Sovos Brands, Inc. operates as a growth-oriented consumer-packaged food company.
On December 30, 2022, the company completed the divestiture of the Birch Benders brand and certain related assets to Hometown Food Company, a portfolio company controlled by Brynwood Partners VIII L.P.
The company’s brands, Rao’s, Michael Angelo’s and noosa, are built with authenticity at their core, providing consumers food experiences that are genuine, delicious and unforgettable. The company’s products are prem...
Sovos Brands, Inc. operates as a growth-oriented consumer-packaged food company.
On December 30, 2022, the company completed the divestiture of the Birch Benders brand and certain related assets to Hometown Food Company, a portfolio company controlled by Brynwood Partners VIII L.P.
The company’s brands, Rao’s, Michael Angelo’s and noosa, are built with authenticity at their core, providing consumers food experiences that are genuine, delicious and unforgettable. The company’s products are premium and made with simple, high-quality ingredients.
Brands and Products
The company’s portfolio consists of three brands: Rao’s, Michael Angelo’s and noosa. The company’s brands offer premium, on-trend and high-quality products in a variety of product categories and appeal to consumers for consumption in a broad range of occasions, including breakfast, lunch, snacks and dinner. The company completed the acquisitions of Bottom Line Food Processors, Inc. d/b/a Michael Angelo’s Gourmet Foods and Rao’s Specialty Foods (‘Rao’s’ or ‘RSF’) in January 2017 and July 2017, respectively, and the company’s single sales and supply chain organization supported the rapid functional integration of the Michael Angelo’s and Rao’s brands. The company completed the acquisition of 100% of the outstanding capital stock of Noosa Holdings, Inc. (the ‘Noosa Acquisition’) in November 2018, and in October 2020, the company completed the acquisition of the Birch Benders business (the ‘Birch Benders Acquisition’).
Rao’s
The Rao’s brand offers a selection of Rao’s Homemade pasta sauces (including tomato-based sauces, Alfredo sauces and Pesto sauces), pizza sauces and dry pastas; Rao’s Homestyle meat-based pasta sauces; and Rao’s Made for Home frozen entrees, frozen pizza and soups. Rao’s sauces are simmered slowly and made in small batches with only high-quality ingredients, like pure olive oil and hand-selected, naturally ripened tomatoes from southern Italy. The company’s sauces have no tomato blends, no paste, no water, no fillers and no added sugar.
Michael Angelo’s
Michael Angelo’s frozen products include a variety of signature dishes, such as eggplant parmesan, lasagna made with fresh Ricotta cheese, shrimp scampi and other pastas, for a homemade taste. The company’s Michael Angelo’s brand is a leading producer of premium frozen entrees inspired by Italian traditions. In 2023, Michael Angelo’s launched into the pasta sauce category.
noosa
The company’s noosa brand offers a suite of delicious yogurt products, including spoonable yogurts and drinkable smoothies. noosa products are creamy and delicious and made with high-quality ingredients, such as whole milk from cows never treated with the growth hormone rBGH, real fruit and wildflower honey. In 2022, noosa launched into the ice cream category with noosa frozen yogurt gelato.
Customers
The company sells its products to customers primarily in the United States and principally to retail outlets and wholesale distributors, including traditional supermarkets, mass merchants, warehouse clubs, wholesalers, specialty food distributors, military commissaries and non-food outlets, such as drug store chains, dollar stores and e-commerce retailers. In the year ended December 31, 2022 (fiscal 2022), approximately 1% of the company’s gross sales were to international customers.
The company utilizes its direct sales force and brokers, as well as third-party distributors, some of whom also purchase the company’s products directly for their own accounts for resale, for the sale and distribution of the company’s products.
In fiscal 2022, the company’s largest customers, Costco Wholesale Corporation (‘Costco’), Walmart Inc. (‘Walmart’) and United Natural Foods, Inc. (‘UNFI’), accounted for approximately 17%, 13% and 10%, respectively, of the company’s gross sales.
Segments
The company’s operations are organized into two operating segments, Dinner and Sauces; and Breakfast and Snacks. The company’s Dinner and Sauces operating segment includes Rao’s and Michael Angelo’s. The company’s Breakfast and Snacks operating segment includes noosa. Due to similar economic characteristics between the two operating segments, Dinner and Sauces and Breakfast and Snacks are aggregated into one reporting segment.
