Q2 2021 Laird Superfood Inc Earnings Call
Thank you for standing by and welcome to the second quarter of 2021 earnings conference call and webcast for Baird Superfood, Inc. I would now like to turn the call over to Mr. Reid Anderson of ICR to begin.
Yeah.
Thank you good afternoon, and welcome to alert Super Foods second quarter 2021 earnings conference call and webcast on today's call are Paul Hajj, Chief Executive Officer, Valerie Els, Chief Financial Officer, and Scott Maguire, Chief operating officer by now everyone should have access.
As to the Companys second quarter earnings press release filed today after market close. This is available on the Investor Relations section of layers Super Foods website at Www Dot layered super food Dot com before we begin. Please note that all 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 management's current expectations and beliefs and 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 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 layered superfood.
Thank you Reed Hello, Hi, everybody, it's a pleasure to be speaking with you in regards to your second quarter before we begin a discussion of second quarter results I'd like to start by taking a few minutes to address the upcoming leadership transition that was announced concurrent with the earnings release. This afternoon.
After careful consideration of decided now is appropriate time for the company My family and me for me to start transitioning to a nonexecutive role.
And I will be stepping down as president and CEO once they've identified my successor.
After the transition I will remain on the board of directors and remain a major shareholder.
Me closely involved in realizing our long term vision for the company.
Most of you know my deep unwavering passion and commitment to making large seafood successful for everyone involved.
Shareholders employees friends.
Including my close friends and co founders layered and Gabby.
My family in the town of Sisters, Oregon, where we become an integral part of the local economy.
It's been a privilege to lead this company for the past six years and I'm extremely proud of all we've accomplished together in such a short period of time.
By bolstering the expertise of our team and only enhances our competitive position and makes the long term potential even more compelling in my view.
Okay. So now I'll start with a brief summary of who we are and what we view as well as provide a review of Q2 highlights our key growth drivers I'll, then turn the call over to Scott Maguire, Our Chief operating officer, and Valerie Els, Our Chief Financial Officer, leaving plenty of time for Q&A.
Third superfuse emission driven high growth.
Plant based natural food manufacturer positioned to be a leader among the better for you brands in the $759 billion grocery industry.
Our business is omnichannel, but with a best in class Native online platform.
At <unk>, we believe that better food leads to a better world because when people are healthier and feel good they.
They make better decisions.
Our products provide a sustained energy nutrition and hydration that we need to perform from setting up the sun down as part of our daily ritual.
In addition to delivering great taste, our products are convenient easy to use and affordable incorporating sustainable and ethical practices through all phases of our supply chain from farm to Fork.
Now onto second quarter results.
Sales increased 64% to $9.2 million driven by continued momentum in our DTC business. A strong result in grocery and a solid contribution from our newly acquired <unk>.
Online sales were up 57% or $2.1 million, reflecting 94% growth in DTC year over year.
Despite the prior year period, including a meaningful consumer shift to online purchasing in the high to Covid.
As you know we are native digital and our strength in this channel continued to prove itself was 63% of total net sales in the second quarter attributable to this best in class online platform.
Key metrics in our online business remained very positive underscoring the competitive strength of our model.
The conversion rate remains two times the CPG industry average over two thirds of our D to C business is recurring.
Items on subscription increased 77% and unique active subscribers increased 57% from the year ago period.
Retention metrics continued climb with a 15% improvement from Q2 of 2020 for all of our company's history, and we have seen a 20% improvement in second order rate and our 2020 cohort reorder rate compared to the 2019 cohort.
Finally average order value or <unk> continued improved as well rising 30% year over year now on par with their pre free shipping.
<unk>.
Results in wholesale illustrate the growing strength and solid base, we continue to build in our grocery business in the second quarter wholesale in total increased 77% or $1.4 million. Despite our club business remaining level.
Despite the lack of industry trade shows, which have historically been a key source of opportunity accretion for our company.
Club sales are lumpy.
And we're seeing strong momentum leading into Q3.
<unk> sales increased 271% on a year over year basis and accounted for approximately 60% of the dollar increase in wholesale revenues.
In addition to strong demand seen both product turns on shelf and need order wins from the prior year period. We also saw continued improvement spoilsman waste for refrigerated product, reducing D. C spoiled by over 80% since the prior year and improving fill rates to the mid ninety's in late Q2.
