Q4 2020 Laird Superfood Inc Earnings Call
Full year 2020 financial results conference call at this time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone.
If you require any further assistance please press star zero I would.
I'd now like to hand, the conference over to MS. Ashley Smith, managing director at ICR to begin.
Thank you.
And welcome to Laird Super Foods fourth quarter, and full year 2020 earnings conference call and webcast.
On today's call are Paul <unk>, Chief Executive Officer salary L Chief Financial Officer, and Scott Maguire, Chief operating officer by now everyone should have access to the Companys fourth quarter earnings press release released today after market close this is available on the Investor Relations section.
Of Laird Super Foods website at Www Dot there superfood dot com before we begin please note that all of the financial information presented on today's call is unaudited and during the course of this call management may make forward looking statements within the meaning of the federal Securities laws. These statements are based on.
On management's current expectations and beliefs and they involve risks and uncertainties that could cause actual results to differ materially from those described in these forward looking statements. Please refer to today's press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those.
Expressed or implied in any forward looking statements made today.
And now I'd like to turn the call over to Paul Hajj, Chief Executive Officer of Laird Superfood Paul.
Thank you Ashley and Hello, everybody.
Pleasure speaking with you in regards to our fourth quarter and full year earnings report.
Charlotte I wanted.
Congratulate our team for amazing in 2020 results in spite of Covid challenges, we saw net sales growth of 98% over 2019.
We executed a successful IPO.
And we launched innovative new products and enter new categories, including our liquid creamer. Several snack products are functional copies as well as activate and renewable products to round out our daily ritual of healthy living as we believe better food lead to a better world.
2020 was truly epic an amazing year and trust that this team is committed to working hard every day to also make 2021, another amazing year.
On today's call I'm going to hit on the main drivers of our business. We think that will probably be most interested in to start for all of our new investors and I'll give you a two minute summary of who we are and what we do.
We will then jump into our growth drivers and liquid creamer.
I'll hand over to Scott Maguire, our CLO discusses work on operational efficiencies before Valerie elder CFO discusses the financials.
As always we want plenty of time for Q&A.
So to start off for new investors to the company.
<unk> Super pit is a high growth plant based natural food manufacturer with an open ended growth opportunity and the $759 billion grocery industry.
We believe Laird secret period, it's going to be a leader among the consumer industries better for you brands.
And we are mission driven with global Tam appeal on trends and with an outsized E Commerce revenue contribution.
Laird, we believe better food leads to a better world because when people are healthier and feel good they make better decisions.
Our products provide daily sustained energy nutrition, and hydration that we needed to excel through other days from setup to sundown as part of our daily ritual, starting with our superfood coffee and Kramer.
Our mission is simple, we make products that deliver great taste and great quality.
Warner proxy convenient easy to use affordable and available at all.
It's important for us to be able to provide these high quality natural products at accessible pricing when you look at the price per serving.
We can do this while providing trusted authentic products for the mass market.
We accomplished this by vertically integrating self manufacturing in direct sourcing whenever possible to eliminate the middleman, but also the vertical integration gives us oversight to ensure sustainable and ethical practices through all phases of our supply chain from farm to Fork.
We are an omni channel sales approach and I am constantly impressed by our leadership online as a native digital platform in the fourth quarter, 61% of our business was online.
We also sell wholesale in grocery mass and drug.
As foodservice, where we are in the early innings, but our products are a natural fit and we see tremendous long term opportunity.
So first I'll talk about growth drivers.
Overall sales remained very strong in 2020, we saw 98% net sales growth year over year, including a 108% growth in wholesale a 90% growth in online sales.
So there's four topics here on growth I'm going to touch on.
One the crown jewel of this businesses or online sales.
We saw new customer acquisition growth of 192% in 2020 over 2019 and 201% in Q4 alone over Q4 of the prior year.
This proves that early 2020, Covid blood pantry stocking was not just a bubble for alleged secret food <unk>.
The online growth has been sustained and we don't foresee any slowdown in the near future.
Our retention metrics further demonstrate this we saw 33% reorder rate increase for 2020 cohort compared to 2019 cohort.
Our already strong retention to even greater levels.
