Hildred Capital Management recently acquired the bankrupt Hello Bello, a baby products brand, for $65 million. No other offers surpassed this bid despite the company achieving revenues of $180 million. In the modern world, entrepreneurs must integrate influencer and content marketing with additional strategies beyond the traditional product, price, place, and promotion marketing mix. This approach can lead to more sustained success. A pertinent example is Hello Bello, an eco-friendly diaper brand that experienced growth and challenges.
Hello Bello, recognized for its environmentally friendly diapers, sought Chapter 11 protection in October of the previous year. The brand was co-founded by actors Kristen Bell and Dax Shepard in 2019 and initially partnered with Walmart Inc. for exclusive distribution. Today, Hello Bello’s products are available at various retailers and online.
Key Takeaways
- Celebrity Endorsements and Strategic Partnerships: Hello Bello, co-founded by Kristen Bell and Dax Shepard, initially benefited from celebrity endorsements and a strategic partnership with Walmart, leading to rapid growth. However, these factors alone were insufficient for long-term success.
- Challenges Leading to Bankruptcy: Despite initial success, Hello Bello faced significant challenges, including supply chain disruptions, rising production costs, and competition from established brands. These issues culminated in the company declaring bankruptcy in October 2023.
- Acquisition by Hildred Capital Management: In December 2023, Hildred Capital Management acquired Hello Bello for $65 million. This acquisition aims to stabilize and expand the brand by integrating it with Hyland’s Naturals, leveraging additional resources for growth.
- Operational Adjustments and Future Outlook: Hello Bello has implemented various cost-cutting measures and established its production facility to reduce costs. With new leadership and support from Hildred Capital Management, the company aims to maintain its commitment to affordable, high-quality, and environmentally friendly products while pursuing further growth.
Hello Bello’s Chapter 11 Filing and Revival Under New Ownership
Hello Bello, a company co-founded by celebrities Kristen Bell and Dax Shepard, has recently come out of bankruptcy under the ownership of Hildred Capital Management. The company, known for its diapers and children’s personal care products, declared bankruptcy in October due to startup challenges and supply chain disruptions.
Established in 2019, Hello Bello built its first-owned diaper factory in Waco, taking over a previously used facility on Texas Central Parkway. The move included Waco and McLennan County tax incentives and a commitment to create 110 jobs.
Initially, the company saw rapid growth, leveraging its high-profile backers and offering unique purchasing options like home delivery subscriptions or in-store purchases at Walmart. This strategy allowed Hello Bello to significantly impact the subscription diaper market and later expand into children’s vitamins and personal care items.
Following its bankruptcy filing in October, aimed at facilitating a sale, New York-based Hildred Capital Management acquired Hello Bello in December. Will Righeimer, CEO of Hyland’s Naturals, has been appointed to lead the company following the acquisition.
At that time, Erica Buxton, the company’s CEO, stated that, in light of macroeconomic trends such as inflation and rising shipping costs, this strategy is the optimal way forward to ensure that Hello Bello continues to deliver high-quality, environmentally friendly products at reasonable prices.
Road Leading to Bankruptcy…
More than celebrity or influencer endorsements are required to sustain long-term brand growth. A product must also surpass competitors in price, quality, or convenience. Brands facing giants like Procter & Gamble or Johnson & Johnson in their category may find it difficult to achieve enduring success by relying solely on a few key differentiators or promotional strategies.
Hello Bello has experienced this. Other diaper and personal care brands offer similar quality products at competitive prices, available in major retailers with options like fast and free delivery. Although an effective promotional campaign initially boosted Hello Bello’s sales, the brand struggled to maintain its position in the market due to less competitive pricing and convenience factors over time.
Additionally, Supply chains are critical to the success of any consumer goods company. They provide the materials needed to create products and ensure they reach consumers. Disruptions in the supply chain can significantly harm a company’s profitability.
This impact is magnified for companies that do not manufacture their own products. Using contract manufacturers can enhance product marketing and sales, but employing multiple contract manufacturers may incentivize them to keep prices competitive.
Hello Bello experienced this when its single-contract manufacturer raised prices more rapidly than retailers could adjust prices on the shelves. For instance, the producer raised the cost of making diapers by more than 18% over time. Yet, Hello Bello’s primary wholesale customers, including Walmart and Amazon, would only agree to a price hike of up to 10%.
These increases were also higher than those of competitors. While Hello Bello agreed to the cost hikes from its manufacturer, retailers did not support the increased pricing.