Which is dramatically above the 30% to 60% fill rates, we experienced prior to taking over logistics for that product.
New door ads for refrigerated liquid Kramer in the second quarter included raising Yogurts and we are now in approximately 2600 total doors from this product line.
Equally important and new doors was the placement of additional flavors in your existing doors, such as our tumor flavor and 340 specifications.
Improving on our points of distribution, expanding our shelf presence and prominence.
And finally and not to be ever looked into.
With the continued growth of our shelf stable business, excluding clubs fill their shelves civil business saw growth of 42% versus last year.
<unk> expanded days for both coffee products in powder Creamers.
From a mix standpoint, we experienced nice growth across all categories during the second quarter Creamers.
Creamers grew 27% on a year over year basis predominantly due to gains in refrigerated with consumers.
Hydration and beverage enhancing supplements increased 54%.
Led by a prebiotic daily Greens and a strong contribution from our renew rest and recover product may.
Coffee tea Hot chocolate increased 36% led by one of our foundational products into feel that this was followed closely by similar gains in our new functional copies as well as regular coffee and.
And finally harvest snacks and other food items, our newest category drove $1.3 million in incremental sales.
Our harvest snacks and other food items include our appealing nuts and harvest States. Our recently launched Brownie cookie baking mixes and of course, our newly acquired picky buyer product lines bars, oatmeal and granola.
We view this new categories performance is strong evidence that our brand platform approach continues to take hold in our existing customers daily ritual as well as introducing new customers to the brand.
Regarding the integration of picky buyers, we were pleased to everything remains on track we saw strong sales of the new products in second quarter, and we continue to make progress in our rebranding efforts and systems integrations.
Of course learning new lessons as we go which we plan to implement and potential future acquisitions, but overall at this point, we're very happy with the progress.
Despite the significant progress across most topline drivers and despite delivering on our commitment to achieve shelf life extensions and waste reductions for our refrigerated liquid creamer, we did encountered a setback related to a shelf stable liquid creamer.
Which we viewed as an important revenue driver for the second half of 2021.
At the very end of June early July we received information from a co packer that due to lack of industry capacity and strong demand from their existing customers. It would not be able to deliver a product in September as planned.
I would now be pushed back until 2022.
We were also informed that the co packer would require us to modify our formula to include ingredients are inconsistent with our values compromising the authenticity and positioning of the word ship Street brand.
Accordingly, it will see a delay in the launch of a shelf stable liquid creamer until the co packer capacity becomes available.
In addition, we have pivoted to alternate flavor profiles for.
For the formulations still meet our high standards.
Had planned to move forward with our coconut based cream at first but given the new information, we will be pushing forward with our Mac based creamer as her first shelf civil launch.
We have seen really solid performance since launching our powdered creamer in this high growth category, including in new customer acquisition and we also believe we can produce this product more easily towards standards.
We're still very optimistic that the shelf stable Kramer will be a strong growth driver for us both in wholesale and ecommerce.
Unfortunately, with the facts, we have today it will most likely be delayed until 2022.
While the delay in shelf stable Kramer is frustrating remaining true to our mission and values is critical and maintain integrity of our brand and the strong barriers to entry that affords along with driving long term value for all our stakeholders.
On that note a quick update on our ESG initiatives.
The last time, we discussed our ESG initiatives, we highlighted three incredibly exciting cause promises.
Together, we committed to donating $1.5 million meals to feeding America.
The impact of our online sales by building a carbon neutral last mile of Eaton projects and first environment.
And supporting our critical care workers and first responders as they keep us safe through this pandemic with I D.
Regarding feeding America, we're on track with our pledge of donating one and a half million Nielsen Americans facing food insecurity with over 500000 meals currently on deck.
Regarding Eden projects the process of planning 100000, mangrove trees across 900 hectares in Kenya's began hell.
Healthiest shorter carbon neutral last mile golf for online orders.
And with I mean, we recently completed the first of our <unk> knee activations by giving over 3000 everyday hero bundles at no charge to the brave critical care workers and first responders are keeping us safe.
And effort financially supported by your partner Danone.
