Minneapolis-based So Good So You, the plant-based “shots” company, is growing fast since it received $14.5 million in private equity capital 14 months ago.
The capital infusion has allowed founders Rita Katona and Eric Hall, partners in marriage and business, to profitably grow, adding more than 20 people to a workforce that is now 54 employees strong and disproportionately women and people of color.
With a beefed-up balance sheet, So Good So You also was able to borrow money at favorable rates to acquire high-speed equipment to expand capacity to 300 bottles a minute at its southeast Minneapolis plant, the couple said.
The bet is still the same: that young adults and others who don’t always eat their fruits and vegetables still acknowledge the need for nutrition and will buy the shots, sold at 10,000 stores nationwide including Target and Lunds & Byerlys.
“There’s something about the delivery, the shots, that makes people feel like it’s something nice for themselves,” said Katona, a former Target product manager. “We just launched a new shot called ‘Happy.’ Three plant-based ingredients, including saffron, known to be mood-boosting ingredients.”
The “probiotic juice shots,” with names like Immunity, Energy, Detox and Fiber, are full of plant-extruded nutrients designed to support immunity and digestive health. They sell for $3.99 per 1.7-ounce shot, with the convenience-oriented 16- to 34-year-old crowd and young families in mind.
Retail distribution doubled in 2021, and the company says it is the fastest grower in the “functional juice shot category” in hot spots such as Boulder, Colo.; Brooklyn, N.Y.; and California metropolitan areas.
So Good So You’s primary competitors are based in California.
While Katona and Hall declined to talk specifics, the company has averaged 75% profitable sales growth annually over four years.
Spins, which tracks data in the health and wellness category, reported So Good So You retail sales in the 52-week period ending Jan. 23 grew 74% to $24.3 million.
Katona, 41, and Hall, 46, try to focus the company on their employees and the environment. Their product packaging is made from 100% recycled materials. The 15,000-square-foot Minneapolis office and plant are powered exclusively by wind energy.
The long-term plan is to continue expanding the brand “by building a fiscally sound company … that adds value … to our team members, business partners and customers, while being responsible stewards of our planet,” Katona said.
Hall and Katona, aiming to reward and retain workers in a tight labor market, have raised wages and announced that the employee performance bonus will double to $5,000 for 2022 from $2,500 in 2021. Base pay for new hires on the factory floor starts at $16 per hour plus benefits, and can reach the mid-$20s. Hall notes that most of the salaried supervisors started as hourly workers.
“We’ve given out several raises in recent years, and as we grow, we move people internally into leadership positions and better-paying positions,” he said.
Maria Ramirez, for example, began as a temporary production worker six years ago and now runs the kitchen, leading a team of 10 workers. She credits Hall and Katona.
The irony of small-company success means So Good So You also could be an attractive acquisition target for a larger food company. Hall and Katona declined to discuss sale speculation.
Katona and Hall, the company’s majority owners, were among 20-plus individuals who invested about $5 million in the company before the 2020 investment of $14.5 million by New York’s Prelude Growth Partners and some of the original investors.
“A fast-growing food or beverage company in the better for your health consumer space would be absolutely on the radar as a target of large food companies,” said Michael Burgmaier, managing director of Whipstitch Capital. He is an investment banker in suburban Boston who is familiar with So Good So You. “A disproportionate amount of the growth in food and beverage have come from these natural, organic and ‘clean label’ brands, as this sector is described. It’s a long-term trend. And now it’s mainstream. And about 95 percent of So Good sales are coming out of conventional retailers. The big food companies know it.”
Kent Pilakowski, a former General Mills executive and director and investor in So Good So You, for years has consulted and invested in small specialty-food companies.
Without speculating on So Good So You’s future, Pilakowski said owners, including founders and institutional investors, typically sell to larger companies with deeper pockets that believe they can increase sales significantly. Original owners often are exhausted after several years, can’t take the business to the next level and are more than willing to cash out at a healthy multiple of their investment.
Plus, private-capital investors want a significant return within three to five years.