Editor's note: The previous version of this article and video incorrectly associated the Smashmallow lawsuit with Tanis, formerly known as Tanis Confectionary. Sonoma Brands won a $21 million lawsuit that targeted Tanis Food Tec, which is also based in the Netherlands. The companies operate independently.
Smashmallow, a startup backed by food investment firm Sonoma Brands, launched in 2016 to rave reviews; one went so far as to call them "divine." The snackable, handmade marshmallow cubes came in various flavors; the most popular was "cinnamon churro."
As the company looked to scale, it turned to Tanis Food Tec, a Dutch machine builder.
Tanis Food Tec delivered the Smashmallow machine in late July 2019; it cost some $3 million. When it was first installed, the line produced so much toxic dust that a third-party consultant said it was an explosion hazard. Employees near the machine had to wear respirators.
According to BraunHagey & Borden partner David Kwasniewski, who represented Sonoma Brands in a subsequent lawsuit, Tanis Food Tec didn't fix the dust issue for more than a year — though it turned out to be just one of many problems. For example, the machine produced "a hippopotamus-sized amount of waste every day," or about 4,000 pounds.
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Perhaps the biggest problem was that it couldn't hit promised production goals of 2,200 pounds per hour — it averaged closer to 844 pounds per hour. According to Kwasniewski, pretty much every significant component had to be replaced or reworked just to get the machine to hit 844 pounds per hour, and the repairs cost another $1 million.
The machine also failed to make the products resemble the handmade version of Smashmallow. Most notably, it couldn't properly add toppings or coatings to the marshmallow, like the cinnamon sugar coating on the churro flavor. It also failed to produce the marshmallows without wasting 28% of the yield, on average.
At one point, Smashmallow had more than two dozen employees, all of whom had to be laid off because the machine didn't work despite the nearly $4 million investment. Smashmallow was shuttered in 2022.
Because the machine took a year to build and install, finding a replacement machine wasn't an option. The company tried to work with co-packers, but none could achieve the volume and efficiency Tanis promised the marshmallow startup.
Sonoma Brands sued the machine manufacturer, and last week, a jury in Santa Rosa, California, awarded $21 million in damages. And the victory didn't come easy, as Tanis Food Tec tried multiple ways to delay the trial.
First, Tanis Food Tec refused to respond to the complaint at all until the court declared them in default. After they did appear, they tried to file a countersuit against Sonoma Brands, which delayed the trial another six months. The company also tried and failed to hide documents in discovery. Despite the delays, Sonoma prevailed, and while Tanis Food Tec is located overseas, laws in the Netherlands should make enforcing the $21 million judgment easy.
IEN reached out to Tanis Food Tec, but they did not immediately respond to our request for comment.
