Grocery store shelf with bottles of Tapatio brand Salsa picante Hot Sauce. Tapatio has been acquired by Dallas-based Highlander Partners. [Photo: Sheila Fitzgerald/iShutterstock]
Dallas-based private equity firm Highlander Partners has aquired Tapatío, the #5 hot sauce brand in the U.S., from the Saavedra family, which has owned the brand since its 1971 founding in California by Jose-Luis Saavedra Sr.
Terms of the deal were not disclosed. The Arnold Companies also invested “a significant minority equity position” along with Highlander, and the Saavedra family will retain a minority position in Tapatio post-closing, Highlander said.
Tapatío is named after the term used to describe someone from Guadalajara, Mexico, reflecting the hot sauce’s “deep connection” to traditional Mexican flavors, Highlander said. Crafted from a blend of red peppers and spices, the hot sauce is known for its “perfect balance of medium heat and rich, tangy flavor,” the PE firm added, noting that Tapatío is used to enhance everything from Mexican cuisine to eggs, soups, and more.
Jeff L. Hull, president and CEO of Highlander Partners, called Tapatío “a generational business that’s distinguished by a strong, authentic brand in the fast growing hot sauce category.”
“We believe that Tapatío is poised to benefit from several secular trends that are dramatically reshaping consumer food choices,” he added in a statement, “and we look to take advantage of the brand’s significant whitespace opportunity.”
Brand saw Highlander as ‘a perfect fit’
Luis Saavedra Jr., the former CEO for Tapatío, called Highlander “a perfect fit given their extensive background in the branded Hispanic food category.”
“We’re pleased to have a partner that invests their own capital and takes a long-term strategic approach to growing companies,” Saavedra added in a statement. “Tapatío has a strong business with a proud heritage and identity. Highlander shares our vision to maintain this legacy.”
Aiming to grow beyond Western U.S.
To date, Tapatío’s products have developed a large, loyal following in the Western U.S., Highlander noted, where its customers include big-box retailers, supermarkets, restaurant chains, and other retail outlets. With the Dallas PE firm’s investment and partnership, the company aims to extend its reach into “nascent geographies” while broadening its distribution channels, bolstering new product development, and entering complementary new product categories, Highlander said.
Highlander Partner Jeff Partridge said his firm shares the Saavedra family’s vision to maintain the brand’s legacy. The PE firm aims to “carefully and purposefully target opportunities to grow the brand geographically, introduce new flavors and products, and deepen penetration in both the retail and foodservice channels,” he added.
Stout served as exclusive financial advisor to Tapatio on the transaction. J.P. Morgan led the senior financing facilities, and NMP Capital provided both financing and equity in support of the transaction. Katten served as legal advisor to Highlander.
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