And our subscription business is strong and increasing as well continuing to represent a third of our online business. Even more impressive we grew new subscriptions or 184% in 2020 versus 2019 further demonstrating the inherently recurring nature of our revenues and customer loyalty.
The list of achievements of our online business with a long line the health and revenue generation of our email list continues to multiply our conversion rates are twice the industry average and our customer acquisition costs continued to demonstrate the effectiveness and efficiency of our organic customer acquisition strategy.
All in all our online business is best in class non fire, we consider ourselves to be leading the way in the food industry and anticipate their online business will always be more than half of our revenues.
Which we love as it gives us that direct connection to our customers and provides a highly valuable test platform for new products before we take those products investing in wholesale rollouts.
Second when it comes to growth drivers, let's look at wholesale we.
We are a first step goal to get to 20000 doors and are now a third of the way there, but when you look at all the future opportunities in drug grocery mass convenience stores, the future potential is far larger than that.
To help achieve our goal of getting our products from 20000 doors. We've just finished building out a world class wholesale sales team with a higher two sales directors, who each bring senior level CPG experience our organization and both individuals have an extensive track record of building emerging brands and accelerating wage states closure.
We've also this upgrade of broker team by adding a new national broker network to cover natural conventional mass and drug we've aligned ourselves with the industry's top brokers, who bring significant experience building natural food brands in this network better positions us for long term growth across all these channels.
We're also happy to announce from important recent wholesale wins from March that demonstrate our continued growth momentum.
We're launching or liquid Kramer and 290 target stores this month as well as in Harris Teeter and wafer.
We're starting to get solid traction for functional coffee and are launching in a 400 new stores. This month alone.
Additionally, we are discussing your international strategy internally now and while there remains low hanging fruit in U S. We are aware of in international opportunities as well and recently, we launched our superfood shelf stable gamers into 220 <unk> stores in Canada.
There are a lot of groceries, that's happening in the back half material, which we intend to be part of as well, we're very excited about wholesale growth for this year.
Nexon growth drivers I'd like to talk about platform expansion.
As you know we're building a brand platform, which enables us to continually find innovative products with large camps that some line and take those when you see the wholesale channels.
I'm a field testing functional copy I believe this is going to be a multibillion dollar market in the next five years and the fourth quarter, we launched our second functional coffee boost coffee the first ever coffee with vitamin D from plant based whole food sources.
This complemented our initial functional mushroom coffee released in mid 2020 and in January 2021, we further expanded this product set with our third functional copy focused coffee.
Which includes functional mushroom extracts and botanical adaptogen for cognizant support.
We are working on a deep pipeline of highly innovative functional coffee products, which will continue to release from the coming quarters and we're excited to be leading the charge when it comes to innovation and creating functionality in this category.
We launched <unk> and harvest sales from Q4, the first steps into the massive healthy better for you whole food snack category.
Chile nuts, which launch first was a huge success, we saw impressive immediate demand.
Since the launch appealing that timberland solvents, our seventh best selling SKU and two cows, our 11th best selling dot com and Amazon SKU.
This is especially impressive considering we sold out on day, one of inventory on hand were out of stock for a full month after launch.
Additionally, after spending years at 4 million you get it just right. We have launched our newest activate product are prebiotic daily Greens.
This price includes 18, superfoods functional mushrooms, prebiotics and Sheila it which is amazing superfood from high end the Himalayan mountains.
This product not only provides needed daily micro nutrients, but also has developed to support your microbiome, which is incredibly important element for our overall health that researchers are just beginning to fully understand.
And finally in growth drivers I'd like to touch on M&A.
We are seeing a lot of M&A activity in the marketplace and opportunities are coming our way, but we have a deliberate and measured approach here. We look for a number of things that can be innovative products manufacturing capability unique talent or supply chain opportunities.
But we are in the early stages of our corporate development strategy and it's our intention to prove out the power of this growth opportunity. We believe we can rapidly plug new products into our platform, while not distracting from our current mission and our critical internal growth projects.
Now gross margin from like a Kramer.
As everyone knows is we've been talking about we are facing some temporary compression in margins due to higher shipping costs in our online channel and due to our newly comparing relaunch, which is due to the short shelf life and associated distribution efficiency issues, we're dealing with there.
