If you’re an astute follower of my content, you’ve heard me mention the concept of precision fermentation (and/or name notable startups that are commercializing such material for functional CPG brands) in numerous pieces of content over the last handful of years. That being said, I’ve somehow overlooked the fact that I haven’t given precision fermentation the respect it deserves with its own dedicated content. But regardless of mentioning it before...how about we start with what the heck precision fermentation is and how it differs from what has been used in food production for thousands of years ago. Traditional fermentation uses intact live micro-organisms to modulate and process plant-derived ingredients. It results in products with unique flavor, nutritional profiles, and modified texture. Precision fermentation is a significantly newer technology that has been used within the food industry for let’s say the last two decades. Precision fermentation has now emerged as a leading edge of food and beverage ingredient innovation…with the list of mega-companies investing in the process growing extensively of late. Precision fermentation uses microbial hosts as “cell factories” for producing specific functional ingredients. Not only is precision fermentation being explored as a launchpad for cultivating new protein sources, but it’s also highly versatile in its capacity to be tailored toward producing other key food and beverage ingredients for texturizing, flavoring, and stabilizing.Unlocking the potential of precision fermentation within the CPG space has been made possible with the use of artificial intelligence to rapidly identify ingredients that may offer improved functionality or added health attributes. AI is the heartbeat of the precision fermentation movement. To keep this content concise, I'll focus on functional CPG applications involving nature-identical animal proteins (e.g. Perfect Day and The Every Company). There’s a few different short- and long-term value propositions that differentiate this precision fermentation material from the mainstay commodity ingredient that I mention including functionality and quality considerations, sustainability, and hedging commodity costs with supply chain stability. Finally, I'll walk through the different challenges and potential slowups around adoption of precision fermentation that's likely ahead for the food technology.

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There’s A LOT of misunderstandings when it comes to recessions. While it may seem counterintuitive, recessions aren't all bad news. The clouds that settle over the economy during a recession do in fact have a few silver linings…so I want to talk about the long-term impact of those within the context of the grocery business. And just so we’re on the same page, when I say grocery business…I’m talking about the CPG industry yes, but also grocery retailers, contract manufacturers, and agricultural businesses.

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Pivotal is an interview-style segment that tackles topics in consumer packaged goods (CPG) and fast moving consumer goods (FMCG) from the business leaders that live it EVERY DAY! This episode is a special one for a three reasons...(1) we recorded it in person at the "Carlsbad mecca of functional ingredients" aka Compound Solutions, Inc. headquarters (2) Matt Titlow gave us the FULL origin story from the company's inception to the major pivot points throughout the 25 years and where we are now. And then finally, the conversation was recorded during the month that marked the 25th business anniversary of Compound Solutions, which is a entrepreneurial feat that shouldn't be understated in any industry but specifically the supplement industry. I've known Matt personally going over 12-13 years, so I pepper him with insightful questions and even get him to ponder what the next 25 years looks like for Compound Solutions. But these are just some of the interesting topics we chatted about in this episode...

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CPG marketers are constantly trying to come up with ways to stop consumers’ infinite scroll, so why not utilize a remixed version of an 1860s military strategy, right? While most think about “shock and awe” as simply a massive application of firepower by the military, the real battleground is within the opponent’s mind. “Shock and Awe” accomplishes psychological victory by influencing the will and perception to get the adversary to do what the attacker wants. That might seem just a tad extreme for CPG industry strategy, but let’s swap a few words or phrases around and it would read like this…While most think about “shock and awe” as simply a massive production of content assets by CPG brands, the real challenge is within the consumer’s mind. “Shock and Awe” accomplishes attention getting by intriguing and influencing to get the consumer market to do what the CPG brand wants. Now…that sounds a bit more CPG strategy-esque, right? We are well past the point that more content is going to be the answer to disrupt the infinite scroll and get attention in today’s information-heavy society. CPG brands need to realize that precisely targeted communications could be the online equivalent of smart bombs, but also “shock and awe” can’t be carried out entirely online. Some kinetic force is still needed because you can’t fully “shock and awe” with information operations alone in the CPG industry. But this kinetic force is not sought on a large scale, but to give the impression that CPG brands can influence a consumer’s mind. What the heck am I talking about? Let’s dive deep into why CPG brands are using a shocking strategy that aims to combine playfulness and consumer interest into limited edition items that attract both social media attention and sales.

