The Annapolis founders of Tessemae’s salad dressing and condiments plan to move on if a pending sale of the company out of bankruptcy goes through this month, but the popular brand is expected to remain on the shelves of dozens of national and regional retailers under new ownership.
Tessemae’s filed for Chapter 11 reorganization last February to restructure debts and stop what it called costly and distracting litigation by a former lender.
Panos Brands, a New Jersey owner of specialty food brands, has agreed to buy Tessemae’s for $4.5 million in a pending deal that requires approval of the U.S Bankruptcy Court in Baltimore.
The new owners are expected to continue the full line of dressings and condiments at existing retailers, such as Whole Foods, Walmart, Kroger and Harris Teeter, said Greg Vetter, Tessemae’s CEO.
Vetter and his two brothers started the company in Annapolis in 2009 based on their mother’s all-natural salad dressing recipe. The products debuted in a single Whole Foods store, and sales quickly expanded to national grocers, retailers and hotel chains.
“The brand will continue. The quality will continue,” Vetter said in an interview. “That was a key component of what everybody was trying to have accomplished. … It’s still selling really well and there’s still a wonderful following.”
The company had worked to stabilize the business and boost orders in bankruptcy, but determined it could best preserve the brand by selling its assets, according to a Dec. 21 court filing. The Chapter 11 filing had listed liabilities in a range of $10 million to $50 million.
Vetter said he never expected the company’s journey to include a Chapter 11 and bankruptcy auction, where Panos was chosen Dec. 18 as a the highest or best bidder of two competitors. The buyer, based in Rochelle Park, New Jersey, manages a portfolio of brands such as Andrew & Everett cheese, KA-ME Asian food products, Walden Farms calorie-free foods and Amore Italian cooking pastes.
“I think everything has a cycle and it has an end,” Vetter said. “This is this journey’s conclusion. … We have been doing our best to get a good outcome, the best that we can, for all of the shareholders involved and to keep the brand alive moving forward.”
The company has seen its share of ups and downs. In 2015, Under Armour founder Kevin Plank and his brother Scott Plank invested $5 million in the company, which at the time had $25 million in sales. At its peak in 2021, Tessemae’s was producing 36 bottles of dressing per minute, which were sold in 12,500 locations nationwide.
But demand outpaced supply as the company quickly expanded, and Tessemae’s faced worker shortages and cost increases for raw materials during the coronavirus pandemic. The struggles led to layoffs in 2021 as well as to product price hikes and cuts to promotional spending and some of its less profitable customers.
The dressing maker shifted to a contract manufacturing model instead of running its own plants, then last year shifted to a “turnkey” model, in which a co-manufacturer buys raw materials and Tessemae’s buys finished products. The company also has faced litigation over the years, most recently when Democracy Capital Corp. sought more than $13.8 million related to a loan with an original principal amount of $3 million, a court filing said.
Vetter and his two brothers, Matt Vetter and Brian Vetter, will be parting ways with Tessemae’s.
They are working together in two fairly new businesses. They started Alta Fresh Foods, a fresh food supplier to big box and club channel retailers such as Sam’s Club, two years ago. They also launched Homegrown Brands, a brand accelerator, last summer to pass on some of their expertise through branding, marketing and consulting services for growing brands.
“I think that we accomplished a lot against all odds,” Vetter said of starting Tessemae’s with his brothers. “We started something from nothing without any food manufacturing experience and we made the No. 1 organic salad dressing brand in the country for 15 years. … I think there’s a lot more that we can still do together.”