But typically to look from Premier we set a goal to have these issues resolved in the first half of this year and we believe we are still on track to hit that goal from <unk>.
Meantime, we have started to get some wins by optimizing the supply chain and working to make significant improvements or fresh product line.
Midway through the year, we expect to reduce waste issues, which are contributing to margin compression.
And we will give distributors plenty of time to manage inventories, enabling them to keep larger quantities on hand. It's also gives our customers plenty of time to consume as well as providing additional efficiencies and shipping logistics and warehousing.
It's taken longer than we would like and the truth is that we could've had it resolved faster if we were willing to compromise our values by adding stabilizers and have multiple buyers that we don't believe it.
But we're taking a longer term solution, which is doing something new with a completely new ultra clean label product a formula that has never been done before we're unique and our commitment to authenticity and trust for our brands and will not compromise by simply adding in Greece, We don't believe in.
Having said that we believe it's worth the wait we feel the early launch even with the packaging challenges it was worth it.
The time to test the product in the market, where we have seen very strong consumer adoption and repeat purchasing where we had been selling what the creamer. We've seen strong shelf losses, we didn't expect to see until the end of this year does continually growing and keep in mind. These strong shelf losses are in spite of lower shelf flow rates than we would've liked in the distributor channel.
<unk>.
Which we know are artificially low in these numbers.
This is a powerful sign as to how buyers and customers are loving your innovative functional liquid creamers.
But the strong sales data emerging we are also accelerating our efforts for our liquid creamer shelf stable product.
Starting to pilot this product with a new co Packer and expect to have this out in the second half of this year.
Site for this liquid shelf stable line to supplement our shelf stable powder products for the conventional channels with the sub $5 price point, great price fit for many of these more value conscious grocery chains.
And this also opens up the amazing opportunity with Amazon in our DTC channel to sell at full retail, which will balance margins and increased revenues for the entire liquid creamer line.
Now I'd like to turn to Scott Maguire Cielo to discuss operations.
Thank you Paul.
Three months into this role as Chief operating officer and show great to be a part of this team that has built an amazing platform and one with so much potential I am grateful to help take this flow to new levels of execution and innovation and be given the responsibility to ensure these great products to be available to everyone everywhere very fast.
Safe and delicious.
Regarding the fourth quarter, the pandemic presented us the common production supply challenges our top priority was and is keeping people safe and securing the timely delivery of equipment and raw materials and lining up with supply chain to make sure every consumer has access to our products very challenging.
Despite these pandemic complexities, we are hyper focused on building a world class operational business and as a nation.
Some strides in efficiencies is something we will never let up on I'd like to share some specific fourth quarter developments in three key areas, including throughput production and direct to consumer capacity parcel costs and people and talent.
Okay.
Our first production line and from significant in Q4 versus Q3, leveraging a total team effort. These results were driven by the implementation of our new sales and operations planning process execution of our production and Astra scheduling and sequencing algorithm continued enhancements to our preventive maintenance and the installation of <unk>.
Automated controls trading visibility to real time results.
In the midst of all this is something we are very proud of we installed tested and began ramp up of our second production line.
This production line helps us on four critical levels and provides redundancy.
And more than doubled capacity.
It increases our ability to vertically integrate co pack CS and finally provides critical flexibility by building, our inventories and smart ways from.
New products for the maintenance and major peak revenue Timeframes and as a result of this to put it in the past any progress we achieved our targeted safety stocks two months sooner than anticipated.
On personal costs. This has provided us challenges indirect to consumer.
Freight rate increases from parcel companies have been passed down it's a delicate balance from one of our requires surgical real time of change.
We saw an instantaneous rate hike mid fourth quarter.
Simple solutions to chip away at this and we are working on all of that including subscription consolidations packaging and mode optimization and strategic filing of our offers.
Finally regarding our people and our talent from the fourth quarter, we made investments to strengthen our engineering and procurement teams. This is already paying dividends and automation from the liability sourcing and certainty of supply of our raw materials.
Moving forward I'd like to share a few key tighter range on fiscal year 2021, we have screens that provide a template for how we do.
Manufactured more cells made.
Make it more efficiently move it smarter and cash.
