Svoboda Capital Fund IV has made a $10 million investment in California-based cheese and cheese snack company, Sonoma Creamery.

In business since 1931, Sonoma Creamery produces and markets premium cheese and cheese-based snacks. More than 40 years ago, Sonoma Creamery introduced Hot Pepper Jack cheese to the market, but more recently, in 2014 the company launched into the better-for-you snack segment with the introduction of Mr. Cheese O’s – the first of its kind crunchy, shelf-stable, high protein, gluten-free, lactose-free, baked cheese snack made with organic quinoa and no artificial ingredients or preservatives. This was followed just last year with the introduction of Sonoma Creamery Parmesan Crisps, Cheddar Crisps, and Bacon Cheddar Crisps, which are made with real bacon and no artificial nitrates or nitrites.

Previously owned by a subsidiary of South Korea’s Pulmuone, Sonoma Creamery was acquired by Estate Cheese Group – a group of approximately a dozen investors led by current Sonoma Creamery president and CEO John Crean in 2011.

Upon the launch of Mr. Cheese O’s under Crean’s leadership, Crean told the Press Democrat, “There’s so much interest in this type of food now. This is no longer a niche thing, people want it.”

Over the past three years, Sonoma Creamery has pioneered a new food category and has expanded its product line which is sold through a range of major retailers including Amazon, Costco, HEB, Kroger, Safeway/Albertsons, Target, and Wegmans.

“We are excited to have a new partner who shares our belief in making addictively healthy cheese snacks from the highest quality, simplest ingredients,” said John Crean, Sonoma’s President & CEO. “Teamwork is our secret weapon. We believe deeply in delivering the absolute best, most compelling, most innovative products to our consumers and retailer partners.  We are enthusiastic that the team at Svoboda share our objectives as the surest way to build long-term value for our shareholders, partners and employees.”

Founded in 1998, and based in Chicago, Svoboda Capital Partners has $350 million under management and focuses its capital deployment in the targeted business niches of consumer products, value-added distribution, and business services. Under the firm’s investment structure, it typically makes investments of between $10 and $20 million in partnership with management teams.

Smart Snacking

This is the first investment for the firm in the food sector, according to Food Dive. However, selecting the better-for-you snack category for a maiden food investment is well advised.

In recent years, snacking has demonstrated continued growth as a consumer-led trend. However, this growth has recently intensified, climbing from 76 percent of consumers snacking in 2014, to 83 percent of consumers saying they snack in 2016, according to Technomic.

“With consumers’ lives getting busier, snacks are serving more needs than in the past,” explained Kelly Weikel, director of consumer insights at Technomic. “To gain share, operators and suppliers must adapt their snack lineup to meet consumers’ wide range of need states—from tiding them over to the next meal to replacing meals, to providing nutritious, supplemental treats.”

Drilling down, there is even more potential for return on investment in the better-for-you snack category, as consumers are more often opting for snack foods as health plays a greater role in food choices, and younger consumers blur the lines between snacking and formal meals, reports Food Dive.

Further supporting indications that snacking is a consumption pattern has staying power, is that today, 24 percent of all snack foods are eaten during meal times, according to a report issued by The NPD Group, compared to 21 percent five years ago – a trend that is expected to continue, with expectations that the trend will increase by another 12 percent.

Given these market dynamics, Sonoma Creamery is well positioned to achieve strategic growth and returns for its partners.

“We have been impressed with Sonoma’s ability to innovate and grow in the exciting healthy snack category,” said Jeff Piper, managing director at Svoboda Capital. “We are looking forward to collaborating with the Sonoma management team to enhance the long-term growth and success of the company.”

-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.