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Dean Foods Returns to Plant-Based Products with Good Karma Investment

Today dairy processor and distributor Dean Foods announced a minority investment in Boulder, Colo.-based Good Karma, a producer of flaxseed-based, dairy-alternative food and beverage products. Originally a private label manufacturer of dairy-alternative milks, Good Karma developed its own branded CPG line in 2014 and expanded beyond beverages to yogurt in late 2016.

The investment will help Good Karma to expand distribution across the U.S. As part of the deal, Dean Foods said it will lend support to Good Karma’s growth in conventional retailers via its sales team. The capital will also go towards brand-building and Good Karma’s product innovation pipeline. Good Karma will operate as an independent company, led by its existing leadership team at its Boulder headquarters.

“We are excited about how this partnership will give us the opportunity to advance our mission of inspiring goodness by making our flax-based non-dairy beverages and yogurts more accessible across the U.S.,” Good Karma CEO Doug Radi told NOSH in a statement. “Through the increased availability and investments in brand-building and product innovation, we believe we’re better positioned to support families looking for plant-based options that are free of allergens.”

Dean Foods’ investment follows a previous round of funding, led by 2x Consumer Products Growth Partners. At the time of a 2014 U.S. Securities and Exchange (SEC) filing, Good Karma had raised $2 million in funding and was seeking an additional $8 million in capital.

2016 saw Dean Foods exploring new revenue streams. The company acquired ice cream brand Friendly’s and established a joint venture with Organic Valley to distribute the brand’s dairy products. On the company’s fourth-quarter earnings call in February, 2017, Dean Foods’ executives discussed how mergers, acquisitions and investments could help balance the variable price of milk and ebb and flow of that business.

“We’re looking at categories that are adjacent to dairy,” Dean Foods CEO Ralph Scozzafava told analysts. “We’re looking at one particular that would be, what I’d say, a good balance to the commodity seasonality that we see, the cyclicality we see with Class I milk. That would also be, I think, a good addition to the portfolio as we talk about being more and more Class I commodity resistant.”

Christopher J. Bellairs, Dean Foods’ CFO, added that while the company was certainly open to acquisitions, it was also considering joint ventures and “other forms of deals and structures that allow us to partner with very strong brands.”

The investment marks a return to plant-based products for Dean. In 2013 the company fully spun off its Colorado-based WhiteWave division, which included soymilk brand Silk, and sold plant-based protein brand Morningstar.

Good Karma COO Kevin R. O’Rell and Radi both previously worked WhiteWave while it was owned by Dean Foods. Rudi as Marketing Director for Silk from 2004 to 2007 while O’Rell was Senior Vice President of Research and Development for WhiteWave from 2004 to 2006.

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