How Cynthia Tice built Lily's Sweets into a $400M sugar-free chocolate brand

Executive overview

Most sugar-free chocolate tasted terrible in 2011. Cynthia Tice, a food consultant approaching 60, found a stevia-erythritol formulation that actually worked and brought it to Whole Foods.

She launched with four people, no salaries, and a mandate to be profitable from day one. Ten years later, Hershey's acquired Lily's for $425 million.

Deep category expertise, built over decades, can matter more than youth or capital when launching a consumer brand.

From natural food store to consulting

• Opened a 400 sq ft natural food store in Philadelphia in 1977 after a personal health transformation at college
• Ran the store for over 20 years — never truly profitable, but personally fulfilling
• The 1989 Alar scare (apple pesticide linked to cancer) brought new customers into natural food stores for the first time
• Sold the store in the late 90s; burned out after 20+ years of retail
• Pivoted to consulting, helping conventional grocery chains understand and source natural and organic products
• A pivotal industry seminar moment: a Whole Foods rep told Safeway and Acme, "We're not after natural food customers — we're after yours"

The pivot to chocolate

• First product concept (a stevia-sweetened soda) was abandoned when Coke and Pepsi announced the same play in 2007
• Pivoted to chocolate; early homemade attempts with stevia were unacceptably bitter
• Discovered a supplier who had solved the bitterness problem by blending stevia with erythritol and fiber (dextrin) to balance the sweetness profile
• Partnered with Chuck Gennardi — he invested $125K (as a loan), her father put in $25K; they split equity 50-50
• Named the brand Lily's after Chuck's niece, a brain cancer survivor who fundraised for her hospital as a child; charitable giving was built into the company from the start

Launch and early growth

• Launched nationally at Whole Foods in March 2012 with four SKUs: original, almond, crispy rice, and coconut
• A personal relationship with Whole Foods' VP of merchandising shifted the buyer meeting in their favor
• Ran heavy demo sampling and promotions (on sale roughly half the year) to drive consumer trial
• No employees, no salaries, no office — co-manufacturer handled production and shipping
• Lost a small amount in year one; profitable every year after
• Revenue approached $1M in year one; grew at least 40% annually, most years doubling

Legal battle and scaling

• In 2015, Cynthia's original soda-era co-founder sued claiming partial ownership of Lily's — a two-year legal fight
• Won the case in 2017; could not settle because the settlement demand was beyond her means
• Chuck stepped back in 2014; replaced by Laura Fraga; Cynthia's two adult children joined — still a team of four
• Raised a total of ~$350K from friends and family across the company's life before taking institutional capital

Private equity and exit

• In 2018, took a majority investment from VMG Partners (Velocity Made Good), a founder-friendly CPG specialist
• Run rate was $40M at the time of investment
• VMG hired Jane Miller as CEO; she built a 40-person team in Boulder, Colorado within months
• Sales reached $110M just 18 months after the VMG investment
• Hershey's acquired Lily's in June 2021 for $425M
• Cynthia retained shares through the VMG round and received a second payout at acquisition

Lessons

• Profitability-first thinking (unusual in CPG) kept the business lean and self-sustaining through a costly lawsuit
• Promotion drives trial, but Lily's customers were relatively price-insensitive — product attributes were the real hook
• Cynthia credits the outcome roughly 50-50 to experience and timing; the sugar-awareness wave was not something she predicted
• Founders should define what role they want post-acquisition before negotiations — not after
• Late-career founders bring category depth that compensates for inexperience with finance and team-building