For manufacturing more ourselves we have already converted two products a share from a co packer from a production facility and we will convert in line.
Maintaining more efficiently, we will make investments in continuous improvement lean practices in automation as we strive to provide real time efficiency feedback and we strive to eliminate redundant.
Redundant harvest SaaS Paas, we will do.
And we hope to build a flexibility to support the variety of packaging innovations, we expect to launch.
Our engineering team is literally all over this.
Moving into smarter in cash.
What is very exciting as we broke ground last month at our sister campus for our new customer fulfillment center, we strive to optimize the layoffs or velocity storage cost reductions direct to consumer enhancements and most importantly, amazing our customers, how well we move product to them.
Let me now hand, it over to value.
Thanks Scott.
To round out our presentation on the P&L operating expenses remained firmly in our control in the fourth quarter and as we have done historically and we continued to effectively manage these expenses across the board.
General and administrative expenses were 44% of net sales for Q4 2020 compared to 36% in the prior year, which reflects incremental unexpected public companies.
On an apples to apples basis, if we excluded the public company cost argument <unk> expense would have been 32% of net sales down approximately 400 basis points.
At 2% of net sales <unk> development remains highly efficient with a rapid cash payback in sales and marketing expenses were 37% of net sales for Q2 thousand 20 compared to 49% net sales in the prior year period, reflecting continued effectiveness and efficiency of our organic customer acquisition strategy and the fixed cost line.
Range available cash net cash.
Great.
Now to look ahead to the coming year.
Our 2021 net sales growth remained at least $42 million representing year over year growth of at least 60%.
We feel confident in these numbers as our business is inherently set on a path with strong growth of our core product line in existing direct and wholesale relationship. So the slope of the growth curve will be determined by index expense of a number of initiatives in the coming year, including Olympic premium packaging, we announced in the first half as well as launching illiquid shelf stable option in the second half.
2021.
Timely and innovative new product introductions with continued strong online performance.
The addition of wholesale doors, specifically from larger teams utilizing our liquid creamer as an entry point for these opportunities.
And continuing to earn more product placement on shelf at larger partners and increasing the value of each one of those doors.
Also fostering increased brand awareness.
Keep in mind that on the top line expectations should continue to take shipping factor into account as we navigate the optimal balance of pre shipping and increase in shipping expenses for our DTC business, including the increased shipping costs that began in the fourth quarter.
And further take liquid cream require range into account during the first fixed line for 2021, following which our margin should begin to fully slope operating.
The first half headwinds in mind, we expect 2021 margins of 28% to 30%, which we plan to achieve the liquid packaging update optimizing of our DTC shipping and maximizing the fixed cost leverage available to us for integration.
And similar to the top line expectation with growth of improvement in our margins will be dependent on the execution of these key initiatives it's Bob.
I would like to reiterate however that this coming year.
First step toward our long term target we came to the public markets with very clear set of long term goals and we're happy to say that we remain confident in our ability to achieve that.
Over the next two to four years in 2023 2025, we believe this business can run with significant annual revenue growth as we begin to leverage our brands Black line.
Margins north of 40% and EBIT margin.
I'll now turn it back to Paul.
Thanks, Paul.
We are building large superfood for significant scale.
Want to be a multibillion dollar brand platform.
We're not making decisions for the quarter or even the year the decisions, we're making now the investments in infrastructure Topnotch operating talent.
Strategy and supply chain products segments. These are all investments into this long term plan.
We have the Arsenal and team to develop or acquire innovative better for you products that large tam opportunities and we are building an authentic trusted brand platform with the ability to have massive scale and growth into the future for decades to come. Thanks.
Thanks, so much share team and to our shareholders now lets open the call to Q&A operator.
Thank you and as a reminder to ask a question you will need to press star one on your telephone keypad.
To withdraw your question simply press the pound key.
First question will come from Bobby Burleson with Canaccord. Please go ahead.
Hey, everybody thanks for taking my questions.
<unk>.
So congratulations on the revenue upside in the.
EBITDA number.
I'm curious.
Paul on <unk>.
When you're talking about M&A.
And I'm curious.
How about partnerships what are your thoughts there.
Big CPG Big.
<unk> guys heard.
Announcements.
From other guys that are partnering with large players.
