The consumer products space is rapidly transforming amid fierce online competition, underscored by a spate of retail bankruptcies and blockbuster acquisitions like Amazon’s purchase of Whole Foods Market.
To capitalize on emerging opportunities in this new environment, Fenwick Brands, an investor focused on consumer packaged goods, closed its first fund, announced earlier this month. Fenwick Brands Fund I targeted $30 million and was oversubscribed, showing that investors are keen to cash in on the disruption in consumer-facing markets.
“Companies at our investment life-stage are often at an inflection point. Our thesis is built around putting strong foundations in place so that brands can scale quickly and win,” said Melissa Baker, the firm’s CEO, in a press release announcing the close.
The fund will target investments between $3 million and $7 million in CPG brands that allow the firm to leverage its operational expertise.
While many consumer brands have struggled, data suggests a targeted strategy is more likely to be successful than a wide-reaching mandate.
According to a second quarter report from RSM and PitchBook highlighting consumer products, “niche businesses are likely going to have a lot more value than many broader businesses, which are having trouble staying nimble and navigating this changing environment.”
Birmingham, Alabama-based Fenwick said it will make minority and majority investments and plans to target brands where it sees a strong product offering, cultural fit and potential for growth.
Kathryn Mulligan is the associate editor of Middle Market Growth.