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Keen Capital Acquires Stake in Dahlicious Organic

Martín Caballero

Massachusetts-based brand Dahlicious, which markets a line of organic lassis, or milk-based Indian-style drinkable yogurts, has sold a stake in the company to investment fund Keen Growth Capital, the company announced in a press release last week.

Though financial terms of the deal were not disclosed, Jerry Bello, managing partner at Keen, told BevNET that the investment is structured as a long-term play that includes an immediate infusion of working capital in addition to future tranches. He framed the overall commitment as “slightly less than $4 [million].”

“It’s more complex than just saying a number,” Bello, a well-known food entrepreneur and investor, said of the investment, Keen’s first in a dairy and non-dairy ready-to-drink beverage brand. “If we really like the company and the product, which we both do right now, we are really committed with staying with the brand in the longer term.”

Dahlicious also announced that it will be changing the company name to Dahlicious Organic. Along with redesigned packaging, the company is adopting a painted elephant as its new symbol, meant to represent “ancient wisdom and time-honored tradition.”

Bello explained that, in Dahlicious, Keen recognized an opportunity to partner with a company with a differentiated product that is still relatable to mainstream consumers. He said the next goal for the brand is to “texturalize and create depth in the flavors” and continue to cultivate its positioning as a sophisticated craft offering.

Having previously focused on its dairy-based lassis, Dahlicious has recently expanded into plant-based dairy products. In February, the brand launched its first food SKU, a line of almond-based yogurt cups, with retailers in the New York City area, including Fairway Market and Kings Food Markets.

The brand has faced challenges in the past year. After missing its original launch date last June, a line of non-dairy lassis made with almond milk is scheduled to be on-shelf at the end of Q2. At the 2017 Winter Fancy Food Show in San Francisco last January, the company showcased the line as an “almond-based kefir,” but several months later, it received a cease-and-desist letter from a lawyer for dairy-based kefir brand Lifeway. In the letter, attorney Douglas A.Hass wrote “Lifeway is deeply concerned about Dahlicious’s misleading representation of its products as kefir and the confusion this use engenders in consumers who seek the significant benefits from actual kefir.”

The company said that use of “lassi” rather than “kefir” on the finalized non-dairy version of the product was not related to the complaint.

“We see ourselves bringing Indian style drinkable yogurt to the market the same way Siggi’s brought Icelandic style [drinkable yogurt],” said Dahlicious co-president Ajeet Burns. “[Dahlicious co-founder Jaidesh Sethi] is trying to innovate with great new products in all different forms, whether that’s a bar or something frozen that we can bring to the market in the future.”

In addition to expanding the sales team, Burns said that the new funding will be used in part to add further capacity to the company’s 25,000 sq. ft. production facility in Leominster, Mass., over the next 12 to 18 months. Bello noted that capital will go towards upgrading plant efficiency, which will improve margins and therefore free up additional financial resources for marketing and promotion as the brand seeks to gain traction in conventional retail. Dahlicious is currently sold in Costco, Market Basket and select locations of Safeway and Whole Foods.

“Strategically we are looking to strengthen our relationship with Whole Foods over the next couple months and, on top of that, find some of these larger retailers that have more points of distribution,” Bello said.

As the company grows, Burns said Dahlicious will focus on balancing its portfolio of organic non-dairy and dairy-based products.

“The proficiency within the company is big enough that we can innovate on both sides of dairy and non-dairy,” he said.

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