Any potential there this year.
We're looking at all the opportunities.
We are.
If there is an opportunity that basically enables us to build this brand that's what it's all about we're not making acquisitions and buying other brands that we're going to we're going to put a lot of our own marketing efforts into those brands and it would be sort of the same concept with a partnership we're not going to spend a lot of energy promoting other brands, but if there is.
If there is a deal that is a win win for everybody.
We're certainly look at it and there has been opportunities we've been looking at so.
We're excited about these potentials that.
I can't tell you, whether something will happen to you or not.
Sure Fair enough and then just quickly this is per Valerie I guess on the gross margin guidance and you made the comment.
Slow a slow slope upward.
Seems like it would be more of a step function.
Upward in the second half unless theres some margin expansion potential here in the first half.
Is that fair.
Stefan.
I don't like to speak to it too much because like Scott mentioned in his comments there is it just one solution.
The shipping side of that the issues that we're facing today for example, so yes.
Yes, when we when we make an improvement when you start to see some of those improvements play out.
We're going to head in the right direction, but huge steps with every single line of those.
Thank you I have gotten to know me well enough that I would like to be a little bit more conservative than over promise on that one.
Sure I was just thinking about the shape of the year for gross margins.
Be able to get to that kind of a 29%.
Are you thinking that maybe we get from expansion here in the first half if not all dependent it's not all kind of a mid year and then forward improvement.
I think we've been pretty explicit on the shelf stable excuse me the shelf life improvement on liquid tumor most likely happening midyear and then targeting a shelf staple liquid tumor to be in the second half of the year. So I think for those two.
That's probably the most likely timing to see the improvement on the free shipping coupled with the DTC parcel cost challenges. They are facing I think that one will be more gradual over the course of the year, yes, because real time and we're working on a lot of different solutions.
Specifically right now and Scott, leading the charge there.
Great.
And then just last one from me if we think about the impact.
On shipping.
Shipping costs.
The gross margin impact.
Or split.
So you can total alluded to between like a free shipping impact.
The whole cost of freight in general just the higher shipping costs in terms of holiday.
<unk> margins in Q4.
No not a problem so when we're thinking about the compression related to the free shipping indicative price.
Cost challenge that one is actually pre split down the middle.
Looking back to Q4 of last year when free shipping wasn't in play. So that's about 900 basis points from Q4 of last year to Q4, this year and again pretty breakeven readout in the middle there and then the remainder of the compression. We're seeing from Q4 of <unk> 19 is liquids cleaner and not be out there at 500 basis points right now.
Great well, thanks for taking my questions guys.
David I was just going to add a little bit onto the free shipping as we're talking about that is this.
Kind of a reminder.
The free shipping is one of the most powerful use of capital investments we've ever seen when we look at 2020 or new customer cohort three year, ltvs $17 $37 million versus our 2019, three year, new customer LTV of $8 $7 million to $8 million. So we've increased our LTV value $8 5 million.
While we sacrifice basically 800000 shipping income so it's just an incredible investment when we look at that spend it makes everything more efficient as we.
We've doubled our conversion rates from the website. So that means that all of the ads and all the other traffic that we bring to the site is going to be more effective so.
Where we are at this stage in the game, it's just a really really powerful tool that we need to keep going on.
Fantastic I appreciate that additional color.
You bet.
Our next question will come from Alex Fuhrman of Craig Hallum. Please go ahead.
Great. Thanks, very much for taking my question and congratulations on a very nice quarter and a very nice year.
Wanted to ask about the long term strategy in terms of grocery stores and other opportunities in food mass and drug because it certainly sounds like youre continuing to pursue grocery and making some nice hires on the sales side of things there.
I just wanted to at all about your comment that you envision layer superfood always having more than 50% of its sales coming online is that kind of suggests that as you look out over the next couple of years, maybe it'll be a little bit of a less emphasis on traditional grocery or is it just that your online business is growing.
<unk> fast that grocery will never really have the chance to fully catch up.
It's the latter.
We are a true omni channel sales company. So we're not we're not putting a huge emphasis on.
One over the other.
We love our wholesale customers, we love the wholesale business.
