Minneapolis-based So Good So You, the herbal shots company, has been growing rapidly since receiving $14.5 million in venture capital 14 months ago.
The capital injection allowed founders Rita Katona and Eric Hall, partners in marriage and business, to grow profitably, adding more than 20 people to a workforce that now has 54 employees and includes a disproportionate proportion of women and of people of color.
With a strengthened balance sheet, So Good So You was also able to borrow money at favorable rates to acquire high-speed equipment to expand capacity to 300 bottles per minute at its southeast Minneapolis plant, a said the couple.
The bet is still the same: that young adults and those who don’t always eat their fruits and vegetables will still recognize the need for nutrition and will buy the shots, sold in 10,000 stores across the country, including Target and Lunds & Byerlys.
“There’s something about the delivery, the shots, that makes people feel like it’s something good for themselves,” said Katona, a former Target product manager. “We just released a new shot called ‘Happy’. Three plant-based ingredients, including saffron, known to be mood-boosting ingredients.”
Probiotic juice shots, with names like Immunity, Energy, Detox, and Fiber, are packed with extruded plant nutrients designed to support immunity and digestive health. They sell for $3.99 per 1.7-ounce shot, thinking of the 16-34 year old clientele and young, convenience-oriented families.
Retail distribution doubled in 2021, and the company says it’s the fastest growing in the “functional juice shot category” in hotspots such as Boulder, Colorado; Brooklyn, New York; and California metropolitan areas.
So Good So You’s main competitors are based in California.
While Katona and Hall declined to discuss specifics, the company has averaged profitable sales growth of 75% per year over four years.
Spins, which tracks data in the health and wellness category, reported that retail sales of So Good So You in the 52-week period ending January 23 rose 74% to 24.3. millions of dollars.
Katona, 41, and Hall, 46, try to center 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 factory are powered exclusively by wind energy.
The long-term plan is to continue to grow the brand “by building a financially sound business…that adds value…to our team members, business partners and customers, while being responsible stewards of our planet.” “, said Katona.
Hall and Katona, aiming to reward and retain workers in a tight labor market, raised wages and this month gave each employee a $5,000 bonus, double that of last year, for a record performance in 2021. Base pay for new hires at the plant starts at $16 per hour plus benefits and can reach the mid-$20. Hall notes that most salaried supervisors started out as hourly workers.
“We’ve given several raises over the past few years, and as we grow, we’re moving people internally to leadership positions and higher-paying positions,” he said.
Maria Ramirez, for example, started six years ago as a production temp and now runs the kitchen, leading a team of 10 workers. She credits Hall and Katona.
The irony of small business success means So Good So You could also be an attractive acquisition target for a large food company. Hall and Katona declined to discuss the sale speculation.
Katona and Hall, the majority owners of the company, were among more than 20 people who invested around $8 million in the company prior to the 2020 investment by Prelude Growth Partners of New York.
“A fast-growing food or beverage company in the better-for-your-healthy consumer space would absolutely be on the radar as a target for big food companies,” said Michael Burgmaier, managing director of Whipstitch Capital. He’s an investment banker from suburban Boston who knows So Good So You. “A disproportionate share of food and beverage growth is coming from these natural, organic, and ‘clean label’ brands, as this sector is described. It’s a long-term trend. And now it’s common. And about 95% of So Good’s sales come from conventional retailers. Big food companies know that.”
Kent Pilakowski, a former General Mills executive and director and investor in So Good So You, has for years consulted and invested in small specialty food companies.
Without speculating on the future of So Good So You, Pilakowski said owners, including founders and institutional investors, typically sell to larger companies with deeper pockets who believe they can significantly increase their sales. The original owners are often burnt out after several years, can’t take the business to the next level, and are more than willing to cash in on a healthy multiple of their investment.
In addition, private equity investors want a significant return over the next three to five years.