Behind the scenes of ~$15m investment in Big Easy Blends

Granite Creek and Clover, an independent sponsor, bet on a beverage business in a bid to grow its capacity.

Amid a need for increased production capacity, beverage manufacturer Big Easy Blends secured up to $15 million from Clover Capital Partners and Granite Creek Capital, two sources told PE Hub.

With a name reflecting its founding city, New Orleans (The Big Easy), the ready-to-drink beverage maker will invest proceeds into building and buying equipment for a new facility in its headquarters, among other expansion strategies. “This isn’t a liquidity event for the founders,” said the sell-side advisor, Brian Alas of Boxwood Partners, who has long known the co-founders.

Boxwood was originally hired five years ago when Big Easy first explored raising institutional money “but it wasn’t the right time in the lifecycle of the business,” said Alas, managing director at the bank.

When Boxwood relaunched a process last November it was more about “finding someone who can provide just debt, and then as we moved along, we realized there’s a good opportunity to partner with equity sponsors,” Alas said.

Regardless of the change in deal structure, Granite Creek Partner Jim Clark said the company was seeking growth capital to keep up with growing demand from existing and new customers – without giving up control.

Alex Schneider, cofounder of Clover Capital, added that he saw the potential in flexible packaging – a key focus area for the company – driven by convenience and sustainability. There’s an “opportunity to look at what other products consumers want in flexible packaging,” he said. In the long term, the firm will explore recyclable products within the pouch category, he said.

Founded in 2007, Big Easy designs and manufactures branded and private label single-serve pouches for iconic beverage brands like Welch’s. The idea is that stand-up pouches belonging to the flexible packaging category use less plastic than traditional bottles.

The pool of buyers for Big Easy, which generates revenue in the $20 million range, included private credit firms, growth equity firms and a few traditional PE firms, according to a source.

“The process boiled down to a select group right before Christmas,” the source said.

Boxwoods’ Alas, who has worked with Clover on several deals, called the independent sponsor last fall. Clover’s long-standing relationship with Boxwood, along with the firm’s relevant experience in the food space, made for a logical pairing. The firm, for example, owns Jo’s Candies, a chocolate company.

Although Clover typically takes control equity positions, it helped to be flexible in this case. “We are more strategy agnostic,” Schneider said.

“The fact that this was a minority transaction made the population of relevant partners [even] smaller,” according to Schneider. Schneider then sought out Granite Creek’s Jim Clark – someone he has known for over 20 years – to help meet the capital and debt required to get the deal done. Granite Creek, a Chicago-based PE firm, provides equity and debt and pursues situations where a flexible investment approach can deliver unique and highly customized solutions.

The deal formally closed early April and a joint LOI was signed mid-January. “From the check size perspective, it was the best of both the worlds,” Alas said.

In addition to physical expansion plans, the fresh capital will be used to improve industry awareness of the company as well as execute on new licensing opportunities, Clark added.

The big picture  

According to Alas, the deal points to another larger trend in the supply chain of food and beverage manufacturers servicing the private label market: a run up against capacity.

An increase in demand for store-brand goods has impacted the manufacturers, he said. The shift in preference for private label goods, which are cheaper but just as good, started a long time ago and has only accelerated during covid.

For example, Boxwood recently launched a sale process for a company that manufactures spices, seasonings and extracts, and much like Big Easy, this asset has private label exposure.

“There’s a finite amount of capacity in the supply chain [of these manufacturers],” he said.