Food industry feasts on celebrity investors
Companies, A-listers get together to improve their brand, move product
Investing in liquor companies has been lucrative for a long list of celebs, but Oprah Winfrey’s recent decision to back the rising True Food Kitchen restaurant chain reflects a slightly different A-list trend: Chomping into the food and dining businesses. ❚ The media mogul said in a statement that she took a stake because she wanted to “be part of the company’s future.” She will serve as a collaborator and consultant to expand the health-oriented restaurant chain across the U.S., the company announced.
Winfrey joins a long list, from Beyonce to Ashton Kutcher, who have put their money where their celebrity mouths are in recent years, backing everything from protein substitute companies to online grocery stores and “healthy” beverage manufacturers.
They follow in the footsteps of past Hollywood stars such as Paul Newman, the late actor whose products still grace supermarket shelves with profits going to charity, or country crooner Jimmy Dean, whose sausage brand outlives him.
Flush with income from their starring roles, celebrities invest in the food or restaurant trade to leverage their fame and hedge against upheaval in the entertainment business.
“In the past, celebrities could make enough money by securing a movie or a record deal,” said Jeetendr Sehdev, celebrity branding authority and author of “The Kim Kardashian Principle.” “Now it’s harder to make money that way. So, they might seek backend endorsements and investments in business.”
Plus, they often score sweet deals from developers or business partners who know how celebrity cache will elevate their otherwise sometimes forgettable brands.
“It’s very likely that these companies give better deals to celebrities,” said Bruce Turkel, brand consultant and author of “All about Them: Grow Your Business by Focusing on Others.”
While it’s common for people to fund companies they suspect will produce a return, there are other drivers that can motivate stars to invest, such as branding opportunities.
“It is critical for celebrities to invest in their brands,” Sehdev said. “Whether it’s Madonna and Vita CoCo or (Beyonce) and Jay Z going vegan, taking an equity stake allows them to come across as being authentic.”
Others might hop on the food industry bandwagon to stay in-tune with today’s health-conscious consumers.
“Celebrities want to be part of a value system,” said Erich Joachimsthaler, founder of brand-building firm Vivaldi. “If health and wellness is important ... use it to connect with ordinary consumers and make a larger impact globally.
“Look at what Oprah did for Weight Watchers. It’s success was enormous after she invested.”
Known as the “Oprah effect,” the billionaire raised overall awareness of the weight loss company. The company’s stock price doubled after the announcement she had become an investor.
Turkel warns, “Just because a celebrity does it does not mean it’s a good investment. Remember their area of expertise. Often, it’s probably not investing.”