LOUISVILLE, COLO. — About six years ago Todd Lachman began recognizing that retail sales of smaller, on-trend brands were growing at the expense of larger brands.
“I felt that there was a distinct opportunity to create a company specifically and purposely built to basically acquire, integrate and grow a portfolio of these brands,” he said. “I put together a phenomenal, growth-oriented, tenacious team with the right capabilities.”
With the backing of private equity investor Advent International, Sovos Brands was founded in 2017. After acquiring the brands Michael Angelo’s, Rao’s, noosa and Birch Benders, the Louisville-based company is taking another big step in its history.
Sovos Brands on Sept. 22 priced its initial public offering of 23,334,000 shares of its common stock at $12 per share. The shares began trading on the Nasdaq Global Select Market on Sept. 23 under the ticker symbol “SOVO.” The IPO is expected to close on Sept. 27. Underwriters will have a 30-day option to purchase up to an additional 3,500,100 shares of common stock at the IPO price, less the underwriting discounts and commissions.
“It was the right time to go public and have the balance sheet and our corporate brand on the world stage,” said Mr. Lachman, founder, president and chief executive officer. “From talent acquisition, future M&A, it made all the sense in the world, and I’m really excited for the next chapter.”
From 2019-20, net sales for Sovos Brands increased 66% to reach $560 million while adjusted net income rose to $44 million from $11 million.
In Latin, sovos translates to “one of a kind,” a trait Sovos Brands looks for in acquiring premium brands that have yet to reach their market penetration potential. All the brands that Sovos has acquired had under 10% household penetration at the time, Mr. Lachman said.
“We look for brands with very specific attributes,” Mr. Lachman said. “All our brands have taste superiority in their categories, strong consumer affinity. They all have high-quality ingredients with cleaner labels.”
Sovos Brands in January 2017 acquired Michael Angelo’s Gourmet Foods, Inc., which features a line of premium frozen Italian entrees that contain no artificial ingredients. Rao’s Homemade, a premium line of pasta sauces, pizza sauces, dry pastas and frozen entrees, was acquired in July 2017. Since the acquisition, the Rao’s brand has entered the soup category and household penetration of Rao’s nearly has doubled to 9.6%, Mr. Lachman said. Noosa Yogurt LLC, acquired in 2018, features premium yogurt made with whole milk and wildflower honey.
Sovos Brands in 2020 acquired Birch Benders, LLC, a producer of pancake and waffle mixes, toaster waffles, and pancake and baking cups. This year keto-friendly and organic cake and brownie mixes as well as two keto-friendly frostings launched under the Birch Benders brand. Frozen waffle sales for Birch Benders grew 387% from June 2020 to June 2021.
“We averaged about one acquisition a year over the last four years, and we have the full intention to execute that element of our playbook going forward,” Mr. Lachman said.
With over 30 years of experience in the consumer packaged goods industry, Mr. Lachman has worked for Procter & Gamble, Kraft Foods, Del Monte Foods, Inc., Mars, Inc., Altamont Capital Partners and Advent International.
He was president of Mars Petcare from December 2011 to April 2015. Could Sovos Brands bring its premium strategy to the pet food category?
“Half my career was in the wonderful pet category,” Mr. Lachman said. “I do have two dogs. So I’m a dog lover. But we can’t really commit to entering or not entering that category. First of all, we love the categories we’re in, and there are a lot of categories that we believe are ripe for disruption by leveraging our capabilities and talent.”