Beyond these larger cost projects, our internal sustainability team has been constantly working on many smart ESG efforts, which possibly affect every aspect of our company.
Efforts are quarter, our company's mission values and something of which we are very proud.
To summarize in Q2, despite some challenges we again delivered strong growth across multiple channels.
And our portfolio with the introduction of new innovative products.
Further expanded our customer base and began to integrate picky into the organization.
Our brand platform approach continues to demonstrate its power.
Although that platform now covers multiple large Tam. We believe we are barely scratching the surface of what Larry Superfoods is capable of long term.
With that I'll turn the call over to Scott to talk about operations.
Thanks, Paul.
Our top priorities remain people's safety, keeping customers orders filled and positioning ourselves to handle greater complexity and greater revenues.
Without taking an eye off of those we made great strides in our picky integration and we executed flawlessly on nine new products.
Have a great process for getting all this done and as I've shared last couple of quarters before ends our approach manufacture them ourselves make them more efficiently move it smarter and faster and my company I will briefly touch on each of those manufacture more ourselves we do this to control cost and quality and to create flexibility to respond to our.
<unk> growth.
And ever changing supply chains and I'm. So proud of every person on our team who rally to produce in house six new Skus. This quarter, that's what we call gone vertical and we went vertical and other areas to which I will mention in a moment.
A more efficiently while focusing on several key automation projects for the third and fourth quarters, we continue to implement inflation offsets through continuous improvement projects.
Additionally, with so many companies struggling with raw materials and transportation our year long strategy to build inventories during pandemic uncertainties has paid off and positioned us well and finished good and raw materials safety stocks for the second quarter in a row. This was demonstrated by achieving nearly perfect customer order compliance.
Moving smarter and faster the tactics, we spoke to the first quarter led to a 33% extension in our fresh liquid shelf life and as you would expect we reduced manufacturing waste and spoilage by 50%.
Additionally, in May we implemented a form of going vertical in the balance of our liquid distribution logistics and took over delivery to the distribution centers. This nearly eliminated store level out of stocks aligning to our goal of having every consumer find our product when they want it due.
Due to its success, we are aggressively pursuing additional vertical moves in other distribution channels, which we anticipate will create benefits in our P&L late Q3 or early Q4.
In terms of direct to consumer and free shipping not only did we continue on our mission of attracting new customers, but we raised our average order value again, giving us leverage against our personal costs going forward. We are optimistic about additional subscription consolidations as well as the early returns on how picky products mix with various personal configure.
<unk>.
Finally, we agreed to a partnership with two industry leaders and order fulfillment, who will implement our next level execution software for our vertically integrated direct to consumer business. These will both be part of our new on campus customer fulfillment center due to open in the fourth quarter and then my company. Finally, some day one we have always been.
Authenticity values, our culture, and our people and of course growth. Our people are one of our greatest assets and we want everyone to say and truly believe this is my company and that light not only is the acquisition of picky exciting from emission product and quality standpoint, it's also exciting from the talent they brought to the table.
We are really to have a picky team, saying this is my company.
Now, let me turn the call over to Valerie <unk> our CFO.
Thanks, Scott growth in online wholesale channel are key factors in our second quarter performance driving 64% year over year increase in net sales $9.2 million.
As Paul highlighted metrics and our DTC business remains very strong and continue to compare very favorably to peer and related companies.
94% growth.
Both core and new products. We are very pleased with our continued improvement in already strong retention description and ANZ performance among others.
In wholesale we continue to broaden our customer base and are seeing continued taxane pressuring our brand and quality are key factors, helping to grow our door count and points of distribution in grocery. It's also important to note that we've made significant progress improving results within existing customers.
Sample philosophies and our liquid Skus halston have improved significantly over the past several months nearly doubling since the beginning of the year.
At the same time, we have greatly reduced our liquid cleaner related chargeback stemming from shelf life issues at both achieving an extended shelf life and significant operational and logistical improvements late in the second quarter.
Gross margin improved 30 basis points on a year over year basis to 23, 9%.
<unk> year over year improvement in <unk>.
Market, including an optimized DTC shipping expense and reduced liquid claim related charge back from distribution centers, partially offset by higher wholesale shipping expense and elevated manufacturing costs, given the demand physical cleaner.
