San Francisco Equity Partners acquires majority stake in frozen snacks brand Brazi Bites

The private equity firm, which focuses exclusively on consumer growth companies, said the acquisition aims to develop the business around the strength of its founding team – Junea Rocha and her husband Cameron MacMullin – who have been “leading a movement among consumers toward authentic, ethnic and better-for-you frozen food offerings.”​

Rocha said she grew up eating bite-size cheese bread because it is one of the most popular snacks in Brazil. She and MacMullin started the company in Portland, Oregon, in 2010 after realizing there is a white space for healthy options in the frozen aisle.

Brazi Bites became available in the natural channel, including Whole Foods, shortly after its initial launch. However, the business did not take off until the couple pitched their company on Shark Tank in 2015.

“The consumer demand just exploded,”​ said Rocha.

For the past three years, Brazi Bites experienced a 4,554% compound growth rate and has an average revenue of $20m annually. Its product line, which includes cheddar and parmesan, garlic asiago, zesty pepper jack and cheese pizza, also expanded into over 6,000 stores across the US, including Kroger, Costco, Target and Safeway.

‘We reached an inflection point about a year ago…’

Rocha noted Brazi Bites had always been “scrappy and clean,”​ and she wanted to build a more profitable business in longer term.

“We reached an inflection point about a year ago. After a high-growth period, we decided to evaluate what would be the next step for the company… We hired an investment banker from Seattle and met with different private equity companies.​

“Ultimately, we partnered with SFEP because they have experience in bringing authentic products to more audiences, creating more value for our brand in the future,”​ she said.

After the acquisition, SFEP will crank up Brazi Bites’ marketing model and scale up its distribution in suitable channels, according to Scott Potter, managing director at the investment firm. Down the road, it will also help the snack company with logical product extension “that has consistency around Latin-inspired food category,”​ he said.

However, Potter noted this is SFEP’s first acquisition in the snack category as the firm has mainly invested in the home care and beauty industries in the past.

“So the supply chain could be challenging because the products are frozen… In terms of marketing, we will have to ensure the products pop on shelf when they are behind a door in the freezer,”​ he explained.

Frozen foods poised for growth

Potter told BakeryandSnacks there are several criteria for a company to receive investments from SFEP.

“We only partner with consumer product businesses that are at an inflection point. We also look at their financial profiles, typically between $20m and $100m annual sales… as well as partnership models, margin structure and how they run their businesses,”​ he said.

Regarding the acquisition of Brazi Bites, Potter said SFEP had spent a lot of time looking at the freezer section because it is the last part of the grocery store that is transitioning to “clean label and healthy.”​

“The frozen aisle has reversed its long-term sales decline and is poised for growth,”​ he said. “I certainly think the underpinning of the recent Conagra-Pinncle Foods deal is a reflection of this revised focus on this sector.”​

However, it is those smaller brands focusing on better-for-you attributes and ethnic flavors that are taking market shares from legacy brands, noted Potter.

“We believe US consumers are engaging with ethnic flavors more than ever before… so [acquiring Brazi Bites] is truly an opportunity to further reinvent the frozen category,”​ he said.