Califia Farms raises $225m to expand plant-based empire: ‘We're carefully evaluating opportunities to expand beyond beverages'
The round - one of the largest private capital raisings within the natural foods sector, taking Califia's total funding to $340m over four rounds – was also supported by Singapore based investment company Temasek, Canada based Claridge, Hong Kong based Green Monday Ventures, and an unnamed “Latin America based family with significant interests in coffee and consumer products.”
The new investor group will take a minority stake in Califia Farms, with representatives from QIA, Temasek, and Claridge taking seats on the Board alongside existing investors Sun Pacific, Stripes and Ambrosia. Barclays acted as exclusive financial advisor and sole placement agent to Califia Farms on the capital raise, while Akin Gump served as legal counsel.
The capital injection will help Los Angeles-based Califia Farms invest in R&D, increase its production capacity, deepen its presence in the US market, and continue to expand overseas, said CEO Greg Steltenpohl, who has built up a portfolio of plant-based milks, creamers and drinkable yogurts; cold brew coffee; and juice.
'Different usage occasions and different commodity streams'
He told FoodNavigator-USA: "Califia’s focus is on different usage occasions and different commodity streams. An important part of our use of funds is to increase its rate of investment in R&D and to continually ask ourselves if we are providing something different and/or something better.
"Our goal is to provide options with greater nutritional content along with delicious taste. With dairy present in some form is almost every meal and throughout the food supply as an ingredient, there are even more opportunities within plant-based dairy than there are in mimicking meat.
"Califia is carefully evaluating its near term opportunities to expand beyond beverages and into many more culinary applications. [For example] oat has expanded its role in the company’s portfolio from pure oat SKUs into an important foundational ingredient in creamers, coffee blends, yogurts and optimized nutritional products."
Asked about the firm's manufacturing capabilities, he said: "We are definitely planning to increase capacity at [Califia's manufacturing faciloty in] Bakersfield, but it could mean participating in partner facilities along the way as well."
As for international expansion plans, he added: "Califia currently operates teams in Canada, the UK, Australia, and Mexico with emerging export relationships in Asia, the Middle East and South America."
“The more than $1 trillion global dairy and ready-to-drink coffee industry is ripe for continued disruption… Speed to market is critical for companies at our stage and we are thrilled that our new partners share our vision to be the leading independent brand in the plant-based sector. Each of our partners brings significant resources and global expertise to accelerate our next stage of our growth.”
Greg Steltenpohl, CEO, Califia Farms
Oatmilk gaining traction in third wave coffee houses
While Califia Farms has historically focused on refrigerated products in its distinct 'curvy' bottles, it made its first foray into shelf-stable beverages last fall with the launch of nitrogen-infused cold brew lattes made with oat milk that will help facilitate moves into e-commerce and convenience channels.
The firm, which recently launched into 7-Eleven stores, first moved into the burgeoning oatmilk category last spring with a barista product and an unsweetened product.
But while most observers agree that oatmilk could become a big category in plant-based milk, particularly in the foodservice channel, success in mainstream retail channels will not come overnight, Steltenpohl told FoodNavigator-USA in a recent interview.
"The adoption and awareness of oatmilk has been driven by the coasts and in the natural food segment and has not yet crossed over into widespread adoption."
He added: "Both Oatly and Califia are doing really well but we're still in fairly limited ACV. We're doing very well in our core coastal locations and natural food channels, and there's no question that third wave coffee house adoption does have an influence on retail home consumption.
"Mainline foodservice distributors are still very slow in adopting oatmilk, but we've found it more fruitful as a young brand to focus on what we call alternative distributors, and there's no question that the leading vanguard of third wave coffee houses has crossed over into oat as the preferred variety of barista formulations, and among the progressive coffee houses, that's even beyond dairy milk."
Asked about the performance of Übermilk, an oatmilk-based beverage with added plant protein launched early last year, the company said it "is still available in limited capacity at select retailers in the US, it’s currently undergoing an optimization (recipe enhancement). Look out for it in summer 2020!"