Sorry, there is a margin benefit from nonrecurring of Q2.2020 are shouldn't see raw materials, largely offset I sell through of higher cost inventory with elevated fixed labor cost as a primary factor.
Our team ahead of scale.
On a sequential basis Q2 gross margin was down 120 basis points, primarily reflecting elevated wholesale trading.
While the margin benefit of an optimized DTC shipping expense and reduced liquids payment related charge backs or largely offset by the sell through higher cost inventory.
Operating expenses were $8.5 million for the second quarter or 92% net sales can take a $4.3 million or 77% of net sales in the same period last year prior to becoming a public company.
General and administrative costs represented 45% of net sales in the current quarter compared to 33% a year prior but over 70% of the incremental expenses being attributable to public company.
Noncash stock based compensation for example accounted for 35% of the increase in the comparable prior year period.
The second quarter further included deal related costs and accretion of our therapy for prepaid inventory both expected to be nonrecurring.
On a sequential basis G&A costs remained relatively stable, but improved slightly as a percent of sales from 49% in Q1 to 45% in Q2 and 41% excluding the previously mentioned dealer inventory with their items.
Sales and marketing costs represented 43% of net sales in the second quarter flat compared to four 8% in the year ago period and down slightly from the sequential quarter exports.
We expect to leverage our operating expenses as our business significantly in the future.
With over $43 million at the cash and investments and no debt our balance sheet remains strong and provides sufficient capital to support our growth initiatives.
The change in cash from Q1 to Q2 reflects normal operating activity plus the net use of approximately $10 million of cash to complete the acquisition of <unk> in early may.
Related to our full year 2021 outlook when establishing our guidance earlier. This year. We noted that the achievement of topline revenue targets would be contingent on successful outcomes of the following priority refrigerated liquid creamer optimization in the first half of the year as well as launching or shelf stable liquid cleaner option in the second half of 2021.
Kenny and innovative new product introductions with continued strong online performance.
The addition of wholesale doors, specifically, some large team utilizing our liquid schemer as an entry point for these opportunities.
And continuing to earn more product placement on shelf at larger partners, increasing the value of each one of those stores, while also fostering increased brand awareness.
I'll discuss the progress on some of these initiatives in his remarks, I will briefly revisit them again now.
In terms of our refrigerated liquid creamer optimization in the first half of the year as Paul noted we are there.
Very pleased to have executed on this priority.
Late in the second quarter, we achieved a 60 day shelf life, which opens our refrigerated product uptake expanded features store placement and heartfelt and will continue to help us greatly reduced our files from eight.
Turning to on shelf are strong and continue to improve and we continue to be optimistic on this product the ability to drive growth in grocery moving forward. If our team to continue to got logistical improvements for future margin benefit.
In terms of new product introductions, the second quarter saw a significant number of new product launches and we are excited to continue telling our story to consumers for the second half of the year to continue driving trial by new and existing customers and to encourage inclusion into the consumers' daily ritual.
In terms of earning more product placement on shelf at existing partners and winning new wholesale direct but we have had some meaningful wins this year.
Based on the target Harris Teeter wake firms eight of Roes in the U S as well as <unk> in Canada.
Also expanded item placements and Cvs health food.
They play rather than civilians and <unk> just to name a few and we expect to have some continued wins in the second half of 'twenty 'twenty. One. However, we have been informed by various retailers that they have canceled their category reviews, and reset which were previously planned for Q3 and Q4 and this will delay some of the expected wins and growth opportunity in wholesale.
Up until 2020 Kim.
We remain confident in earning additional placements the timing some of it will be late and anticipated.
And finally, launching or shelf stable liquid tumor option in the second half of 2021.
As Paul noted in his comments, we have been informed by our co Packers that are planned production timeline has been delayed until 2022.
We are still very optimistic about this product, but we now know that the timing and growth stemming from that launch will be later than initially anticipated.
As a result of this new information primarily related to the delayed co packer availability for the shelf stable liquid.
We are updating our annual guidance, we are confident in our ability to execute on this priority, but given the timing delays. We are now anticipating net sales for full year 2021 to be between 38 and $40 million, reflecting a 46% to 54% growth over 2020.
