As consumers gravitate toward better-for-you-offerings and sugar alternatives, a small Chicago-based sweetener company stands to be one of the biggest beneficiaries.
While Whole Earth Brands is largely unknown to shoppers, the company’s expanding portfolio of brands like Wholesome and Equal are household names executives are optimistic will attract consumers and give it a bigger slice of the $100 billion sweetener market heavily dominated by sugar.
“We are at the beginning of a very exciting journey [to other sweetener options] that is going to go on for a very, very long time,” said Albert Manzone, who became CEO of Whole Earth Brands in 2016. “We’re not the solution, but we’re part of it.”
Whole Earth Brands went public in June 2020 following a merger with a SPAC, or special purpose acquisition company. At the time, its portfolio included Equal; Whole Earth, a sweetener made largely from stevia and monk fruit; and a pair of brands available outside the U.S.
Since then, it has dolled out more than $250 million to purchase Swerve, a keto-focused sugar replacement, and Wholesome Sweeteners, a maker of organic, fair-trade certified sugar, honey, agave nectar, allulose and other liquid sweeteners.
Manzone said the acquisitions build on the company’s goal to scale up its natural and alternative sweeteners portfolio that will give consumers and retailers a wider swath of choices depending on their eating habits, health concerns and economic status. In 2021, Whole Earth’s top four brands together were in 85,000 stores, a jump of about 9% from 12 months earlier.
Whole Earth Brands doesn’t grow or process its sweeteners; rather, it buys them from ingredient suppliers and then brands them before selling to the public. The strategy not only generates higher margins and is less capital intensive, but it also lowers the risk for Whole Earth if the popularity of one sweetener wanes since the company has a larger portfolio of options at its disposal.
“This company is not in the ingredient business,” Manzone said, although Whole Earth does offer licorice flavorings. “We’re a consumer products company.”
Whole Earth Brands, which controls about 11% of the alternative sweetener market, according to company estimates, is looking to acquire brands that expand its existing presence with certain ingredients, or enter new up-and-coming offerings that are emerging in popularity.
It’s also aiming to become a bigger player with products that use its brands. Wholesome, for example, recently introduced cake, muffin, cornbread, brownie and cookie mixes, while Swerve rolled out cake mixes, chocolate chips and cookies.
Manzone, a former PepsiCo and Wrigley executive, said these products help give his brands more exposure to customers throughout the store, and drive users of a Wholesome cake, for example, to its sweeteners. While Whole Earth Brands only started introducing baking mixes in the U.S. last year, there is evidence showing products like these can be lucrative for the company.
In France, its Pure Via jam (Pure Via is similar to its Whole Earth in the U.S.) is responsible for bringing about 40% of new users to the brand.
Whole Earth Brands’ revenue rose to $494 million in 2021, an increase of 79.3% compared to the prior year due in large part to acquisitions, which nearly doubled its income.
Once the purchases of Wholesome and Swerve were removed, revenue from existing businesses increased 2%. The company’s branded products were responsible for $389 million in revenue, while its flavors and ingredients segment had revenue of $105 million, an increase of 7.1%.
Whole Earth Brands’ flavors and ingredients are composed entirely of its licorice products that are supplied to nearly every big-name beverage and food company. Licorice, a taste modifier, is used for things like masking an unwanted flavor, intensifying sweetness and improving texture.
Even though the business is an outlier from the rest of Whole Earth Brands, it’s profitable and a major contributor to the company’s free cash flow. Whole Earth Brands controls about 70% of the global licorice flavoring market.
“It is different and at some point when we continue to grow, there would be a strategic question about: Is this business best with us or with somebody else?” Manzone said. “But I think in this phase of our growth it’s a great business to have.”