New investments from actor Leonardo DiCaprio and a Chicago-based private equity firm is puffing up the Hippeas brand of chickpea puff snacks.
DiCaprio and Strand Equity Partners last month invested an undisclosed amount in Green Park Brands Inc., the Santa Monica-based parent company of the brand.
Green Park founder and Chief Executive Livio Bisterzo declined to say how much was invested. He did say the company has raised a total of $2.5 million, including the latest round, with the balance coming from angel investors and friends.
Hippeas began selling through various retailers in March of last year, generating $2.5 million in wholesale revenue over the balance of 2016, he said.
Bisterzo, 36, projected his company would generate $11 million in wholesale this year. He said Green Park was able to get its product into stores quickly in part because of his experience and connections launching two other consumer goods brands – men’s grooming line Kyoku and Little Miracles, a maker of tea drinks. Bisterzo sold his interests in both companies before launching Hippeas.
“It wasn’t my first rodeo bringing a brand to market,” he said. “We knew the product innovation made a lot of sense. We wanted to create a healthy snack product that hit all the major trends. We had the right product, the right brand, a big brand story. Now it’s just going to the market and showing it (to customers).”
Hippeas are available in U.S. stores including Albertsons, Vons and Starbucks, and will be in Kroger Co. and Target stores later this year. The snack is also sold in the United Kingdom, where the company has an office.
A 1-ounce bag of Hippeas goes for $1.95 at Starbucks – a decided premium compared with most snacks.
The typical profit margin for salty snacks is 20 percent to 30 percent, according to Norman Deschamps, owner of Canadian market research firm Rogue Thought Consulting. Sales of snacks including alternative ingredients such as chickpeas, sweet potatoes, kale and spinach grew almost 7 percent from $1.03 billion in 2015 to $1.1 billion last year, according to a report Deschamps authored for industry research firm Packaged Facts. Sales are expected to grow almost 8 percent this year.
Sales of the subcategory of chickpea snacks grew almost 153 percent for the year ended Oct. 16, 2016.
“The category is quite competitive, but the big snack players are only just starting to get into this space, leaving plenty of room for all the new entrants to carve out a niche for themselves (or just as likely to get bought out in the next few years),” Deschamps said in an email. “However, staying on the very edge of this trend is difficult at best, and leaves the company very vulnerable to consumers quickly shifting to the next trendy product within the healthy snack space.”
Branding
Bisterzo began working on Hippeas a few years ago while living in London, where he grew up. He wanted to create a branded food product that would appeal to the growing vegan market, so he settled on working with beans or legumes, which replenish depleted soil with nitrogen.
The company gives 2 cents for each bag sold to Farm Africa, a nonprofit that helps African farmers grow crops in a profitable and environmentally sustainable way. Bisterzo attributes the product’s success to the message resonating with customers, in addition to hitting the right notes nutritionally.
“The consumer wants emotionality, beautiful stories that go way beyond food innovation,” he said. “I see a lot of entrepreneurs with just a better-for-you product and I think, That won’t cut it. Every category is very saturated.”
He wanted to go after the puffed snacks category, which is dominated by Pepsico Inc.’s Cheetos and in which Pirate Brands, maker of Pirate’s Booty, is also a major player. Pirate Brands was bought for $195 million in 2013 by B&G Foods Inc. of Parsippany-Troy Hills, N.J.
Branding is critical for salty snack makers trying to stand out from the pack, said Melissa Abbott, vice president of culinary insights at Bellevue, Wash., food and beverage consultancy Hartman Group Inc.
“There are only so many different formats consumers will accept,” said Abbott. “Whether it’s puffs, sprouted – you really do need to have a fun and playful message. Hippeas is going to appeal to the consumer who is on the fence when it comes to eating beans and legumes.”
Younger consumers, whom Bisterzo said Hippeas is targeting, are more open to trying alternative ingredients and demand convenience, she said.
Early success
Bisterzo began experimenting with different ingredients and formats after moving to Los Angeles two years ago.
He began reaching out to retailers about selling the brand and had early success with Starbucks.
“Starbucks gave us a huge chunk of their distribution,” he said. “Every other customer we went to went for it. We realized we had something pretty special on our hands.”
The coffee chain said in an email that it sells Hippeas at 7,500 of its locations.
“Starbucks is dedicated to providing food items that meet a wide range of dietary needs, while also tasting great, and we believe Hippeas meet both of those requirements,” a spokeswoman said in an email.
Cracked code
Friends and colleagues of Seth Rodsky, a managing partner for Strand in Los Angeles, suggested he check out Hippeas. Rodsky took a look at the company’s impressive start on distribution and reached out about eight months ago, he said.
“For us, (Hippeas) checked all the boxes,” said Rodsky. “It cracked the code of being good for you and tasting great. The branding instantly delivers a sort of attitude and purpose, which, when combined with the taste, the eye-catching design, has the potential to be fairly powerful.”
Strand approached Bisterzo with DiCaprio, who invested in Brooklyn tea company Runa last year.
Bisterzo said the investors are a good fit for Hippeas.
DiCaprio couldn’t be reached for comment last week.
Hippeas, which has a total of 24 employees at its West and East coast offices and 10 more in the United Kingdom, plans to use the money raised from Strand and DiCaprio primarily to build up its marketing and distribution, Bisterzo said.