Further we anticipate gross margin of 25% to 28% for the full year.
Our path to continued gross margin improvement remains the same continue to optimize the balance of free shipping and increase in shipping expenses for our DTC business.
Enhance our refrigerated in the consumer business, including driving more volume and making further logistical and operational improvement.
Introduced the shelf stable liquid cleaner to optimize channel margin, Nick and maximize the fixed cost leverage available to us via our vertical integration risk scale.
We expect continued progress on these initiatives keep us on the path toward our long term goal.
Related to 2022, given the uncertainty in the timing of shelf stable that the sealer and a material growth impact we expect that product to have on our top line once released as well as continued evaluation of other 2022 growth drivers, we will not be providing 2020 to expectations. At this time. However, as soon as we have more completely reliable.
Information for our production and released eight finished shelf stable liquid imminently, we will share that with you all and we will provide our 2020 to annual guidance during our year end call in March.
What we can commit to you today is that we remain very well positioned in the markets. We operate in with plant based options continuing to serve as growth drivers across category, while also taking share.
More specifically to arbitrage our direct online platform remains an exceptional performer and a strong growth driver and we did not anticipate that could change.
Our grocery business continues to build an expanding base of growth in our overall wholesale run rates within a very long runway.
Our club business is stable with historical run rates and showing solid momentum in the early third quarter, we're presuming additional offerings and partners in that channel to drive further growth.
A variety of recent product launches showing solid initial results as well as some exciting launches remaining the balance of the year, we remain confident in our ability to drive solid growth for years to come across the various categories.
Paul I'll pass back to you.
Thanks, everybody for your time today.
As you can see from our recent growth layered superfood remains on track to become a leading player in the food and beverage industry as we continue leveraging our powerful omni channel platform. Thanks for your support and we are now ready to take your questions.
Operator.
Thank you to ask a question you will need to press Star then the number one on your telephone.
Star one on your telephone.
We have our first question from the line of Bobby Burleson from Canaccord. Your line is now open.
Okay.
And best wishes pulse in your next endeavor.
So a couple of questions here on the guidance obviously coming in.
Net income.
<unk> gross margin guidance.
Can you just clarify.
No.
These unforeseen changes impacted the gross margin guidance in particular or is it.
Simply just a question of.
Less fall through.
Obviously not going to be.
Assuming the same volumes.
The internal production.
Back to Europe.
Thats the primary driver or was there anything else at work there.
No I think primarily what we're talking about here is obviously, the lower top line and with the shelf stable the disclaimer, but that was it.
Products that we were going to be utilizing on the E. Com side of the house as well liquidity carried a higher margin profile. So that had a negative impact and then the second piece of that is.
The second piece of the guidance for that is just a slightly slower Costco and club business than we were originally anticipating great momentum going into the third quarter, but we can't really make up what we got what we thought slower in the first half. So I would say, it's really a combination of those two things Costco is a great business for us at still very healthy don't get me wrong, but it's the margin profile that we want.
Well, it's inefficient product to make and it moves the needle pretty dramatically on our top line. So nothing else really going on outside of that there are some really exciting initiatives coming up in the second half of the year that we're confident we're still going to make progress just not to the same extent.
That we were previously helping partner.
And then those anticipated resets.
No.
<unk> is that.
For specifically for you or is that generally for.
<unk>.
Partners.
Yeah.
Yes.
Generally I think with the year Covid Lauder alloy groceries, we've been talking to them.
Decided to postpone a lot of their category resets until next year.
So some of the larger partners that we're expecting to play with this year have done that and we're hearing about more and more through the grapevine of just changes happening at that level. So nothing specific to us.
Okay.
Then just one last quick one.
Curious.
In terms of.
The competitive landscape yeah. There is some large players that are building a nice balance sheets here and going after.
Plant based creamers among other categories curious.
How you see the evolving competitive landscape, there and how the Mac.
Nick.
Demand creator.
<unk> positioned versus some of the other oat based creamers.
Yes, I mean.
Our product remains unique in the marketplace and Thats. The one one thing with our company and the innovation profile in our Creamers are truly clean label a lot of.
There may be a lot of plant based creamers out there, but there's definitely stands as a different product functional ingredients.
Clean label.
