Chicago-based Cambridge Capital Partners is betting frozen Mexican food will eventually become as commonplace as its Italian counterpart, pizza.
The private equity firm has thus partnered with a member of the founding family and management of Excelline Foods Inc., the third largest independent manufacturer of ethnic food in the U.S., to recapitalize the company.
The Chatsworth, Calif.-based company manufactures frozen and refrigerated Mexican food products such as quesadillas, taquitos, flautas, tamales and enchiladas. Excelline also produces non-Hispanic products, specialty items and appetizers, and distributes all of its products to supermarkets, mass merchants, foodservice suppliers and private label accounts in all 50 states.
The U.S. frozen food industry is approximately $67 billion in sales, according to Technomics, and growing at 8% a year, said David Posner, partner of Cambridge Capital. “In 1967, it took approximately two hours to cook dinner; today’s consumers want food that can be prepared in as little as five minutes,” he said, quoting Consumer Insights Magazine. Moreover, grocery stores have expanded their average size frozen food sections 50% in the last 10 years.
“We’re attracted to ethnic food, and frozen food in particular, because it’s a very rapidly growing market. The Hispanic population is now the largest minority group. I believe in the next 10 to 20 years, Mexican food will become as commonplace as pizza. Kids like it, it’s easy to prepare and it has good variety,” said Posner.
Posner said his firm’s plans going forward are to continue to grow the category. “We’ll look to add new product lines, both Mexican and other ethnic foods, and we’ll look to grow through add-on acquisitions of ethnic food companies,” he said.
Posner said CCP currently consults “for a who’s who of the food world,” including ConAgra, Frito Lay and Kraft, among others.
In other news from the firm, Wolfgang Schwerdtle has joined Cambridge Capital as a principal. Prior to joining the firm, Schwerdtle worked at Madison Dearborn Partners where he was responsible for sourcing, evaluating, executing and monitoring private equity investments. He also worked in the investment banking division of Goldman, Sachs & Co.
Cambridge Capital Partners is a private equity firm that specializes in making investments in manufacturing, distribution and service companies valued at less than $100 million. It maintains a formal partnership with The Cambridge Group, a strategic management consulting firm focused on demand-driven growth strategies.