Boulder broadens health and wellness platform through acquisition

by Eric Schroeder
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BOULDER, COLO. — Boulder Brands, Inc., which already maintains a strong presence in the gluten-free market, is making another addition to its health and wellness platform with the acquisition of an 80% stake in GlucoBrands, L.L.C., owner of Level Life Foods. Based in Highlands Ranch, Colo., Level Life offers products geared toward daily management of diabetes.

Level Life’s first products, Level Life Glucose Gels, were launched in September 2012 for use primarily by emergency medical technicians (EMTs) and type 1 diabetics to help correct low blood sugar level events. But Boulder Brands sees additional opportunities for the company’s products and plans to launch Level Life’s next and primary line of products — bars and shakes. According to Boulder Brands, the new bars and shakes will be designed to help control carbohydrates, support healthy blood sugar levels and help satisfy hunger for those managing carbohydrate and sugar intake, including consumers who may be pre-diabetic or who already have type 2 diabetes.

“We are excited to add Level to our health and wellness innovation platform as it will become our fourth category-elastic, need-state vertical brand, serving the diabetic consumer,” said Steve Hughes, chairman and chief executive officer of Boulder Brands. “Ultimately, Level will complement Smart Balance in heart-health, Earth Balance in plant-based and Udi’s and Glutino in gluten-free. Diabetes is one of the largest and fastest growing need states in consumer foods today. However, it is an underserved market with few brands offering great tasting products with the optimal balance of sugar and carbohydrates.

“Level is market-ready and is currently launching four bars and four shakes. As with our other brands, category expansion opportunities are extensive, and we look forward to growing Level to a much larger brand in the future.”

Boulder’s expansion in the health and wellness market comes at the same time Vevey, Switzerland-based Nestle S.A. has been building its presence in the category. Nestle in February acquired Pamlab L.L.C., Covington, La., a manufacturer of medical nutrition foods for a variety of medical conditions, including diabetes, depression, high-risk pregnancy and cognitive impairment.

Mr. Hughes said he was especially impressed with the experience and passion of the Level management team, which includes Peter Noverr. Mr. Noverr has more than 15 years of experience in business start-ups and turnarounds such as EAS and Atkins Nutrition. Mr. Noverr will become vice-president of Level Life and will immediately leverage the Boulder Brands’ sales, marketing and supply chain teams to fast track the launch into bars and shakes, Mr. Hughes said.

In addition to the acquisition of Level Life, Boulder announced it has signed an exclusive license agreement with Byrne Dairy of Lafayette, N.Y., under which Byrne will become the exclusive distributor and marketer of Smart Balance Milk. Boulder Brands will receive royalty payments as part of the agreement.

“Boulder Brands entered into a co-packing agreement with Byrne Dairy over four years ago, and has developed a strong partnership,” Mr. Hughes said. “Byrne Dairy is one of the most successful and innovative companies in the dairy industry, has a strong base business in our most established markets, and as a result, we believe Smart Balance Milk is in good hands.”

Beyond the acquisition and licensing agreement, Boulder on July 10 closed on a new $330 million senior secured credit facility that consists of a $250 million, 7-year term loan and an $80 million, 5-year revolving credit facility. Boulder said it will use the proceeds to refinance its existing $280 million senior secured credit facility, of which $242.2 million was outstanding immediately prior to the refinancing, and for general corporate purposes. The overall effective interest rate on the new facility is 5.25%, 225 basis points below the previous facility. This will result in approximately $5 million in annual cash interest savings based on debt outstanding immediately prior to the refinancing, Boulder said.

“We are delighted with the strong demonstration of support and the ongoing confidence in our outlook by the banking community,” said Christine Sacco, chief financial officer. “The favorable market environment enabled us to lower the company’s overall interest rate and secure less restrictive covenants, which will provide more financial flexibility.”

Commenting on all three moves, Mr. Hughes said the strategic announcements represent “important steps in helping us continue to fulfill our vision of creating a high growth, high margin, health and wellness innovation platform.”

Boulder’s health and wellness platform consists of brands that target specific consumer needs: the Glutino and Udi’s Gluten Free brands for gluten-free diets; the Earth Balance brand for plant-based diets; the Level Life brand for diabetic diets and the Smart Balance brand for heart healthier diets.

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