Spreading Roots: How BranchOut Food Recovered From Adversity Post-IPO

There is no linear path to incremental growth, but sometimes unforeseen challenges can become new opportunities for success.

Before going public two years ago, dehydrated fruit and vegetable maker BranchOut Food began making inroads in South America through a partnership with a Chile-based business, bringing a pilot program of its GentleDry technology to that facility. While that partnership is still in place, a larger opportunity opened up in 2023 with a separate manufacturing partner in Peru. BranchOut moved to co-locate, installing a full-scale line of its proprietary equipment at that plant.

Soon after, BranchOut faced an existential crisis in June when its Peru-based partner shut down operations suddenly, leaving the facility (and equipment inside) to creditors. BranchOut was on the cusp of scaling up its manufacturing without a full-scale production partner or access to its equipment.

The unforeseen hurdle led BranchOut to vertically integrate its operations sooner than it had intended, said founder and CEO Eric Healy. “We said that we have to build our own facility or we are done.”

The business took over a former asparagus processing plant in Peru last summer and built out four full-scale production lines within its new 50,000 sq. ft. space while “reinventing ourselves from an operational standpoint,” Healy said.

Part of the reinvention included a public offering in June for 1.19 million shares of common stock, as well as investment from Healy and a $3.4 million private placement, convertible note from Kaufman Kapital.

Settled into its own manufacturing plant, BranchOut began scaling production in Q1 2025, landing new deals and expanding its retailer partnerships in both branded snacks and private-label production.

A Three-Pronged Approach To Growing The Business

Healy said the path to profitability is now rooted in “three legs” — consumer products, private-label manufacturing and ingredients — anchored with three main partners: Walmart, Costco and ingredient provider MicroDried.

For Walmart, BranchOut produces various private-label, plant-based snacks. At Costco, the food manufacturer has developed an “innovation platform” for itself, launching Pineapple Chips, Bell Pepper Crisps and a new Crunchy Strawberry Halves product.

The final leg brings the company into the ingredients space, where it signed a deal in March with Idaho-based MicroDried.

“We know retail. That’s our expertise,” Healy said. “We don’t really know [the ingredient] side of the business. We could have built it ourselves, but it would have taken a long time.”

Along with the three pillars of its current business, BranchOut has also been going through the arduous but potentially lucrative process of partnering with the U.S. Army. The deal would offer another revenue stream supplying dehydrated fruit and vegetables in troops’ MREs (Meals Ready-To-Eat).

Last week, the company announced it had begun the next phase of the approval process, a field test of its Cinnamon Churro Banana Chips.

The Future Of Dried Produce

After reporting revenue up 118% year-over-year in its Q1 2025 earnings, BranchOut is anticipating it will be debt-free by the end of the year.

While the brand manufactures in Peru, it brings the bulk product to Texas for packaging. In this framework, BranchOut avoids the full brunt of the 10% import taxes currently levied on Peruvian imports.

“We’re only paying tariffs on roughly half of the final value of our products once they sit on the shelf,” Healy said.

That cost-benefit also plays into the broader premise to compete directly and replace retail freeze-dried snacks, which cost 20% to 30% more to produce and are predominantly imported from China, Healy said.

“A whole batch using our technology takes about 40 minutes; whereas freeze-dried takes two days or around 30 hours,” he said. “It’s antiquated technology. Our process doesn’t freeze it, but it goes through fresh and is never heated or frozen, so we get better flavor, better price, better texture.”

The company has already fielded many inquiries from retailers who are looking for alternatives to the Chinese-based freeze-dried products carried in grocery stores. While currently situated in the mass and club channels, BranchOut is preparing to launch a product that is aimed at the produce department in the conventional grocery channel.

BranchOut is expecting to announce a new partnership by the end of the year, which will expand its GentleDry technology into new applications that could place it in the “confectionery or dessert space,” Healy teased.