Califia Farms raises $ 225 million to expand globally

Dive overview:

  • Vegetable beverage company Califia Farms raised $ 225 million in Series D financing led by state-owned Qatar Investment Authority. Califia said in a release that it is one of the largest private capital financing rounds in the natural food sector.
  • Other investors include the Singaporean investment company Temasek, Claridge, Canada, Green Monday Ventures and a family in Latin America. The new financing group will take a minority interest in Califia Farms, with representatives from QIA, Temasek and Claridge on the board of directors.
  • Califia said that this financing round will help her to continue building her oats platform and launching new lines. With the money, the company can also invest further in production capacity, R&D, American penetration and global expansion.

Dive Insight:

With new international investors and a huge financing round, it seems that Califia Farms wants to become a global, plant-based powerhouse.

Securing financiers around the world and adding those representatives to the board can be beneficial to Califia because it strives to increase shelf space and brand awareness globally. From Canada to Singapore, investors in this final round can provide expertise and resources to the California-based company to which other plant brands have no access.

The largest investor in Califia, Qatar Investment Authority, could mainly help the company expand its reach because it has global interests. Last year, the QIA CEO told Reuters that the company wanted to invest $ 45 billion in US investments, particularly in real estate and technology. But QIA is shifting its strategy a little, guessing that vegetable will can be lucrative.

That reasoning is supported by data. According to a BIS Research report, the market for plant-based alternatives to foods and beverages is expected to reach $ 80.43 billion by 2024, with an annual increase of 13.82%.

Califia Farms, which already has a portfolio of drinks made from almonds, coconuts and cashews, as well as a line-up of cold-brewed coffee products and vegetable coffee creamers, plans to use the anticipated growth of the alternative market by using these funds to launch new products.

Greg Steltenpohl, founder and CEO of Califia, said in the release that the financing announced that “speed to the market is crucial for companies in our phase.”

In the past, Califia has successfully used additional investments to grow its portfolio. In 2018, Califia Farms raised more than $ 50 million in a financing round led by Ambrosia Investments. That year the company introduced non-dairy drinkable yogurt with added probiotics. And last year, Califia launched a line of protein-enriched oat drinks called Ubermilk. Califia will continue to expand its oat alternatives with this money, which is especially popular in space. Sales of oat milk in the US have increased to $ 29 million, according to Marketplace, compared to $ 4.4 million in 2017.

Although Califia Farms is the third largest American vegetable dairy company to follow Danone and Blue Diamond, according to Euromonitor it is facing increasing competition. An Innova Market Insights report on top trends for 2020 predicted that the vegetable dairy category will diversify as consumer interest continues to grow.

Many large companies have already introduced yogurt, drinks, coffee and ice cream with the oat drink, including Nesquik, Chobani and Danone. New innovations and investments make the space even more crowded. ChickP, a food-tech startup based in Israel, recently launched a line of chickpea isolates designed for vegetable dairy alternatives, and Mooala, a Dallas-based banana milk maker, raised $ 8.3 million in November.

In general, the vegetable segment has seen a sharp increase in the financing of the industry M&A in recent years, according to a Deloitte report. Califia raised $ 115 million for this final round, according to Crunchbase.

The investor focuses on vegetable dairy products because the traditional consumption of cow’s milk is declining. Two of the largest dairy producers in the US, Dean Foods and Borden Dairy, have filed for bankruptcy in the past two months. Cow milk sales fell to around $ 12 billion in 2019 from $ 15 billion in 2015, while almond milk sales increased by around 6% to $ 1.35 billion and oat milk a huge 662% to $ 59.8 million in 2019 , according to Nielsen data quoted by Reuters.

“The total change in dietary habits of American consumers is what drives the decline of dairy products,” Steltenpohl told Reuters. While traditional dairy struggles are struggling, this funding could provide Califia with capital and global resources to bring more disruption and gain market share.