We are of course take a very methodical approach to the wholesale business, we're going to test our products online and make sure that we've got those blockbuster products picked out that we're going to make that bigger investment and see the wholesale channels, just because youre dealing with lower margins youre dealing with a costing them on the shelf and you don't want to Miss there as far as getting product from the shelf that arent really.
Turning our wholesale business is growing incredibly well.
Doubled our door count last year and were over a third of our way to the goal that we set 20000 doors and we think they are actually starting to rethink that number.
We think that's a pretty conservative number and there is a lot more opportunity when you start looking at drug and others. So we're charging hard.
Getting an extended kind of shelf life on our list of Kramer is an important part of continuing the conventional rollout where a lot of the white space lies for us and our shelf stable liquid Kramer is an incredibly important tool as well.
On the shelf stable.
Those more conventional stores without sub $5 price point.
So that's all coming this year and we're just continuing to charge.
A little bit of a longer lifecycle with grocery.
Category review meetings now that.
Net you can then place your products on the shelf towards the end of the year. So we are really hoping for third.
Third and fourth quarter to get onto the shelves from that process.
And we're excited for it we've got we just put in as I mentioned earlier a world class team. We believe we have really now built out as of this month.
The dream team of brokers, who.
Specialized in each of the different channels are new sales directors for east and west that have a lifetime experience filling white space and we feel are really fit the values of the company and are going to be aggressive in that fashion and of course, our VP sales, Josh does an incredible job of restructuring getting us into a really strong position to sell into wholesale.
So we're very focused on it and excited about it but the online business is just exploding.
It's just an incredible best in class business. We believe we've got the strongest online platform in this industry period and.
With the team that we have in place thats driving it the kpis and the growth is even getting better. So it's extraordinary and it's very unique for this industry that we are.
We're really excited about it and we're not going to take our foot off the gas on the online business and so as fastest wholesale growth. We just still believe online is going to grow faster.
That's great I appreciate that Paul and then and then.
More on the online I guess it sounds like from from your comments, you're getting a really nice pick up from from the free shipping promotion in terms of new customers and it certainly sounds like <unk> been even more so the net added a whole lot of new subscription.
Can you talk a little bit about kind of the margin impact of having customers on that subscription model as opposed to just buying individually.
Both today I guess as long as you're offering free shipping and then if you kind of think to at some point in the future. If you were that you reinstate some type of a minimum purchase for free shipping like you had perhaps before the pandemic I mean, what is the profitability of a subscription customer compared to just getting <unk>.
More orders from from customers just on their own.
I'll talk to a couple of those points, but I will say.
When you when you get somebody on a subscription the lifetime value of that customer is incredible and we have very low churn so getting them on that program. They do get.
A slight discount.
To encourage them to get out and subscription that we've been doing a lot of work lately to really look at those subscriptions and we then condensing subscriptions we've been.
Talking about programs like Hey, cut your carbon footprint in half and we've got an 18 month shelf life from the <unk> seven getting every month, one day, a month or two bags every two months.
And to make some more efficiencies on the shipping side. So we're doing a lot of work to really make those efficient, but those are very profitable as some of our most profitable business that we have.
And I think you've covered it perfectly the only real difference is that now the subscriber will earn a discount and it comes in next year, but thats. The major differentiator is that correct.
That's terrific thanks very much.
And again as a reminder, in order to ask a question simply press Star one on your telephone keypad. Your next question will come from George Kelly of Roth Capital. Please go ahead.
Hey, everybody thanks for taking my questions.
So maybe just to start.
With that I am curious about the so the shelf stable liquid creamer, that's launching in the back half of this year.
When I think about that.
You launching that through your your own e-commerce, and Amazon and other.
Online channels.
Seems to me like that could be a huge T.
But.
I don't know if thats, a big product category online or I don't have a lot of kind of industry data behind that but could you help maybe just size.
How excited you are about that is that a big.
Potential product category.
It's a big potential project category for a couple of reasons, it's not just the online Amazon I'll talk on the second the real driver with US was to really fill the white space with conventional for that sub $5 price point, which is really important and many of those conventional stores to have.
And overall lower cost per our guests the powder product is actually a better value when you break it down on a per server basis, but the higher overall price point.
You are not looking at per serving.
