Basically with what Quest Nutrition has been able to accomplish, competitors believe "it's basically cheating" at this point. In this latest episode, I'll utilize the Q2 2024 Simply Good Foods Company (NASDAQ: SMPL) earnings report, earnings call, and supplemental presentations that were filed on 4/4/2024 as the backdrop to provide broad nutritional snacking market insights. In fiscal Q2 2024, both Atkins Nutritionals (aka the Atkins diet) and Quest Nutrition performed well against the categorical competitors in tracked channel retail takeaway, with Quest Nutrition specifically having strong YoY growth at 13.1%. What's at the heart of the Quest Nutrition success? Quest Nutrition is still known for the original Quest Bar. That means the company needs the bar business to be healthy for any of this innovation risk to make sense. Here’s the good news…the core bar business is growing. In fact, this year it had tracked channel retail takeaway growth of 6%. Additionally, Quest Nutrition has proven it's one of the few brands that can successfully extend across multiple product forms...and its customer base expects them to come into an indulgent snacking category and flip it into great tasting (high protein, low sugar) offerings. The snacks segment of Quest Nutrition, which now accounts for almost half of all retail sales, saw retail takeaway growth increase 21%. But if we take this one layer deeper…the salty side of the Quest snacks segment had quarterly retail takeaway growth of about 40%. Quest chips now make up just over 20% of the total Quest Nutrition revenue and provides around 30% of new users to the brand. Salty snacks are where I’d argue the most excitement lies, but it seems the brand believes (at least right now) there’s more low-hanging fruit within sweet snacks. I say that because it was recently announced that Quest would launch a new bake shop platform for the fall of 2024. The offerings will start with high protein, low sugar, and great tasting muffins and a brownie. The company believes this new platform will bring new consumers to the active nutrition category and further expand usage occasions for the Quest Nutrition brand. Additionally, Quest Nutrition will prioritize its recently revamped RTD protein beverages more and even extend the packaged liquids form factor into protein iced coffee. These product innovations will be underpinned by a comprehensive marketing plan as part of the “Its Basically Cheating” advertising campaign with actor Kumal Nanjiani. This is another big step forward for Quest Nutrition…that will reach billion-dollar retail sales status by the end of this year. Finally, I run through what's causing the weak brand performance at Atkins Nutritionals and explain actions the company is taking to change it…especially against the backdrop of GLP-1 weight loss solutions. In my opinion, you’re going to see weight management brands like Atkins (and others) get repositioned on the right side of GLP-1 second-order effects through both product innovation (e.g. Atkins strong)...but most of the “innovation” will come in the targeted communication marketing strategies.

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