proud of how far we have come – and how many consumers across the country we’ve reached,” Adair said in a release. “We look forward to leveraging Bansk’s deep understanding of our space and operational expertise to accelerate Red’s next phase of growth.”
Founded in 2009, Red’s markets a portfolio of frozen burritos, breakfast burritos and breakfast sandwiches manufactured at its North Sioux City, South Dakota production facility. By shrinking from its original 11 oz burrito to a 5.1 oz option years ago, the company has been able to maintain an MSRP at roughly $2.99 and compete against lower-priced, conventional items. Improvements to self-manufacturing have also allowed the company to lower costs and raise margins.
The company has broad distribution across channels with placement in retailers including Sprouts, Albertsons, Costco, Kroger, Publix, Target, and Walmart.
In 2016 Red’s launched frozen entrees such as burrito bowls, macaroni and cheese and globally-inspired dishes, but all were discontinued over the last year. Instead, the company has focused on taking on larger CPG brands such as Jimmy Dean by complementing its single-serve products with multi-pack offerings.
Though details of Red’s financing have been sparse to-date, NRV and Centerman Capital are both investors and SEC filings indicate the brand has raised over $5 million to date.
Founded in 2019 by Bart Becht, former senior partner of JAB Holdings, Bansk Group is an investor in several personal care brands, including Amika and eva.nyc, pest and animal control company Woodstream, and OTC medicine, vitamins and supplement company Arcadia.
“With today’s consumers increasingly focused on clean, convenient eating options that offer dynamic flavor profiles, the frozen food market is ripe for disruption and Red’s is well positioned to capitalize on significant growth opportunities ahead,” said Brian O’Connor, senior partner and chief investment officer at Bansk. “Brands that achieve superior taste coupled with clean, nutritious ingredients and convenient formats can achieve sustainable long-term brand differentiation.”
Despite tough competition from private label, other natural brands (Amy’s), and large CPG companies (Conagra’s Evol), Red’s has managed to maintain and in some cases gain category share. In the natural channel, Red’s is both the largest burrito brand overall and the leading breakfast burrito maker. Within the frozen breakfast set in natural, it is the second highest performer. It’s also the number two natural, frozen burrito brand in MULO.
The frozen category as a whole is rising, with the breakfast subsegment of particular interest to retailers, investors and consumers.
According to the third edition of Deloitte’s annual Future of Fresh series, in 2021 while the fresh food market saw 10% growth, the frozen category grew 21% over the same period. Respondents cited the lack of perishability and price point as driving factors of their purchasing decisions. Meanwhile, in c-stores, for the last 52 weeks ended July 30, 2022, frozen food sales in c-stores accounted for $3.2 billion, up from $2.4 billion in 2019 (in the 52 weeks ended August 3, 2019), according to Nielsen IQ.
Still, the opportunities for Red’s exit to a large CPG company were somewhat limited given the acquisition slowdown by major frozen players such as Conagra and B&G.