<unk>, 999% this doesn't do as well and more kind of conscious minded value minded I guess conventional stores. So it opens up tens of thousands of doors for us to get into.
With a product and so we've really initially started for that having said that.
Liquid Cramer can do very well on Amazon Amazon of course is so efficient with their shipping methods that we're really really excited about that channel for the product and also for our day to see.
What we have found on the stores that are carrying both.
Liquid Kramer and our shelf stable Kramer is we haven't been seeing any sort of cannibalization to date, we've got still strong shelf philosophies in the stores for both products in both categories. So.
We kind of viewed as a different consumer.
But we are excited and it's going to definitely move the needle and so we were telling people.
We're telling you guys ended the year and we're now really making a real concerted effort to accelerate that and try and get that done as quickly as we possibly can this year.
There's a few challenges we're getting some new things here. So we can't say exactly when and how it's going to happen is.
Most of the shelf stable products have ingredients in those that.
We're not good with and when you go to the co Packers to manufacture this product thats the automatic Oh, yeah, let's just put this in this in there.
We're not we're not good with that but we have done pilots that proved out our formula does work and we're now working towards commercializing that product and we're going to move as quickly as we possibly can so we'll certainly give you updates every quarter as far as how we're progressing.
Okay, Great. That's helpful and then maybe shifting a bit different topic.
With your online business.
What is it.
Have you seen much change in places that have opened up maybe I'm talking about COVID-19 kind of reopening sooner than others I'm thinking some states. In particular are you seeing much of a change in the growth rate or any of the kind of repeat buying or any of that.
Those.
Those things in those various states.
No no we're not we're not seeing any sort of downside in the online business. We believe that people are still gravitating towards online and the people that move they're going to stay there and we're actually still seeing growth in the whole online category.
<unk> been prudent kpis. So we really haven't seen any any of that sort of changed if there is a shift of course that's value with this business is nominal channel platform will be will be where they are where they are so they want to buy in a grocery store will be there that theyre going to go back to the office and started drinking coffee there we've got our foodservice program in play.
We are making moves to sort of bolster that side of the business, but we don't think the online business going away.
We've just now because of our position.
The strength that we have Howard capitalized, we're now able to really start to reach out and the top of the funnel and do some incredible activations such as.
The U S ski and snowboard team among a host of other really strong top of the funnel activations that are really really looking like strong performers, bringing more people into the funnel.
And we just don't see into it we still think we're just scratching the surface and of course when you look at.
The continuing sort of broadening of the platform.
Side of just coffee creamers into healthy snack products and other categories that we're now in development.
It's just going to continue we don't see an end to.
That's excellent and then maybe last question from me.
Okay.
As a function of coffees that you've launched.
Hi.
Okay.
The comments in your prepared remarks, you seem really really amped up about that whole category in general.
So I guess the question is could that be do you think longer term that could be as big as Kramer for you. I mean is that sort of a five year growth pass through longer can you help sort of size again.
And opportunity.
Yes, I mean, we believe believe it is I mean, just look at the size of the coffee.
Cam.
That's an indicator there is there is a massive opportunity here.
<unk>.
We're in the belief that.
People are drinking talking basically our theory with all of our products.
We want to make people healthier, but we're not telling them hey, you need to go to the gym and work out for four hours were saying Youre drinking coffee just strength. This coffee instead do the same thing that you're doing to make it easy and we think this is.
A really perfect product that paint that sort of scenario so.
Lot of coffee drinkers in the U S.
Majority of adults.
Now, we're saying do this and it's going to give you something additional and so we're we're excited about the category and we're innovating and we're coming up with.
New products are now more releases to give people choices of the things that they feel they need what type of boosting your body they need what type of support they need and they can get it is true drinking your coffee and so to me. It's a no brainer. This is going to be a big category and we think we're really well positioned as one of the first movers here too.
Innovate to tie in our functional sort of benefits that we do with all of our products bring it together and then deliver to the marketplace first online and then through the wholesale channel is that we're building because we will have the infrastructure in place to do it. So we think we can we can we can be a mover and I don't know how much that market, we're going to cash nobody knows.
But we're going to we're going to give it a go.
Great. Thank you.
You bet.
