Simply Good Foods Faces Class Action Lawsuit Over Owyn Protein Shakes Acquisition
Simply Good Foods, the owner of Quest, is currently embroiled in a class action lawsuit from investors alleging that the company mishandled the integration of its $280 million purchase of Owyn protein shakes. The investors claim that a reformulation led to a decline in sales for the brand.
The lawsuit, filed in the U.S. District Court for the Southern District of New York, specifically points to Simply Good Foods’ switch to an “inferior supplier of pea protein” as the root cause of the taste and sales issues faced by Owyn. Since acquiring Owyn in 2024, the company’s stock price has dropped by 70% and it has incurred $200 million in impairment on brand assets.
Investors are seeking compensation for their financial losses resulting from Simply Good Foods’ alleged mismanagement of the Owyn acquisition.
Challenges Faced by Simply Good Foods
Simply Good Foods has been grappling with a slowdown in sales as competition in the protein shake and bar market intensifies. The addition of Owyn was intended to diversify the company’s product offerings and capture a share of the ready-to-drink protein shake segment.
However, the integration of Owyn has been described in the lawsuit as a failure, with the company’s decision to change pea protein suppliers resulting in product quality issues that affected taste, texture, and shelf life. This led to negative reviews, decreased sales, and the loss of distributor relationships.
CEO Joe Scalzo, who recently returned to lead a turnaround effort, acknowledged the product issues and anticipates further distribution losses. Despite these challenges, Scalzo remains optimistic about the growth potential of Owyn and plans to refocus the brand’s strategy on its core products.
Simply Good Foods aims to address integration and execution issues to capitalize on the consumer demand for clean label plant-based nutrition products. Scalzo emphasized that the underlying consumer proposition of Owyn remains strong, and the company is determined to overcome its current challenges.