And we've been innovating and quite frankly that has led to some of the delays as we're just not willing to.
On the shelf stable liquid to compromise and Ed.
So the old Mac itself has been a great platform, we've been seeing recently with like Pumpkin Spice launch revealed map kit has been actually outperforming that goes in that base.
You see a lot of <unk> out there you see macadamia nut.
Our product has.
Great Mouthfeel, great flavor, combining the Mac the healthy fats from the Magna, having avocado oil and things like that so it's a great product and definitely differentiated still as things like functional mushrooms with Hoffman calcified CLG with 17 minerals.
So we're.
We're very optimistic we're seeing the consumer adoption of our <unk>.
Fresh packaged liquid creamer, and it's just doing incredibly well shelf losses are still growing and.
We think we're well positioned to play in this space and can be very competitive and of course. This is one component of our overall brand platform that we're building as well.
Okay. Thanks, guys.
These filings.
Thank you. Our next question comes from the line of Alex Fuhrman from Craig Hallum Capital. Your line is now open.
Hey, guys. Thanks for taking my question and Paul Congratulations on taking layered from from such a small company and growing it into what it is today getting the company public wish you all the best in whatever you have in store for yourself I did want to ask a little bit about the.
The guidance for the year, just by kind of rough math here. If you think about how well the online business has been growing at and it sounds like there's really no reason to think that that business is going to continue to perform really well rough math would kind of.
The wholesale channel for the back half of the year. It is going to be kind of flattish to where it was.
Last year and in the first half of the year. So can you kind of unpack that a little bit obviously, theres a lot of things kind of kind of churning beneath the surface there.
How much of the lower guidance would you say is the delay of the shelf stable liquid product and versus how much might be some of the choppiness you alluded to in the club channel or anything else that might be going on there.
Yeah sure so in terms of the guidance.
The majority of the <unk> related to the shelf staple liquids came here and then I would say the remainder of smaller question would be related to the club business, but.
The biggest driver in the second half Youre right on there it will remain E com and more specifically DTC because of that we will see the growth spread across multiple product categories excuse me category.
In DTC, we just have that much larger customer base than we did a year ago, even acquire the same with the portfolio. We have a lot more product to utilize to drive that growth and Q3 Q4, I think Paul just mentioned one of them. We have again, Kent blended product coming out both Mac pumpkin Spice is a great. One that is already showing amazing new customer acquisition.
You mentioned.
Stable liquid femur delay and those grocery resets that we mentioned.
It will minimize the growth that we were originally anticipating but we still expect to see some growth there.
Pad and we will continue to have steady smaller doran and we're improving the shelf philosophies in that business.
We fully expect our refrigerated liquid commit to continue to grow its dollars contribution it's doing really well, so far but really happy with the progress we've made there.
I'd say, the one thing that could always that.
And the cost some lumpiness.
If cosco or club in general performed better than we're taking credit for and we are expecting continued locations across various regions. We know we're going to have a decent third quarter. Then so far already but we are being conservative with the level of placements nowhere, we're taking credit for in the fourth quarter. It does it's a great time for our product on shelf.
<unk> with their new year, New you kind of movement. They do every year, but we are not being overly bullish with the assumed placement at that point in time.
Thanks, Bill that that makes a lot of sense and then.
Just thinking about liquid in general I mean, it seems like.
Hi.
Over the past year, there have been a number of issues with the co Packers and and the shelf life and things like that.
And yet the demand clearly seem to be there from from your retail partners and from your customers and I'm sure you must have looked at potentially bringing that manufacturing in house can you talk a little bit about what.
What you've seen out there how much that might cost if you were to.
Does that get around co packers completely and bring that product development in house.
Yes, I mean, that's something that we're constantly looking at just as you know are sort of I know, we want to get that leverage and vertical integrate wherever we can.
We're looking at all the options. There is there is just of course, bringing it directly in house manufacturing cells, there's partnerships that can be had.
There is there.
And then I will say on the co packing is.
We've been a public company so people got to see the whole development profit this product, but we are making progress I know it may not seem like that.
The refrigerated flicking Kramer.
Over the course of the year, we've now got it to a great shelf life. We've got a really unique product that's very unique in the marketplace, that's getting great traction that people really love.