If you have any additional questions. Please press star one on your telephone keypad. Your next question will come from Bobby Burleson with Canaccord. Please go ahead.
Hey, guys I'm back.
You mentioned volume.
My kids are not behaving so there might be some noise in the background, but.
Just curious.
You're talking about maybe having to revise that 20000 doors goal, maybe higher how much of the confidence is coming from that shelf stable liquid creamer opportunity is that a big part of it.
Completely news.
Areas of wholesale that you guys can access.
And do those doors, you mentioned 10000 plus stores.
Did those come in big chunks.
Given the price point.
Yes, I mean, youre absolutely right, that's really the point of this product and as we're starting to understand these markets. We of course came out strong in natural and we've got a decent HCV and now we're starting to set our sights on these conventional channels. We're not done with natural we've got a lot of new skus to continue to add across the aisles of the grocery store.
And natural but conventional is still the larger number of doors and we're looking at places like drug and we're seeing we're seeing just how strong our refrigerated liquid creamers performing the shelf turns with shell philosophy that consumer adoption people love It and if we can get this sort of high quality <unk>.
<unk> into a low cost format lower cost format into conventional shelf stable stores. We just feel strongly we can we can really start to penetrate and then once we do that.
We turn to innovate new products, we're building certain products from the ground up knowing that that's really going to be the destination will still of course test them online, but that the lower the lower price point better for you products that we think will do well in conventional will continue to fall. So that we can then also add additional skus that are in the future.
And the functional coffee being one of them as well.
No.
We are excited.
We're still thinking that 20000 number but when you start to look at the natural stores. If you look at the convention that were pursuing and you look at the opportunity in drug there's a much bigger price probably closer to 40% and 45000 total that we'd like to be able to access more often we think we can just to renew great product innovation.
Excellent and then just on the online business curious.
What the.
Mix of direct.
Online was there.
Clearly faster than overall online for Ya.
I'm sorry, Bob.
Broke up just one second of can you just ask the question again.
Oh, yes, sorry, just curious what the mix of direct growth of the total online is growing faster than total long oriented.
Driving a bigger share of total online.
Right.
Yes, definitely yes, yes. So if we look at 2019 to 2020 and DTC was up 143% Amazon was up 40% and some of that if corn is very intentional we want the consumers to be on our platform every time that we can get in there that's where we create the greatest long term value possible from the brand where we have the ability to continue to India.
For them educate them cross sell to them and so that is that is the goal, but we are seeing that play out as of yet.
And it seems like on loan 61% of sales.
Is there any reason why this couldnt get to 70%.
I know that you don't want to artificially.
Yes.
Allocate.
Revenue from channels, what's happened naturally from what you see I mean could this get north of 70%.
Well it probably could it is it.
Strong, but at the same time, we are really doing well in wholesale as we mentioned, we just rolled out in the target and Harris Teeter and a bunch of other chains.
This month actually so wholesale is going to be continuing to grow, especially as we.
In the next few months kind of continuing to fix the share.
Shelf life issues with refrigerated creamer that just means more wholesale rollouts.
The rest of the year so yes.
Online will continue to grow and it's going to grow aggressively, but we believe we're going to get this wholesale growth to kind of probably keep pace for a while.
Okay. Thanks, guys, sorry for all the questions I appreciate all the answers. So we are here for if you have any more far away.
Yeah.
And if there are any additional questions. Please press star one on your telephone keypad.
There are no further questions at this time I will now turn the call back over to Mr. Hajj for closing remarks.
Thank you.
So yes. Thanks, everybody. We appreciate your support and sharing our long term vision.
Really we just couldn't be more excited about where we are today, we have the authentic and trusted brands.
The average strengthening management team that's prepared to scale. This company the omni channel distribution network with what we believe is the best E Com platform the business.
We have the marketing expertise and the capital to make very superfood, the strongest and fastest growing platform in the entire food and beverage industry with a realistic goal of achieving $1 billion revenues.
We're a very young company, we don't manage quarter to quarter. So encourage investors to look at the long term. So we firmly believe we will meet or exceed our annual goals. So thank you everybody for your support and sharing your long term vision and.
We're happy to talk.
Thank you.
This concludes today's conference call since per ton you may now disconnect.
Okay.
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