Online supermarket The Vegan Kind has been bought out of administration by a business associated with its current private equity owner following a downturn in trading and soaring costs.
Recovery firm Interpath Advisory was appointed as administrator at the business on 11 October 2022, The Grocer can reveal.
Joint administrators Alistair McAlinden and Blair Nimmo immediately sold the business and assets to Lillie SPV Ltd in a pre-pack transaction.
Companies House filings show Lillie SPV is controlled by Literacy Capital, which was the majority owner of The Vegan Kind.
The move comes less than four months after Literacy Capital took over control of the business, buying the majority stake from its founders and bringing in a new CEO in a turnaround attempt.
Former Holland & Barrett boss Tony Buffin, who joined The Vegan Kind as chairman in February, is also listed as a director of Lillie SPV. Buffin, who works with Lit Cap on a number of its other investments, was brought in to help professionalise The Vegan Kind.
All 38 of the business’s staff transferred to the new owners under the terms of the transaction, in addition to “key management and assets”, according to Interpath.
Established in 2013 by Scott and Karris McCulloch, who launched TVK from their two-bed flat in Glasgow, the business is the UK’s largest online supermarket dedicated solely to plant-based products, servicing thousands of customers through a next-day delivery model nationwide.
It offers more than 5,000 plant-based products, in addition to monthly vegan beauty and food subscription boxes.
Following record revenues of £7.5m as the pandemic supercharged demand for online operators, the business invested in its infrastructure, including moving to a 35,000 sq ft warehouse capable of servicing further significant growth.
However, following a downturn in sales since lockdown restrictions eased, coupled with the increased costs related to the new warehouse, TVK losses spiralled and led to cashflow challenges, Interpath said.
Lit Cap, which also counts DTC petfood operator Butternut Box as part of its portfolio, first became involved in The Vegan Kind as a major investor in 2021, backing a £3.5m growth funding round.
The PE firm appointed Sarah Boddy, who headed up the US division of petfood group MPM Products for the eight years, as CEO in June when it took over the controlling stake in the business from the McCullochs.
Boddy remains in charge of the new business following the deal.
In early 2020, TVK turned to crowd investors to help maintain its rapid growth, with 2,085 backers taking part in a £670k funding round. All shareholders, including Lit Cap, won’t see a return on their original investment in the business.
Tony Buffin told The Grocer the pre-pack deal ensured the future of the business and allowed it to continue to trade “providing its valuable supermarket and subscription box service to its loyal plant-based customers nationwide”.
“The Vegan Kind supports a wide range of plant-based food suppliers, including small artisanal suppliers, and the new shareholders are committed to continuing to support these suppliers to enable customers to access exciting new and novel plant-based foods,” he said.
“As part of creating a viable future for the business, unfortunately, roles are unlikely to be found for all of the existing team. The new shareholders are, however, keen to secure as many jobs as possible and continue to work with all affected employees at this time.
“The Vegan Kind and its associated social media platforms, including ‘Accidentally Vegan’, have over 800,000 followers and are an important source of information for vegans across the country. The new shareholders remain very supportive of continuing to provide this valuable service to the plant-based community and hope to share more exciting news about The Vegan Kind in the coming weeks.”
Alistair McAlinden, joint administrator and an MD at Interpath Advisory, added: “The company’s directors had sought new investment to support the continued operation of the business, but those efforts were unsuccessful, and the directors took the difficult decision to place the company into administration.
“However, we are glad to have been able to conclude this transaction and give the business the best opportunity of a successful future.”
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