Marketing, Advertising and Consumer Research
The company utilizes a variety of marketing channels to drive household penetration and brand awareness through paid, earned and owned marketing channels.
Digital Advertising
The company’s digital marketing efforts include video advertisements that play as viewers stream content like television shows on online video channels and applications, content and paid social advertisements for social media networks, paid advertisements and paid preferable placement of the company’s products on e-commerce sites, paid advertisements for the company’s brands and products in search results, online and mobile coupons and promotions and paid advertisements on third-party and retailer mobile sites, third-party and retailer websites and in-store near the company’s products or at check-outs to drive purchases of the company’s products. In addition, the company maintains an active email program, which the company leverages to deliver information on new product launches and promotions for the company’s Rao’s and noosa brands, and the company maintains registered domains at www.sovosbrands.com, www.raos.com, www.noosayoghurt.com and www.michaelangelos.com, which serve to communicate news about the company’s brands directly to consumers who access the company’s websites and social media sites and to address questions, comments or concerns about the company’s products. From January 1, 2022 to December 31, 2022, the websites for the company’s Rao’s and noosa brands collectively had an average of approximately 228,000 visitors per month according to Google Analytics.
Social Media, Influencers, Earned Media and Branded Content
The company has an active presence on social media platforms, including Facebook, Instagram and Twitter, to connect with the company’s consumers for each of the company’s brands. The company also partners with a number of social media ‘influencers’ who generate further awareness of the company’s brands through sponsored content, such as custom posts and ‘micro-sweeps’ or giveaway offerings, on various social media platforms. The company focuses on selecting social media ‘influencers’ who are real-life, approachable fans with whom the company’s consumers can relate, as well as chefs and experts on food or dietary lifestyles. In fiscal 2022, the company estimated that its influencers and social channels delivered 13.3 million impressions for the company’s brands.
In addition, the company utilizes public relations outreach to editors and journalists, partners with companies to create branded content featuring the company’s brand names or products, and collaborates from time to time with celebrities or chefs to promote and endorse the company’s products.
Research and Development
The company’s total research and development expenses were $6.7 million for the year ended December 31, 2022.
Manufacturing
The company produces its Rao’s Made for Home and Michael Angelo’s frozen products in Austin, Texas and the company produces all noosa spoonable yogurts in Bellvue, Colorado.
Co-Packing Arrangements
In addition to the company’s own manufacturing facilities, the company sources a significant portion of the company’s products under ‘co-packing’ arrangements, a common industry practice in which manufacturing is outsourced to other companies. The company’s co-packer La Regina di San Marzano USA, Inc. (together with its subsidiaries and affiliates, ‘La Regina’) produces the substantial majority of its Rao’s Homemade tomato-based sauce products in Italy and has established a manufacturing facility in Alma, Georgia that uses imported ingredients for the production of the company’s tomato-based sauces.
The company has entered into an agreement that provides La Regina the exclusive rights to be the third-party supplier of certain of the company’s tomato-based sauce products in the United States. The company has the right to purchase the La Regina U.S. facility under certain circumstances. The company’s U.S. agreement with La Regina has a base term ending December 31, 2031, with five-year extensions (unless three years’ notice of non-renewal is provided), and limits La Regina’s ability to produce products for other brands. The company’s Italy agreement with La Regina has a base term ending December 31, 2027, with a seven-year extension (unless three years’ notice of non-renewal is provided), and limits La Regina’s ability to produce products for other brands.
The company also uses co-packers located in the United States and Italy to supplement the company’s supply of Rao’s Homemade tomato-based sauce products and for the production of the company’s Rao’s Homestyle tomato-based sauces with meat, as well as its Rao’s Homemade Alfredo sauces and Pesto sauces. The company uses co-packers located in the United States and Canada for the company’s Rao’s Made for Home soups. For the company’s Rao’s Homemade dry pastas, the company uses a co-packer in Italy. The remainder of the company’s noosa products, including fruit smoothies and gelato, are each produced by different co-packers located in the United States. The company may leverage a co-packer located in the United States from time to time to supplement the company’s in-house production of select Michael Angelo’s products.
Distribution and Logistics
The company distributes its products to the company’s customers’ distribution centers directly from the company’s production facilities, the company’s co-packers’ production facilities or from warehouses operated by third-party logistics (‘3PL’) providers. Certain of the company’s customers are also distributors.
