Carolina Foods gets financial boost to take private label sweet baked goods capacity to next level

By Gill Hyslop

- Last updated on GMT

Carolina Foods produces enough doughnuts annually to circle the globe twice. Pic: GettyImages/sara_winter
Carolina Foods produces enough doughnuts annually to circle the globe twice. Pic: GettyImages/sara_winter

Related tags Carolina Foods Falfurrias Capital Partners Sweet baked goods Private label Duchess Chicago Custom Foods Dollar Tree

Private equity firm Falfurrias Capital Partners has made an undisclosed investment in the manufacturer that produces nearly a million honey buns daily, as well as enough doughnuts each year to circle the globe twice.

Carolina Foods was founded in 1934 and has grown into one of the leading wholesale bakeries in the US, operating out of multiple locations across Charlotte, including a 100,000 sq. ft. manufacturing facility in Charlotte’s South End.

The company produces doughnuts, honey buns, pies, fritters, and a host of other sweet treats under the Duchess brand, as well as private label for some of the world’s leading snack brands. The products are sold in single-serve and multipacks distributed in club stores, mass merchandisers and convenience stores in all 50 states as well as Puerto Rico, Mexico and Canada.

To the next level

Carolina is the Falfurrias’ third investment in the packaged food category in the past two years, following the 2019 acquisition of condiment, sauce and spice producer Sauer Brands and the subsequent bolt-on of branded popcorn seasoning company Chicago Custom Foods.

The company has raised approximately $1bn across four funds, employing a proprietary, research-based process called ‘Industry First’ to identify markets with durable growth trends, construct a thesis based on research findings, and partner with management teams to create strategic value.

Terms of the deal were not disclosed, and no immediate changes were announced. Carolina’s 400-strong workforce is expected to be retained following the transaction, along with third generation owners Paul Scarborough (CEO), Katie Scarborough Caldwell and Ruffin Scarborough.

“This partnership will give us the financial resources and management expertise to take Carolina Foods to another level,”​ said Paul Scarborough.

“Falfurrias has a tremendous track record of helping the companies they invest in realise next-stage growth, and their expertise in food marketing and distribution will be especially useful to our organisation.”

Falfurrias partner Chip Johnson said the Charlotte-based PE firm has been aware of Carolina for a number of years.

“We always enjoy partnering with companies in Charlotte, and this deal is especially exciting to us given our recent focus on the packaged foods market. We feel we can add a great deal of value to the company based on our team’s knowledge of food manufacturing, marketing, and distribution,” ​said Johnson.

Tad Dickson – former CEO of grocery chain giant Harris Teeter and current member of the Board of Dollar Tree – and Hershey and Coca-Cola alum Mary-Ann Somers served as advisors to Falfurrias and will serve on the Board of Directors of Carolina Foods on completion of the transaction.

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