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Organic Baby Food Pouch Maker Scores Private Equity Deal

July 20, 2015

Sprout Organic Foods recently announced a new investment partnership with North Castle Partners, a consumer-focused private equity firm investing in the health, wellness and active living sectors. The amount and terms of North Castle’s investment in Sprout were not disclosed.

Founded in 2009, Sprout made its initial splash in the food industry when it launched a line of organic baby food pouches making easy for parents to keep their kids fed while on the go. With dual headquarters in Boulder, Colorado and Atlanta, Georgia, Sprout is a privately-owned company. Its ethos is simple: “Our primary value is providing safe, healthy and delicious food products for children.” Decisions about the company’s direction are made within its well-established “environmental value system.”

The lightweight pouches offer more than just convenience and portability. Made of FDA-approved materials, each layer in the pouch serves an important purpose. The innermost layer, which comes into contact with the food, is made of BPA-free polypropylene. Many baby food manufacturers use glass, which can make portability a challenge. According to Sprout, “Reducing packaging weight is one of the best ways to reduce a product’s footprint.” The company also points out that many recycling facilities lack the capabilities to recycle glass, sending it to the nearest landfill instead.

The second layer is made of foil which provides protection from light and oxygen. The external layers make it easy to rip off the top without spilling the pouch’s contents.

As a result of this tri-layer technology, the baby food inside can be free of water reconstituted-concentrates, fillers, preservatives, and acidifiers in the food. Sprout makes its baby food using a slow cooking technology, which can help food retain its vital nutrients during the heating process.

The company has since expanded its product line to include food items designed specifically to meet the nutritional needs of kids as they grow from babies to toddlers. Products include everything from “Starting Solids” to “Toddler Snacks.” Sprout has also launched a line of snacks and smoothies geared toward adults that are made with organic fruits, vegetables, and whole grains.

“We are excited about the Sprout acquisition as our latest Nutrition platform that addresses the needs of today’s consumers. The organic baby food category is an attractive market with strong underlying fundamentals. Sprout is a strong brand that resonates with retailers and consumers, with a product portfolio that has meaningful competitive differentiation,” said Alison Minter, North Castle Managing Director.

“At the foundation of our approach is to partner with exceptional management teams and industry professionals to unlock the full potential performance of these companies,” commented North Castle’s managing partner Chip Baird. “We are pleased to announce that industry veteran Rick Klauser, formerly the Chief Marketing and Medical Sales Officer for U.S. Infant Nutrition at Nestle (Gerber), will become the CEO of Sprout, effective immediately.”

North Castle’s investments target consumer-driven product and service businesses that promote “health, active, and sustainable living.” North Castle’s portfolio of health and wellness companies include many popular name brands like Naked Juice and Bora Bora Organic. Earlier this year, the firm made an exit from previous holding Flatout Flatbreads.

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