Private Equity Titans Forge Flavor Platform to Master the Taste of Health

SAN CLEMENTE, CA – July 22, 2026 – In a strategic move that underscores the immense value of food science in the modern wellness economy, specialty ingredient manufacturer Custom Flavors has secured a major partnership with private equity firms Butterfly Equity and Graham Partners. The deal is more than a simple capital injection; it marks the creation of a formidable new “flavor investment platform,” uniting Custom Flavors with Target Flavors to build a dominant force in the high-stakes world of making healthy, functional foods not just palatable, but desirable.

The New Architects of Taste

For over two decades, Custom Flavors has quietly operated at the frontier of food science, carving out a reputation as the go-to problem solver for the food industry’s toughest challenges. The California-based company specializes in developing complex flavor systems for the most demanding applications: protein bars, functional beverages, nutritional gummies, and other “better-for-you” products that are notoriously difficult to get right. Their core expertise lies in what the industry calls “modulation and masking”—the science of neutralizing the unwanted “off-notes” from ingredients like plant-based proteins, high-potency vitamins, and dietary fibers.

“What makes Custom special is our people. We’re a team of flavorists and food scientists who genuinely love solving hard problems,” said Alex Wendling, CEO of Custom Flavors. “This partnership gives us the resources to grow that team and keep raising the bar.”

The new backing will fuel significant operational expansion. The company recently established a bi-coastal manufacturing footprint with the opening of a new 53,000-square-foot facility in Concord, North Carolina, in late 2025. This site, which represents an initial $6 million investment, is projected to double the company's overall production capacity. This expansion is critical for slashing lead times and freight costs for its growing client base across the Midwest and East Coast, enabling the company to reach over 85% of the U.S. market within two days.

A Market Hungry for Innovation

The partnership is a calculated response to a seismic shift in consumer behavior. The global market for functional foods is no longer a niche segment; it’s a booming industry valued at over $380 billion in 2025 and projected to approach $1 trillion by 2036. This explosive growth is driven by a confluence of factors: a health-conscious public proactively managing wellness, an aging population seeking nutritional support, and a mainstream demand for “clean label” products with recognizable ingredients.

This is precisely the market where Custom Flavors excels. As consumers demand snacks and meals that are high in protein, fortified with vitamins, or plant-based, they are unwilling to compromise on taste. This creates a critical bottleneck for food manufacturers, a problem that specialized flavor houses are uniquely equipped to solve. “Demand for functional, better-for-you, and clean-label products is growing quickly, and those are exactly the applications where great flavor is hardest to get right,” noted Andrew Snyder, Managing Partner and President at Graham. “Custom Flavors has built its reputation solving those challenges, and that puts the Company right where the market is heading.”

The nutraceuticals market, a close cousin to functional foods, is on a similar trajectory, expected to surpass $1.1 trillion by 2033. For brands competing in this crowded space, differentiated and appealing flavor is not a luxury, but a key to survival.

The Private Equity Playbook for Flavors

For the investment firms, this deal is a masterclass in strategic consolidation. Butterfly Equity, which specializes exclusively in the food sector with a “seed to fork” philosophy, manages a portfolio of high-profile wellness brands like Orgain, MaryRuth Organics, and Bolthouse Farms. Investing in Custom Flavors provides Butterfly with a crucial upstream asset—a company that supplies the foundational technology enabling the very products its other portfolio companies sell. It’s a move that secures a key piece of the value chain.

“Custom Flavors is an exceptional business and one we have followed closely for many years,” said Aaron Kirkbride, Partner at Butterfly. “Alex, Mike and Steve have built a platform with best-in-class technical capabilities, strong customer relationships, and a deep commitment to quality and service.”

Meanwhile, Graham Partners brings its focus on technology-driven manufacturing and a proven track record in the ingredients space. The firm’s strategy involves building platforms in high-growth industrial niches, and this partnership expands on a move it made in late 2025 when it first invested in Target Flavors. Based in Virginia, Target Flavors is another full-service flavor house specializing in custom solutions for the beverage, dairy, and bakery industries. By bringing Custom Flavors into the fold, the two PE firms have created a complementary platform. While Custom has deep expertise in nutrition bars and gummies, Target brings strength in beverages and dairy, creating a combined entity with a vast and diversified market reach.

Building a Bi-Coastal Flavor Powerhouse

The infusion of capital and strategic oversight is set to accelerate an already ambitious growth plan. The partnership supports a recently solidified leadership team, with Alex Wendling stepping into the CEO role and industry veteran Scott Nadison joining as President to help scale operations. “We are incredibly excited to partner with Butterfly Equity and Graham Partners,” said Nadison. “They bring deep experience and connections in the food sector and share our vision for Custom’s next phase of growth.”

This vision is materializing in brick and mortar. Beyond the initial phase of the new North Carolina facility, a second phase is already planned for late 2026, which will add expanded R&D labs and new processing technologies. This mirrors the investment in its San Clemente headquarters, which features a state-of-the-art Innovation Center for rapid prototyping. The goal is clear: to institutionalize innovation and maintain best-in-class lead times even as the company scales.

Under the new platform, both Custom Flavors and Target Flavors will benefit from shared resources and a unified strategic direction, all while continuing their respective operational expansions. This dual-pronged approach, with innovation hubs on both coasts, creates a powerful network for R&D and customer service. It positions the platform not just as a supplier, but as an indispensable innovation partner for any brand looking to compete in the future of food—a future where health benefits and exceptional taste must go hand in hand.