Soulfresh: why we invested

This is our first investment in the food and beverage sector - so why have we chosen Antipodean healthy food group Soulfresh? We take a look at the market and the reasons why we believe we can help support the Soulfresh team on its journey.

Soulfresh: why we invested

Insight / 24 Dec 2019


Why we invested.

True recently invested in Soulfresh, the global food & beverage brand platform that researches, develops and distributes brands built for consumers focused on healthy and sustainable lifestyles. We believe this business has the platform and distribution capability to become a global leader in the fit-for-the-future categories that are driving the next iteration of consumption.

Matt Truman, CEO and Co-Founder of True, outlines his view on the investment, the changing nature of the market and, most importantly how True can help the management team deliver on its goals.

What is Soulfresh?

Soulfresh is a profitable, fast growing (60% historic revenue CAGR) food and beverage platform, focused on delivering alternative options for consumers looking for healthy and sustainable lifestyles. Soulfresh has a strong portfolio of disruptive brands operating across three core categories. It delivers 11 own-brands across fermented (living) beverages, plant-based foods and drinks. Brands that sit within its portfolio include Lo Bros (kombucha range of drinks), Nutty Bruce (plant-based milk alternatives), Pico (organic vegan chocolate) and Eaty (plant-powered “meat”). Consumers can purchase these products from numerous retailers across six countries.

Why Soulfresh?

One of the key headline factors behind our investment decision was Soulfresh offers broad market defensiveness being exposed to large, staple food and beverage categories but also offers access to a dynamic consumer behavioral shift towards much healthier and ESG focused consumption habits.

“The markets in which Soulfresh operate are all demonstrating tremendous structural growth with living beverages, delivering compound annual growth of nearly 30% set within a stagnating global soft drinks category worth a significant £278bn.”

Plant-based foods, whilst much smaller, continue to deliver growth rates at 8x that of the global meat category with ESG-related issues driving material changes in consumer behaviour in this category. This year Impossible Foods, one of the leading innovators of plant-based foods, has launched a pork-based alternative.

We believe that consumers are increasingly looking to companies to deliver ethical products that offer convenience, sustainability and functionality as well as a focus on health and wellness. Regularly sought out features include lower sugar intake, organic, vegan and more natural products. We also believe that countries and governments, and therefore supermarkets, will look to drive this shift in behaviour as the costs of maintaining a healthy lifestyle rise ever upwards. For example, in the UK, the Co-Op announced at the turn of the year it would be bolstering its vegan range and the Sugar Tax introduced in April 2018 is accelerating changes in behaviour.

For current brands, it is very difficult to re-position your brand appropriately and we are seeing evidence of smaller, more nimble brands taking significant market share from leading global incumbents across most supermarket categories as a consequence. Supermarkets will have to react to this to continue to remain relevant to their customer base. Consequently, a key attraction of Soulfresh is its focus on R&D, its test and fail quickly mentality, its ability to launch new products and categories ahead of the competition and the CEO’s unrelenting drive to follow the consumer wherever they go. This last point is the most important – that we look to partner with passionate, knowledgeable, ambitious and dynamic entrepreneurs and management teams. Didi and his broader team tick all of those boxes, and their products have even had a significant impact on my personal lifestyle choices and sleep patterns!

True & Soulfresh.

At True, we only invest in businesses we believe we can help. In this instance, we believe our unique vertically integrated sector specialist platform can materially accelerate Soulfresh’s growth trajectory, enabling the management team to achieve their goals of a leading global brands platform. True’s team have spent nearly 20 years working across the grocery sector. We see over 3,500 young businesses from 43 countries a year, which will help guide Soulfresh’s investment in R&D at a product/trend level. Our team have experience advising some of the largest retailers in the world notably Tesco, Metro, Alibaba, Amazon, Kroger, Booker, Sainsbury, Asda, Migros, Homeplus, Ocado and many others.

Meanwhile our global Partnership programme boasts strategic partnerships with five grocery businesses, including M&S, Morrisons, 7-11, Shell and Waitrose – and our board level network globally in this area is vast. True will therefore help with accelerated UK and international distribution, presenting Soulfresh as an innovation catalyst to our own existing partners (a great example of reciprocal advantage for all) and our broader board level grocery networks.

Our experience in e-commerce owning several DTC brands will help inform Soulfesh’s DTC and B2B e-strategies and our experience with M&A in this space, following our investments into Soulfresh and late last year, Shameless Pets will help bolster an experienced management team. As our business continues to grow, so will our ability to introduce new distribution channels.

Finally, our vertically integrated sector specialist approach builds a network of entrepreneurs, executives and investors who can help Soulfresh as it grows and internationalises. Two powerful examples on completion is our partnership with Soros Capital management, a prominent global investment firm, and the appointment of Ben Clarke, formerly of Kraft, Burtons Biscuits, Grenade and Bain Capital fame. We are excited about leveraging the networks of both as well as many others over the course of our partnership with Didi and the Soulfresh team.