May 10, 2017

As part of its strategic plan to diversify both beyond and within the dairy sector, Dean Foods Company announced a minority investment in and distribution agreement with Good Karma Foods – a manufacturer of flaxseed-based milk and yogurt alternative products.

Based in Dallas, Texas, Dean Foods has more than 50 national and regional dairy brands and private labels. The group is a leading U.S. food and beverage company, making and distributing ice cream, juices, teas, bottled water, and cultured products, and is the largest processor and direct-to-store distributor of fresh fluid milk and dairy case products in the U.S.

“This opportunity with Good Karma is a way for us to build a platform for a larger plant-based portfolio,” said Ralph Scozzafava, CEO of Dean Foods. “The management team has deep category expertise, the brand is a disruptor in the plant-based, non-dairy space, and we believe we can support its growth.”

Beginning in 2012, Good Karma was the first company to launch a flax-based milk alternative that filled a niche in the market for a dairy alternative beverage that was free of all major allergens, but still provided favorable nutrition, taste, and texture. In the years since, the company has expanded its offerings to include Flaxmilks with added protein, Probiotic Drinkable Yogurts, and Dairy Free Yogurt Cups.

“One of the pillars of our strategic plan is to build and buy strong brands, and Good Karma embodies the exact type of opportunity we’re interested in as we look to add leading and high potential brands in adjacent growing categories such as plant-based beverages.”

This partnership with Dean Foods will enable Good Karma to achieve accelerated expansion in the U.S. market and to increase its investments into brand building and product development initiatives. Once the transaction is completed, Good Karma will continue to operate from its headquarters in Boulder, Colorado, with its existing leadership team remaining in place.

“This partnership validates that Good Karma has become one of the leading and fastest-growing brands to watch in the plant-based category,” said Doug Radi, CEO, Good Karma Foods. “We are excited about how this partnership will give us the opportunity to advance our mission of inspiring goodness by making our flax-based non-dairy beverages and yogurts more accessible across the U.S.”

Balancing Volatility

BevNet reports that during the company’s fourth quarter earnings call conducted in February of this year, Dean Foods’ leadership discussed how milk price volatility could be mitigated through investments and M&As.

“We’re looking at categories that are adjacent to dairy,” Scozzafava told analysts, reports BevNet.

This strategy is reflected in the company’s activity throughout last year, as the company diversified into new and tangential revenue channels – acquiring the manufacturing and retail units of the Friendly’s ice cream brand for $155 million in cash, and establishing a joint venture with CROPP, an organic farmer cooperative and owner of the Organic Valley brand.

This investment and distribution deal with Good Karma is the latest example of Dean Foods’ strategy at work, but it also represents Dean Foods reinvesting in the plant-based space after divesting WhiteWave – maker of Silk brand soy milks in 2013.

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at lkiernan@globalaginvesting.com.