Dive Brief:
- Mondelēz International’s SnackFutures was among the investors in a $13.5 million funding round for soft pretzel maker Eastern Standard Provisions, Mondelēz said. Tapan Shah, head of venture capital for SnackFutures, was listed on the form as a director for the pretzel company, which has a corporate name of Hawthorne Food Co.
- The funding round was the largest to date for Eastern Standard Provisions. The regulatory document said the pretzel maker has $6.45 million in capital left to raise. The company did not respond to requests for comment on the fundraising round or what it planned to do with the money.
- In recent years, Mondelēz has methodically added to its snack-focused portfolio with investments through SnackFutures and a series of acquisitions that have spanned both indulgence and better-for-you offerings.
Dive Insight:
Mondelēz’s SnackFutures arm has played a key role in helping it capitalize on changing consumer trends such as healthier offerings and emerging growth opportunities.
The maker of Oreo, Ritz and Lorna Doone shortbread cookies has already tested a handful of new snack lines by partnering with brands such as NoCOe, a sustainable aperitif cracker; and Dirt Kitchen Snacks, which are made from non-standard vegetables. It also took an equity stake in premium chocolate and snack maker Hu in 2019, before acquiring the rest of the business two years later.
Despite being around nearly five years, SnackFutures has made only a few strategic investments, so when it does participate, it’s likely a sign of faith in the underlying business. By acquiring a small stake in a firm such as Eastern Standard Provisions, Mondelēz can participate in any growth of the business.
Eastern Standard Provisions, which makes direct-to-consumer hand-twisted soft pretzels with all-natural ingredients, also makes waffles and sauces. The investment from Mondelēz likely gives the upstart cash to help grow its business, while providing an opportunity to gain valuable insight from Shah and others at the food giant.
Mondelēz does not have a U.S. presence in the fast-growing pretzel category, so this investment could provide a way for it to participate.
Once associated with bars, airlines or parties, pretzels are seeing their profile rise in the $106 billion crowded snacking category, as novel flavors and their better-for-you profile attract consumers. Pretzel sales rose 16.2% to $1.7 billion during the 52 weeks ended Aug. 7, according to IRI.
Mondelēz’s involvement mirrors a broader effort at the Chicago-based company to double down on its dominant position in snacking, while positioning its business for further growth.
In addition to SnackFutures, it has turned to M&A to build its portfolio. Mondelēz has purchased cookie producer Tate’s Bake Shop and taken a majority stake in nut butter-based protein bars and bites Perfect Snacks. And last year, the company agreed to pay at least $2.9 billion for Clif Bar & Company to further expand its reach into the high-growth bar business.