The company also sells and distributes Rao’s shelf-stable products directly to consumers through the company’s website and Amazon.
Strategy
Innovation, including new product development, is a key component of the company’s growth strategy, which includes extending the company’s product offerings into other categories.
Intellectual Property
The company owns registered trademarks for the company’s principal product brand names in the United States, including ‘Rao’s,’ ‘Rao’s Homemade,’ ‘Rao’s Homemade Since 1896,’ ‘noosa,’ ‘noosa finest yoghurt’ and ‘Michael Angelo’s,’ and various logos used in association with these terms. The company has also applied for or obtained trademark registrations for many of the company’s principal product brand names internationally, including in Canada, the European Union, the United Kingdom and select countries in Asia. The company owns domain names which correspond to the company’s primary brand names, including www.raos.com, www.noosayoghurt.com and www.michaelangelos.com.
The company’s subsidiary, RSF, is party to a worldwide co-existence agreement (the ‘Co-Existence Agreement’) with an unaffiliated third party, Rao’s Bar & Grill, Inc. (‘RBG’), that governs each party’s rights to use and register trademarks consisting of or compromising Rao’s and associated logos (collectively, the ‘Rao’s Marks’). Pursuant to the Co-Existence Agreement, RSF owns the right to use and register the Rao’s Marks in connection with foods, food products, beverages, sauces and related goods and services (including, without limitation, cookbooks and online and retail store services), while RBG owns the right to use and register the Rao’s Marks in connection with restaurant and bar services, including the Rao’s restaurant in New York City which is not affiliated with the company.
Food Safety and Quality Assurance
The company employs FDA Compliant Food Safety Plans or USDA Compliant Hazard Analysis and Critical Control Points (‘HACCP’) for the company’s products at each of the company’s manufacturing facilities. In addition, both of the company’s facilities have achieved a Safe Quality Food, or SQF, certification under the Global Food Safety Initiative (‘GFSI’).
Regulation and Compliance
The company’s operations are subject to extensive regulation by the FDA, the USDA, the United States Environmental Protection Agency and various other federal, state, local and foreign authorities where the company’s products are sold. The company is also subject to laws regulating labor and employment; advertising and privacy; health and safety; and laws affecting operations outside of the United States, including anti-bribery laws, such as the FCPA.
As a manufacturer and distributor of food products, the company is subject to a number of food-related regulations, including the Federal Food, Drug and Cosmetic Act and regulations promulgated thereunder by the FDA for seafood products, as well as the Federal Meat Inspection Act, Poultry Products Inspection Act and regulations promulgated thereunder by the USDA for meat and poultry products.
The company’s manufacturing facility in Austin, Texas is subject to regular inspection by the USDA, and the company’s products containing meat and poultry are subject to USDA regulation.
The company is also subject to the FDA Food Safety Modernization Act, which, among other things, amended the Federal Food, Drug, and Cosmetic Act to require FDA-regulated food facilities to develop and implement a written food safety plan, including a hazard analysis and preventive controls program to minimize or prevent food safety hazards.
Labeling for the company’s products must also comply with the Bioengineered Food Disclosure Standard. The company is also subject to the disclosure requirements of California’s Proposition 65, which requires businesses to provide warnings prior to any exposures to a chemical listed by California as a carcinogen or as having reproductive or developmental effects, including food products.
The company is subject to certain occupational health and safety laws, regulations and directives, including regulations issued pursuant to the U.S. Occupational Safety and Health Act, which require the company to comply with certain manufacturing safety standards to protect the company’s employees from accidents and injuries.
The company is subject to various local, state and federal environmental laws, regulations and directives that regulate, among other things, environmental protection and the use, generation, storage, handling, release and disposal of hazardous substances, including the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Federal Insecticide, Fungicide and Rodenticide Act and the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, and analogous state laws.
Competition
The company competes with smaller and more product-focused companies, including Amy’s Kitchen, G.L. Mezzetta, Inc. and Newman’s Own, Inc.
In addition, the company competes against companies focused on dairy and dairy-alternative products, such as Chobani, LLC, Danone S.A., Fage International S.A. and The Lactalis Group.
History
Sovos Brands, Inc. was incorporated in 2017.
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