Butterfly acquires natural welfare-focused egg producer Pete and Gerry’s

Dive Transient:

  • Los Angeles-based non-public fairness agency Butterfly acquired a majority stake in natural, free-range and pasture-raised egg producer Pete and Gerry’s. Monetary phrases of the deal weren’t disclosed.
  • Primarily based in Monroe, New Hampshire, Pete and Gerry’s sells eggs underneath quite a lot of labels together with Pete and Gerry’s Natural, Nellie’s Free Vary and Contemplate Pastures. The licensed B Corp companions with greater than 130 farms all through the U.S. that comply with the model’s strict animal remedy and environmental sustainability requirements. 
  • Specializing within the meals sector, Butterfly makes use of what it describes as a “seed to fork” strategy to investing within the meals system. It places funds in corporations in 4 verticals: agriculture and aquaculture, meals and beverage merchandise, meals distribution and meals service.

Dive Perception:

As client appetites for better-for-you and environmentally savvy merchandise proceed to extend, manufacturers like Pete and Gerry’s are stepping in to fill the demand. Gross sales of sustainability-marketed merchandise represented 54.7% of the whole CPG market development from 2015-2019, although they make up solely 16.1% of the sector, in response to a report from IRI and the NYU Stern Middle for Sustainable Enterprise.

Animal welfare points are additionally changing into a precedence for some consumers. Roughly two-thirds of shoppers surveyed in November 2018 reported if an organization had a nasty status for animal welfare, they might be much less doubtless to purchase that firm’s meat, in response to information collected by the Animal Welfare Institute.  

Regardless of the rising curiosity in sustainability and animal welfare, nonetheless, natural eggs are nonetheless a comparatively small section of the general market. Natural and cage-free egg-producing hens accounted for 29.3% of the whole U.S. egg-laying flock, in response to information from United Egg Producers. Solely 6.8% of this determine represents natural eggs, whereas 22.5% are cage-free. 

Shoppers could select typical eggs over their natural counterparts due to the worth distinction between the merchandise. They could even be confused about what natural actually means. Fewer than half of shoppers know what the time period “pasture-raised” means, whereas the bulk imagine that “cage-free” and “free-range” imply the birds have entry to the outside, in response to a survey commissioned by pasture-raised egg producer Very important Farms. Hens in cage-free operations don’t have entry to the outside, in response to Eater. Pete & Gerry’s wrote in a weblog submit that there aren’t any federally regulated definitions of what “free vary” means, so hens in these operations might be free to roam exterior — which is the corporate’s coverage — or confined to a screened-in porch. 

Label confusion apart, for the section of shoppers dedicated to animal welfare, discovering manufacturers that supply transparency and integrity is a prime precedence. Just a few main gamers are rising within the humanely raised egg section together with Very important Farms, which went public final 12 months. In response to the corporate’s most up-to-date earnings report, Very important Farms has an 82% share of retail greenback gross sales in pasture-raised eggs. The corporate’s eggs are bought in additional than 16,000 shops, and have been bought by greater than 5 million households. The corporate says it was the biggest contributor to egg class development by way of retail greenback gross sales final 12 months. 

Different corporations providing eggs with improved welfare or sustainability metrics embody Pleased Egg, and Good-looking Brook Farm.

Pete and Gerry’s matches nicely into Butterfly’s portfolio. Whereas Butterfly’s holdings are comparatively few, it additionally owns Bolthouse Farms, the pure fruit and vegetable targeted carrot, beverage and dressings model. Bolthouse founder Jeff Dunn is an working companion at Butterfly, which purchased the vegetable-focused model again from Campbell Soup in 2019. Pete and Gerry’s targets the identical sort of client who can be considering Bolthouse’s brisker and extra pure choices.

“Pete and Gerry’s is a forward-thinking, mission-driven firm that gives a greater egg to shoppers, a greater life for hens and a greater mannequin for America’s small household farmers,” Butterfly Co-Founder Dustin Beck stated in a written assertion. “Butterfly is completely aligned with their mission and appears ahead to supporting the group to proceed these efforts.”

As sustainability and welfare-focused egg corporations look to distinguish and catch their goal client’s consideration, having extra sources just like the backing of a personal fairness firm might be a serious asset. Manufacturers like Pete and Gerry’s have already cultivated a model identification that resonates with shoppers.

— Megan Poinski contributed to this report.

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