Packaged food companies witnessed significant growth during the pandemic as people started cooking more meals at home. This drove demand for easy-to-prepare meal kits as well as snacks. Although restrictions have eased, this momentum still continues as people continue to opt for home-cooked meals due to health and cost factors. Sovos Brands, a rising player in the food industry, is set to go public this week. Here are a few facts to know:
Sovos Brands Inc. is slated to go public on Thursday, September 23. The company will begin trading on the NASDAQ under the ticker symbol SOVO. It will offer 23.3 million shares at a price range of between $14 and $16 to raise $350 million. The IPO will be managed by a group of underwriters led by JPMorgan and Goldman Sachs.
Sovos Brands is a US-based food company that offers a variety of food products such as pasta sauces, yoghurt, pancake and waffle mixes, as well as frozen meals. The company provides these products under its Rao’s Homemade, noosa yoghurt, Birch Benders and Michael Angelo’s brands. The company’s products are carried by several retailers including Walmart (NYSE: WMT), Costco (NASDAQ: COST), Kroger (NYSE: KR), and Target (NYSE: TGT).
Net sales rose 44% to $560 million in 2020 compared to the previous year. On a GAAP basis, Sovos delivered a net profit of $11 million in 2020 versus a net loss of $27 million in 2019. Adjusted net income increased to $44 million in 2020 from $11 million in 2019.
Sovos is working on driving sales and profitability through various strategies such as increasing household penetration, expanding total points of distribution and growing brand awareness.
Household penetration for Rao’s sauces in the 52 weeks ended June 13, 2021 was 9.6%. Each 1% of household penetration of Rao’s pasta and pizza sauces equated to approx. $36 million in retail sales in the same period. Household penetration for noosa yoghurt, Michael Angelo’s frozen dinners, Birch Benders pancake and waffle mixes and Birch Benders frozen waffles was 7.8%, 4.9%, 2.9% and 1%.
Sovos is focused on expanding its total addressable market through the launch of new products such as Rao’s soups and frozen entrees, noosa’s 4.5 oz size and Birch Benders’ frozen waffles and baking mixes, and it expects to nearly double the approx. $26 billion TAM for its brands through further innovation.
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