Sunnie Lands Strategic Investment, Builds New Distribution Channels

Brand momentum carries a lot of weight as a first time exhibitor at Natural Products Expo West. For Sunnie Snacks, that pre-show inertia is coming in the form of new investment, distribution and innovation.

The Los Angeles-based gluten-free snack maker is on its way to closing its first institutional investment round as it expands into multiple parts of the store, builds off its partnership with Southwestern region Target stores and seeks out marketing opportunities in foodservice.

The Nosh Pitch Slam 2022 winner announced it had secured two-thirds of a new plus-six-figure investment round led by Bentonville, Arkansas-based Fulcrum Collective and New York City venture capital firm SWAT Equity Partners.

Founders Katy Tucker and Lisette Howard told Nosh they had made raising the money “basically a full-time job” over the summer but had trouble initially finding strategic investors. After a discouraging start, Tucker and Howard decided to open up the round to consumers and fans as part of a SAFE Note.

“We wanted to give those who had supported us from the very beginning an opportunity to invest in the company,” Howard said. “The company was built ‘by moms, for moms’ and therefore we wanted to go to those customers and say this product is clearly changing the way that you feed your family, do you want to be a part of our story?”

Sunnie publicized the investment opportunity in newsletter blasts and direct emails to customers. With a minimum check size of $10,000, the group of investors has made up about a third of the total pool of capital so far.

Founded in 2020, Sunnie’s mission has been to bring more choice in on-the-go snacking by offering gluten-free, seed-oil free dippers. During the back half of 2023, the brand moved from self-manufacturing and into a co-manufacturing model which increased its refrigerated product’s shelf-life by about 100 days.

The brand also launched its grain-free Sea Salt Crackers as a new product line that brought Sunnie out of the refrigerated section of the store and into the ambient shelves. Tucker and Howard realized the crackers were a “happy accident” that increased visibility to consumers, added value to the portfolio and became a selling point when talking to potential strategic partners.

This resonated with Fulcrum Collective which sees opportunity in grocery for brands that have products in multiple aisles of the store, said Fulcrum Collective managing partner Doug Batie in an email statement. “Millenial and GenZ customers are starting to demand better…the surging trend toward ‘seed-oil free’ products will not be relegated to the Erewhon shopper, we foresee this being a new table stakes issue.”

Retail expansion has been a focus during the second half of 2023. The company lined up new distribution with about 200 Target stores in Arizona, Nevada, Utah and Southern California, where the dipper products are merchandised in the deli section and grab-and-go coolers at checkout. Currently, Sunnie is in about 350 doors between Target and specialty retailers like Gelson’s, Erewhon and Bristol Farm.

“Going up against the big boys in this sector is going to take capital,” Tucker said. “We felt like this was the right time to do it, considering we have a lot of momentum with great accounts for onboarding that are sandwiched between conventional as well as natural specialty.”

The company’s crackers have been picked up by Thrive Market and will also be available in Whole Foods SoPac region this June. Sunnie’s founders hinted at a big retail partnership rolling out in late spring or early summer that will pave the way for the snack maker to hit its goal of an additional 250 to 450 stores by the end of the year.

The new capital is expected to fund marketing campaigns to build brand awareness for Sunnie’s better-for-you takes on “nostalgic classics,” she said. “Our goal with the company is really to be the next generation kids snack brand.”

This week at Expo, Sunnie is sampling its most recent line extensions, a chocolate dipper and a cheesy variety of its grain-free crackers, having its sights set on disrupting “big boy” brands like Ferrero’s Nutella and Kellanova-owned Cheez-Its.

As Sunnie attempts to capture more consumers in kids snacks, it has launched into foodservice with accounts at big name tech companies like Netflix and Uber. The strategy puts the brand in front of adults who will take back the newfound brand awareness to purchase Sunnie in grocery stores.

With an eye towards building retail momentum through brand recognition, Sunnie is also targeting airport convenience stores and is testing the strategy with one retailer in San Francisco International Airport.

“For any young food startup brand, it has become clear these last 18 months that you must get to retail and you must be profitable,” Batie said. “The Sunnie team has been focused on this since the beginning. We are looking forward to working with the Sunnie team to continue driving operational efficiency and retail channel buildout [while] focused on learning and adjusting as we go.”