Pete and Gerry’s Organics, the Monroe, N.H.-based marketer and distributor of organic eggs and one of Grafton County’s biggest companies, has been acquired by a private equity firm in California in a deal that founder Jesse Laflamme says will propel the company’s growth and help it “transcend” beyond the egg business.
The sale, which Laflamme said involved selling a “healthy majority” of his family’s equity in Pete and Gerry’s to Beverly Hills, Calif.-based Butterfly Equity LP and a minority stake to British Columbia Investment Management Corp., marks a major transition for the family egg farm that Laflamme took over from his parents in 2000 and transformed into one of the country’s largest distributors of organic eggs. Pete and Gerry’s now has a supplier network of 140 farms, 250 employees, nearly $260 million in sales and a corporate jet.
Laflamme, who declined to discuss the terms of the transaction, on Thursday cited both personal and business reasons for the sale.
“After 21 years nonstop of doing this I’m at a juncture in my life where I want to do some other things and this will open up some head space for that,” he said.
At the same time, “the business has arrived at the scale of a national brand and we realized this is a tremendous moment when we could take the business and transcend it to other categories,” Laflamme said.
But doing that, Laflamme said, requires a lot of capital, more than it can tap from its traditional banks, and Butterfly and BCI can easily provide those resources.
As part of the sale. Laflamme said he’s relinquished the CEO reins to Erik Drake, who joined Pete and Gerry’s as chief operating officer in 2016 after marketing positions at Late July Snacks, Stonyfield Farm and Johnson & Johnson.
Laflamme, who will remain on the board and become a strategic adviser to the company, said the sale of control means that he is now freed up to do what he enjoys most: being an entrepreneur and coming up with new businesses.
Butterfly, founded in 2017 by two former associates at Goldman Sachs, specializes in making investments in the agribusiness and food sector and currently has $1.6 billion under management, according to filings with the Securities and Exchange Commission. The firm’s portfolio includes protein drink maker Orgain, striped bass sea farmer Pacifico Aquaculture and fast-casual restaurant chains Modern Market Eatery and Lemonade.
“We believe (Pete and Gerry’s) future is incredibly bright as the market leader in the premium egg category,” Butterfly co-founder Adam Waglay said in a statement.
Despite the reputation of private equity firms that strip-and-flip the companies they acquire, Laflamme said Butterfly aligns with Pete and Gerry’s traditional corporate values — the company was the first egg distributor to be granted Certified B-Corporation, joining the ranks of the Upper Valley’s Mascoma Bank and King Arthur Baking Co. — and he’s trustful they will be good stewards of the business.
“I was one of those people,” Laflamme said regarding hesitancy over private equity firms. But he said Butterfly is “oriented toward the same environmental and social governance” issues that earned Pete and Gerry’s B-Corp. status, which denotes a company’s commitment to good corporate citizenship.
“They get agriculture. They get farmers,” Laflamme said.
Pete and Gerry’s employs about 80 people at its demonstration farm and egg processing facility in Monroe, but the majority of its workers are at a processing facility in Greencastle, Pa., and a small executive staff at an office at Centerra in Lebanon.
Contrary to common perception, Pete and Gerry’s doesn’t operate hen houses to produce eggs itself; instead, it contracts with a network of independent farms, many of them in the Mid-Atlantic states. The farms, which raise and manage the hens under Pete and Gerry’s protocols to qualify for the “organic” and “humane” labels, ship their eggs to the company’s two processing facilities for sorting, cleaning and packaging. The eggs are then shipped to markets around the country under the Pete and Gerry’s name and sister brands Nellie’s, Carol’s, and Consider.
The company’s growth has been phenomenal: In 2017, revenues were $177 million, in 2018 about $197 million and Laflamme estimates this year will reach $260 million. Pete and Gerry’s has benefited from two trends driving the egg industry: the rise in organic eggs and new regulations that require farmers to operate “cage-free” hen-laying systems.
But the rapid growth also puts pressure on Pete and Gerry’s to introduce “brand extensions” and enter new markets to maintain momentum. In recent years the company has introduced packaged hard-boiled eggs and liquid egg whites, two growing segments fueled by the rise in packaged fresh foods.
Laflamme said Butterfly will have the capital for extending the Pete and Gerry’s organic brand into new concepts — a Pete and Gerry’s egg breakfast sandwich is one idea under consideration. And now that Pete and Gerry’s has established itself as the No. 1 selling organic egg brand in the country, the status can be a “jumping off point” to expand the name into other protein-based organic products.
“Butterfly is so intense on growing this business, which is great to see,” Laflamme said.
Contact John Lippman at jlippman@vnews.com.