Solve those problems, we've got rid of the waste issues that we've got the distribution logistics figured out.
We've got a really strong partner co packer on that side. So we're doing great. There and we are taking those lessons learned from that and we're now going to apply that to the shelf stable aspect of it is a bit of a different process. It's a different partner, but we've now learned the best way to move the product the best way to make it.
And.
We're going to get there we're going to get there just as a public company versus a private company and really get to see see the whole process and so that's what everybody has been getting this year in the past year, which is a bit unique.
We're confident we're going to get there.
Feeling like we're making great progress and then as far as that vertical integration. There is still a lot of unknowns, we need to give us some more time and we need to look at all the options like I said via partnerships vertical integration and co Packers.
Yeah.
Great that's really helpful. Thanks, Paul.
Thank you as a reminder to ask a question you will need to press Star then the number one on your telephone.
Our next question comes from the line of George Kelly from Roth Capital Partners. Your line is now open.
Hey, everybody thanks for taking my questions.
So just a few.
Start with the key bars.
Expectation for the full year, if I remember correctly when you acquired the brand it was I think $4 million of.
The expected contribution for this year is that still the expectation.
Yes, no changes there and I think the integration is going smoothly. It is going as planned they made a very solid contribution in the first two months. Following the acquisition. So very much on track with what we expected no change to the previous estimate on on that front and I would say very early but we are committed to is our priority. There is the seamless integration for the consumer.
And the subscription perspective, really making sure that we maximize the retention of that group.
And so far that's proving to be true.
And also coming out where we're really excited to get the entire line of picky products on our website in the coming months and also to start will be telling those stories, we haven't had a S. R.
<unk> had our major marketing and storytelling launch, but all of that platform. Yet. So we're excited to take it to start with that and then some early wins coming in on the wholesale side too we have some direct wholesale accounts that we're seeing progress with and we're getting ready to go out and present a lot of the bigger grocery buyers as well in the coming quarters. So lots are still to come.
But so far really solid progress.
Okay. Okay, and then next question on a different segment that coffee.
Business didn't hear a whole lot of commentary in your prepared remarks, just about the coffee opportunity. So just trying to gauge.
What is the opportunity I guess.
Do you think it will take longer to start to show more growth in that category or what has been your learnings I guess.
And that business now.
We're excited for the functional copy and as I said before I think it is going to be a huge portion of the coffee market next five years. So we're keep.
Keep in mind, we just got our wholesale packaging.
It was really in Q2, when we had that in hand to start selling so we are now selling into some conventional channels some natural channels.
And what we're excited about the coffee is.
It's one of the fee products that really allows us to expand into that larger conventional space.
A lot of our products today.
They're more on the natural side, you kind of have access is for a 5000 doors well the excitement around the liquid creamer and why we are working so hard to do that to focus on that product.
Is that that really serves to open up those 40000 conventional doors that sub $5 price point, its really conventional year product. The coffee also fits into that mold.
We've got the price point down now for a great organic coffee with functional benefits at 12.99, a bag that's right in line with.
Quality kind of conventional mass market pricing, which gives us the opportunity to open doors those those larger numbers of doors and then of course the third item that we're excited about is picky buyers has just talked about the.
The reason, we went down that path as we can now develop.
Our mass market bar for $1.99 that gives us that third piece next year to really focus on opening those larger kind of conventional doors to get to that broader base goal. So it sort of as part of our part a concerted strategy to have the package of.
<unk> offerings for that larger conventional opportunity.
Okay. That's helpful. And then last question for me is just modeling.
What was the breakdown within the creamer business, what was the breakdown between powdered and liquid and Thats all I had thank you.
Yes, so in the second quarter liquidity the growth sales were just shy of $1.2 million and then the remainder of that obviously would be yourself stable business, but really really nice progress on the liquid side and a lot more to come there we anticipate.
Okay.
Thank you and now I will turn the call back to <unk> for closing remarks.
Alright, thanks, everybody.
I appreciate your time and.
I'm still going to be a highly active board member.
One board member Elysium area and excited for the future of the company I'm, a big shareholder and.
We've.
We're really bullish about the future of this company. We think there is an incredible opportunity long term.
And.
Thanks for your support.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
Thank you.
Okay.
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