Global Retail   //   June 17, 2024

How DayDayCook plans to grow its Asian food portfolio after acquiring Omsom

Hong Kong-based food group DayDayCook is quickly growing its portfolio of brands after going public last November.

Last week, the company announced its latest acquisition of Asian food startup Omsom, which launched in 2020 and currently offers sauce and noodle kits. The Omsom acquisition consists of a combination of DDC’s cash and stock paid out over four years.

The deal is just one of a few recent acquisitions made by DDC. In 2023 the company bought better-for-you Asian food brand Nona Lim and Thai American brand Yai’s Thai, both founded in 2014. According to DDC, Omsom’s product development will accelerate under its ownership, anticipating that R&D will take about half the amount of time it previously did.

With plans to acquire new brands while integrating the recent acquisitions into its operations, DDC is carving out a niche as a hub for Asian food startups.

Launched in 2012, founder Norma Chu first positioned DDC as a recipe platform for home cooks. Beginning in 2018, the company rolled out its own Chinese grocery lines: DayDayCook, MengWei and Yujia Weng — all of which make their own lines of Chinese food products. Chu told Modern Retail that as the parent company builds out its portfolio, “our strategy is driven by significant shifts in consumer behavior and preferences.”

Emerging trends are a big consideration. For instance, Chu said remote work and at-home dining has more people looking for easy ready-to-cook meals while discovering new cuisines. Omsom’s line of saucy noodle kits fit into this trend. “We think that our current brands are perfectly positioned to meet these trends head-on, allowing us to grow and evolve with our consumers’ tastes and preferences,” she said.

During its fiscal third-quarter earnings, reported in January, DDC disclosed that total revenues were $23.7 million, up 25.5% year over year, while gross profit was $6.3 million. In a 6-K form, DDC said that Omsom brought in $3.7 million in gross revenue in 2023.

Chu said when considering M&A deals, the company’s approach differs based on the business’s size and age and there is no one-size-fits-all strategy. “Each business is unique, especially the budding CPG brands we look at,” Chu said. The company is considering acquiring more Asian food businesses that cover more cuisines. 

Besides buzz, when considering an acquisition, DDC looks at metrics like revenue, growth, product attributes and distribution channels. “But we also focus on more qualitative aspects such as the founders and their team, the authenticity of the brand, and its mission,” Chu said.

“Take the Omsom acquisition, for example,” Chu said. “Yes, it generated a lot of buzz — even more than we expected, to be honest. But that was never what we look for — our goal is to build a sustainable company that can thrive across generations.”

What really drew DDC to Omsom was its founders Vanessa and Kim Pham, she said, and their representation of a younger Asian American generation. More specifically, she was impressed with the way the Pham sisters have leveraged social media to build a brand voice around their “loud and proud” mantra.

“We saw immense potential in the founders and the brand’s strong equity and loyalty. We’re excited to help scale their impact and realize their vision,” Chu said.

DDC will soon start calibrating ways to provide support to its new subsidiaries. Chu said that “after almost a year of integrating and experimenting” with the first brand DDC acquired, Nona Lim, “we’ve familiarized ourselves with the teams and the U.S. market.”

This spring, Nona Lim debuted its new ready-to-heat entrees and instant noodle bowls as the first products produced under DDC. Now, the parent company is ready to pick up the pace and consider making bolder moves. “This year, you can expect us to focus on creating more efficiencies and synergies across our brands, delivering quality innovations, and expanding our retail footprint,” Chu said.

As the portfolio grows and DDC’s network and capabilities mature in the U.S., it plans to create more synergies as a food group. This includes uniting warehouse and logistics support, sales strategy and data analytics, Chu said. With three new brands under its umbrella, DDC’s next stage of integration will include cross-brand collaborations and other marketing initiatives that will be unveiled later this year. 

M&A activity has spiked in consumer packaged goods this year, and it’s expected to continue, said Michael Jones, general partner of Science Inc. “Right now, there is an overall consumer trend toward functional, clear ingredients and low-processed food choices,” Jones said. 

As such, capital-rich companies remain attracted to M&A because it allows them to quickly expand into new market segments and strengthen their presence in existing ones, Jones said. He pointed to Suja Life as an example. Known for its organic and clean-ingredient juices, the company acquired 1980s soda brand Slice in May with plans to reintroduce it as a low-calorie, gut health-focused better-for-you beverage.

“By building a portfolio of complementary brands, especially ones with built-in and passionate audiences, companies can create an overall stronger brand presence and enable organic opportunities for cross-promotions and enhanced brand equity,” Jones said. Moreover, Jones said building out multiple brands under one group also improves margins, by streamlining production, supply chain management, distribution, and marketing.

As for the goal of becoming the General Mills for Asian food products, Chu said DDC “is just getting started.” 

“Our current product portfolio leans heavier on Southeast Asian flavors, there are still many Asian cuisines that we would like to explore, such as Japanese, Korean, and, of course, my favorite Chinese,” Chu said. “If the right opportunities come up, you bet we will be looking at it.”