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WSJ Pro PE Exclusive: Altamont Capital Backs Popular Mini Melts Ice-Cream Maker


WSJ Pro PE Exclusive: Altamont Capital Backs Popular Mini Melts Ice-Cream Maker

The premium brand is one of the fastest-growing ice-cream makers in the U.S.

By Rod James | Jan. 8, 2024 6:30 am ET | WSJ PRO

Altamont Capital Partners is backing Mini Melts USA, a Philadelphia-area business that has gone from operating a single vending machine to one of the fastest-growing ice-cream brands in the country.

The Palo Alto, Calif.-based private-equity firm said it acquired a controlling interest in the company. Mini Melts, founded in 2004, serves 30 million prepackaged ice-cream cups a year from more than 15,000 locations, Altamont said. Mini Melts Chief Executive Dan Kilcoyne remains in charge and is still invested in the business, alongside other shareholders.

The brand offers its beaded frozen confections in flavors such as Cotton Candy and Rainbow Ice, operating a manufacturing plant in Norwich, Conn., that feeds distribution points nationwide, according to its website. Convenience retailers sell Mini Melts as grab-and-go freezer items while the company also sells cups through stand-alone vending machines.

“We did a test with a national retailer which started with 50 locations. They came back and said, ‘This is going really well, we want to roll you into 9,000 locations,’ but we didn’t have the ability to do it,” said Kilcoyne about the decision to bring in a private-equity partner.

Mini Melts appeared on consulting firm Bain & Co.’s Insurgent Brands list for last year, a roster of fast-expanding consumer goods businesses that have outgrown their peers by an average of 10 times.

Private-equity and venture-capital deals in the consumer discretionary sector fell 67% in the first half of last year to $13.49 billion compared with the same period of 2022, according to data from S&P Global Market Intelligence, which cited the effects of higher inflation and rising interest rates.

Kilcoyne sees the premium segment as less vulnerable than others as consumers prioritize quality over convenience. Consumers are willing to pay more for something that tastes good, he said.

The popularity of the product with customers and retailers, and Mini Melts’ unusual distribution model, were among the main selling points for Altamont, according to Managing Director Kevin Mason. Mini Melts moves its products from its manufacturing plant to sale points through company vehicles and warehouses.

The model lets the business respond more quickly to demand from the convenience stores, malls and sports venues where its products are sold, he said. Mini Melts’ priorities include expanding the company’s distribution network, widening its product array, and extending its sales channels to venues such as cruise ships and hardware stores, all while boosting advertising and marketing.

Altamont will use Tacala/Boom Foods as a model, Mason added. The operator of Taco Bell fast-food restaurants grew from 150 locations to 350 after Altamont’s initial investment about 11 years ago, becoming the largest Taco Bell franchisee.

The deal was in line with Altamont’s strategy of writing checks of $15 million to $150 million or more to businesses with earnings before interest, tax, depreciation and amortization of as much as $100 million, Mason said. He declined to be more specific.

Industry publication The Spoon reported in August that Mini Melts has estimated annual sales of $150 million or more, in an article where Kilcoyne discussed the origins of the business.

Altamont has more than $4 billion of capital under management in sectors such as business services, consumer, financial services, industrials and healthcare.