The Supply Side: Act II Capital focuses on retail readiness of premium products

Matt Herlevic and Shawn Baldwin retired from Walmart within four months of each other in late 2018. The two — with more than 60 years of combined retail experience — worked together at times at Sam’s Club and Walmart and joked about a partnership after retirement.

Herlevic worked in internal audit, health and wellness, operations, marketing, and merchandising at Walmart and Sam’s Club. He also led Walmart’s $2 billion optical business and helped Sam’s grow the Taste and Tips product demo program from $80 million to $400 million.

Baldwin is a former winner of the Sam M. Walton Entrepreneur of the Year award from the Walton family for his small business owner support and the fresh and perishable business transformation at Sam’s Club. Baldwin’s expertise has centered around culinary innovation, which he launched at Sam’s Club to improve product quality across branded and private brand assortments. He led corporate sustainability efforts involving agriculture, animal welfare, livestock, fisheries and water usage. He also led joint business planning with strategic suppliers like Tyson Foods and PepsiCo.

“We realized we had retired about the same time and agreed it was time for Act II, so we pooled our capital and partnered in the venture using that name,” Baldwin said. “We look to help specialty, innovative, or disruptive products and technologies in the foods, health and wellness categories.”

Herlevic said Bentonville-based Act II Capital Holdings has kept a low profile but draws interest from hopeful product suppliers looking for expertise and marketability of their inventions or innovation and early-stage investment. Act II has invested in Paradigm Labs. The acoustic freezer technology extends freezer life and eliminates ice crystals from penetrating the product.

FREEZING WITH PARADIGM
Paradigm Labs was one of five startups chosen by Tyson Foods for possible collaboration at the meat giant’s recent Demo Day event. Baldwin said the acoustical freezer is a natural fit for food. The technology uses sound waves to disrupt the growth of ice crystals as food is frozen.

Herlevic said because ice crystals are suspended and do not penetrate the food, the taste and texture are improved over traditional flash freezing.

The partners were so excited about the technology they worked with award-winning chefs to create meal recipes that could be replicated at scale. Working with Chef Rihards Fridenbergs-Kalnins, originally from Latvia, and local Chef Matt Cooper, more than 50 recipes were made for the 5-Minute Gourmet brand of frozen meals. They said the early test market was Allen’s Foods in Bella Vista and the Bentonville Farmers Market, where more than 10,000 frozen meals have already been sold.

Baldwin said acoustic freezing technology can be applied to just about any food, from caviar to cannabis.

“It’s the most revolutionary technology we have seen in food. It can extend the freezer life to 18 months, and the machine technology can be added to flash freezing systems already in use,” Baldwin added. “When strawberries are frozen with our acoustic system, they thaw out plump and juicy and not flat and mushy as with traditional freezing, and shrimp does weep liquid when thawed, which keeps the food’s moisture level intact.”

Act II owns Paradigm Labs and the 5-Minute Gourmet brand. The partners said they are looking for a U.S. co-packer to help them take the brand mainstream with retail beef, pork and chicken meals. The company now only has seafood and vegetarian meals in stock. The packaging also contains a sensor that can be scanned with a customer’s smartphone at the store to see how much shelf-life remains before they purchase the item. Paradigm worked with Evigence Sensors for that technology.

Baldwin said the company is eager to work with Tyson Foods in the coming months to see how the technology can be applied to their business.

OTHER PREMIUM PRODUCTS
The Act II partners represent dozens of other products and/or have invested in capital and expertise. One of the most successful at retail has been the Ventus premium pet treats. The pet treats are sold on Amazon and delivered via direct shipment.

Ventus pet treats are 100% venison muscle harvested from wild antelope in South Africa. Herlevic said a friend of his works to control the antelope population and saw an opportunity to upscale the lean venison. The protein level of the dog treats is 76%, which is exponentially higher than most pet foods on the market, according to Act II.

Herlevic said pet enthusiasts love the higher protein varieties because they satisfy dogs and can be absorbed in their digestive systems. Ventus also has a 30-gram venison protein variety and dried venison powder that can be sprinkled over the pet’s food.

Ventus is a startup company in which Act II invested and continues to counsel and market premium pet treats. Baldwin said the powder and lower protein treats will be marketed into mainstream retail stores in the coming months.

Act II also works in the beverage space with Michigan-based Brewt’s LLC, a cocktail mixer startup owned by Emily Griffen and co-founder Luke Alan. A fighter and fitness trainer by trade, Griffen said she did not like any of the cocktail mixers on the market because of the added sugar and fillers. Seeking to make an all-natural margarita and bloody mary cocktail, Griffen experimented in her home kitchen with various flavors using natural ingredients.

“I started bringing my inaugural mixer to small events and friends’ houses, and it quickly became a requested item. Due to the popularity among people who had tried it, I even started bottling it and bringing the fun to local farmers markets,” Griffen said.

She showed her cocktail mixers at a trade show in her hometown of Grand Rapids, Mich., in 2016 and drew the attention of a local distributor who helped her get the product in front of consumers over the next two years.

Act II Capital met up with Griffen and Alan a couple of years ago as the company expanded production and needed help with widespread distribution. The mixers are now sold in 26 states, including Kroger and specialty stores like Marshalls. Herlevic said the brand will be in around 1,000 Walmart stores in March. In Northwest Arkansas, Brewt’s cocktail mixes can be found at HomeGoods in Rogers.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Firebend.