Carl E. Lee, the former president and CEO of Snyder’s-Lance Inc. – the leading snack company behind Pop Secret, Snyder’s of Hanover, and Cape Cod Chips, has partnered with Adam Peck, Scott Lurie, and Eric Lenzen to launch Arbel Growth Partners – a new fund dedicated to backing emerging natural and organic food brands.

Lee will serve as CEO of the new firm, which will be managed by Peck who is the founder and CIO of Riverwater Partners, a Milwaukee-based investment advisory firm; Lurie, who is the founder and president of F Street Group, a restaurant and catering business operator; and Lenzen, a private equity and venture investor and an attorney specializing in M&As with Milwaukee-based Husch Blackwell LLP.

Founded in February of this year, Arbel Growth Partners has a funding target of $50 million, and has already raised $1.85 million from six investors toward that goal, according to an SEC filing.

Within the fund’s mission to “deliver exceptional returns by capitalizing, advising, and growing emerging better-for-you food companies operating in rapidly scalable markets,” Lee and his team plan to provide their portfolio companies with brand building expertise, growth capital, and the resources to forge strategies that will result in the launch of the next “breakout brand”.

Organic Growth

Identifying as an investor focused on the organic and better-for-you food sector will position Arbel to capitalize upon undeniable consumer trends.

Organic sales on the U.S. market reached $47 billion last year, according to the 2017 Organic Industry Survey conducted by the Organic Trade Association. Of all organic categories, organic food sales saw the greatest increase – jumping by $3.3 billion or 8.4 percent over the previous year; but more importantly – of all organic foods, organic fruits and vegetables accounted for 40 percent of all sales.

Furthermore, Food Dive reports that TechSci Research expects the global organic food market will see a compounded annual growth rate (CAGR) of 14 percent between now and 2021, and a report issued by the Organic Trade Association in March of this year found that organic food sales in the U.S. topped $40 billion per year in 2016, and that more than 80 percent of U.S. kitchens now contain organic food items.

In fact, organic has evolved to represent a more mainstream ideal among consumers from its grassroots, farmstand beginnings, but even still, demand continues to climb, leading the U.S. Department of Agriculture (USDA) to begin issuing certification for organic foods and ingredients grown during the transitional phase between traditional and fully organic production models.

In response to consumer demand, major players have been increasing their sourcing of organic and non-GMO ingredients, or have been making changes to their product lines, according to Civil Eats, which reports that Chipotle has eliminated GMOs from its menu items and Ben & Jerry’s is transitioning to non-GMO ingredients in its ice cream. Others major food companies making the switch include Gerber, which introduced a non-GMO infant formula in May 2016; Sabra Hummus, which has begun shifting GMOs out of its product line; Campbell’s, which has launched multiple organic and non-GMO soups, while also launching goldfish crackers made with organic wheat; Chobani, which has pledged to work toward ensuring organic and non-GMO feed for the dairy cows supplying the milk for its products; and Post, which has removed GMOs from its Grape Nuts cereal and has secured Non-GMO Project certification.

However, while demand dynamics have been changing, large scale supply chain models have not kept pace. Noting this gap, AMERRA Capital Management announced in February of last year that it had joined forces with Pipeline Opportunity Partners to launch Pipeline Foods – a developer of sustainable supply chains in global agriculture – that will have an initial focus on filling the need to meet demand for organic and non-GMO ingredients.

It is this demand-driven market dynamic that is attracting investment dollars. Arbel has already made investments in two companies: Sky Valley Foods – a maker of organic sodas, condiments, and dressings that contain no artificial ingredients or artificial sugars – and Alpha Foods, a maker of plant-based, GMO-free, and heart-healthy meals.

-Lynda Kiernan