Hello Bello decided to establish its production plant in Texas. Although Hello Bello eventually established its manufacturing operations, the setup needed to be more swift. Establishing a manufacturing facility can take several months to years. Initially, the company did not benefit from this move due to delays in making the facility operational. During this period, Hello Bello continued to buy from Irving while working to get its new plant running, leading to the necessity of buying up to a year’s inventory in advance.
The company incurred significant upfront costs by storing large inventory quantities without the expected sales volume.
Production delays were further compounded by COVID-19 restrictions, which hindered staff from traveling to manage the setup and slowed down approval processes. The first production line, which arrived in Texas in the summer of 2021, took six months to assemble and approve.
Staffing the facility proved challenging due to competitive local labor markets and Hello Bello’s initially inconsistent work hours, which resulted in high employee turnover.
In the lead-up to its bankruptcy, Hello Bello implemented various cost-cutting measures, including reducing its international operations, imposing shipping costs on more direct-to-consumer customers, and cutting its corporate staff by 20%, among other strategies.
Finally, after months of suffering, in October 2023, Hello Bello declared bankruptcy and declared liabilities and assets worth between $100 million and $500 million.
A New Start!
Then, after just two months of declaring bankruptcy under Chapter 11, Hello Bello was acquired by Hildred Capital Management in December 2023 for a reported $65 million.
As the new proprietor, Hildred merged Hello Bello with Hyland’s Naturals, a company within Hildred’s West Rancho Dominguez portfolio focusing on pediatric consumer health.
Hyland’s Naturals now provides additional resources to support Hello Bello’s expansion. At that time, Andrew Goldman, co-founder and managing partner at Hildred Capital, stated that integrating Hello Bello with Hyland’s Naturals established one of the largest independent pediatric health platforms in the United States.
Goldman also expressed enthusiasm for simplifying parents’ access to clean and natural health products for their families. Since its inception, Hello Bello has aimed to make high-quality products accessible to all parents, regardless of budget.
The company also declared Will Righeimer, CEO of Hyland’s Naturals, the new CEO of Hello Bello. This dual leadership role is intended to unify the consumer experience across both organizations.
Hello, Bello expressed that with support from Hildred, the company is poised for rapid growth, leveraging a solid customer foundation that values the brand’s quality and affordability.
Following Hildred’s acquisition, Hello Bello will maintain its commitment to offering premium, affordable products widely available in major retail stores and online across the United States. Shepard highlighted the company’s dedication to using the maximum possible proportion of organic materials sourced sustainably while ensuring the products remain effective.
While some elements of their diapers and shampoos require synthetic components, the products are predominantly plant-based. Shepard noted the company’s ongoing efforts to improve, including enhancing laundry detergent packaging as new technologies emerge and are adopted.
About Hello Bello
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Hello Bello offers a range of high-quality, budget-friendly baby products. This brand addresses the dilemma parents often face: choosing between the best for their children and what they can afford. Hello Bello’s lineup includes wipes, diapers, shampoo, sunscreen, bubble baths, body wash, sanitizer, lotion, and diaper rash cream.
Founded in 2019 by actors and parents Kristen Bell and Dax Shepard, the company aims to provide safe, affordable, and environmentally friendly products for all families. The products incorporate organic botanicals, and several options are hypoallergenic and certified by Leaping Bunny.
About Hildred Capital Management
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Hildred Capital Management is a private equity firm focused on healthcare that is dedicated to identifying value-creation opportunities in middle-market companies. The firm collaborates closely with management teams to enhance operations, drive earnings growth, and promote business development through strategic improvements.
Founded in 2019 by Andrew Goldman and David Solomon JD, Hildred Capital Management is headquartered in New York, New York. With a team that brings a wealth of experience in the healthcare sector, the firm partners with management to expand and strengthen businesses. It aims to add value to its portfolio companies and investment partners by supporting operational enhancements and business growth. Hildred Capital Management invests in U.S. and Canadian companies with revenues up to $100 million and possessing innovative technologies, products, and services.
Conclusion
Hello Bello’s journey highlights the complexities of leveraging celebrity endorsements and strategic partnerships in business. Despite its initial success, the company faced significant operational challenges, leading to its bankruptcy in October 2023. Acquired by Hildred Capital Management for $65 million, Hello Bello aims to stabilize and grow under new leadership and integration with Hyland’s Naturals.
The acquisition provides Hello Bello with essential resources to enhance its product offerings and market presence. Moving forward, the company is committed to maintaining its reputation for high-quality, affordable, and environmentally friendly baby products. With strategic adjustments and support from Hildred, Hello Bello is poised for a promising future in the competitive consumer goods market.