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Pivotal is an interview-style segment that tackles topics in consumer packaged goods (CPG) and fast moving consumer goods (FMCG) from the business leaders that live it EVERY DAY! Now, I don’t want to oversell this special edition episode, but it’s kind of a big deal. It would have been a big episode even during good times but consider the collective facts…I spoke with the founder and recently ousted CEO of Bang Energy Jack Owoc…at a time when the initial stalking horse bids were happening in that Chapter 11 bankruptcy auction and when his social media accounts have been taken away. Our conversation weaves in and out of a variety of impactful and insightful subject matter that includes who Jack thinks will acquire the company he founded and the reasoning behind it. Since Jack is locked out of company matters, he doesn’t have any insider knowledge…and neither do I…so any of these predictions were offered up for entertainment purposes only. If you haven't watched any of the other Bang Energy bankruptcy updates, make sure you check them out on my YouTube channel. (Note: this conversation was recorded on May 22nd, 2023)

The Vitamin Shoppe was just sold...again (technically)! What started as highly probable rumors became reality. In a deal that’s expected to close in the second half of 2023, The Vitamin Shoppe’s owner, Franchise Group, would be taken private through a $2.6 billion management buyout. The group buying the portfolio is led by current Franchise Group CEO Brian Kahn but includes a consortium of other investment banks and private equity firms. After the transaction is complete, the current Franchise Group management team, including the CEO, will continue to lead the company and run its current portfolio of retail brands. I'll explain what that MBO could mean strategically for current Vitamin Shoppe vendors, employees, and even little ole me. Additionally, I will update you on the recent business performance for The Vitamin Shoppe. I'll utilize the 2023 Q1 Franchise Group (NASDAQ: FRG) earnings report and conference call to provide quarterly segment-level financial details for The Vitamin Shoppe. I will also dig deeper into several areas of The Vitamin Shoppe, such as franchising activity and merchandising category trends (including the retailer's increased sports nutrition and private label brand focus).

Are growth vibes at Celsius Holdings drying up…or is this desert oasis as lush as Greenland…or was it Iceland that’s green? (D2: The Mighty Ducks reference anyone?) This is the first quarter that Celsius energy drinks was fully integrated into the PepsiCo DSD distribution system after the August deal announcement. Celsius Holdings (NASDAQ: CELH) had quarterly revenue of $260 million, which was up 95% YoY. According to IRI last 52-week data, Celsius was the number one brand driver of growth in the energy drink category. Celsius was responsible for 23% of the category growth, driving $552 million in incremental sales. In addition, according to the trailing 4 weeks of IRI SPINS all tracked channel data for the period ending March 26, 2023, Celsius is now securely the third-largest energy drink brand in the category. Its market share went from 3.7% in the first quarter of last year to 7.5% now. Celsius energy drinks saw massive growth in convenience stores, mass retailers like Walmart, the club channel in retailers like Costco, and the Amazon marketplace. With all this sales growth, Celsius must find balance in marketing initiatives as they level up. Everyone knows they have cash, a big name behind them now, and a desire to keep the public markets happy with growth. That mix can be a money pit if not managed right. What I like about the recent Formula 1 Ferrari team deal though is the global marketing appeal. I’ve mentioned this a few times in previous content, but this hasn’t been smooth sailing for the energy drink brand that acquired its Nordic distributor in late-2019 and formed a joint venture with its Chinese partner. With the rocky elements with the global supply chain, geopolitical tensions, and the strong U.S. dollar…Celsius has smartly focused its attention and resources on fueling the insane growth within the domestic market. But that’s going to start changing soon…or at least that’s what I predict. For one…PepsiCo is the energy drink brand’s preferred global distributor. With PepsiCo being the second biggest in terms of beverage distribution globally, there’s significant opportunities to capitalize on global scale. The first largest global beverage distributor is obviously Coca-Cola and if you look at how it helps Monster Energy, international sales make up 37% of the total revenue. Now…it’s apples to oranges comparison because Monster Energy has a collection of internationally specific brands for those markets. But international makes up only 4.4% of the total Celsius revenue. So, regardless of not having any cheaper portfolio brand options…even a decent go-to-market strategy in the different markets that are popular for energy drinks should yield strong results in 2024 with the help of PepsiCo.

The gang’s all here again…which should be huge news for Premier Protein heading into the back-half of its fiscal year. But as I normally do with my performance update content of publicly-traded functional CPG brands, I will use the recently filled earnings report, earnings conference call, and any relevant publicly disclosed news, in this case it’s BellRing Brands (NYSE: BRBR) 2023 Q2 earnings release, to obviously update you on the performance of brands in that portfolio, but also use it as the backdrop to discuss market insights within the active nutrition formats of the liquids and powders. BellRing Brands is a portfolio that owns a collection of convenient nutrition brands like Premier Protein, Dymatize Nutrition, Powerbar, and Joint Juice, which was previously wholly-owned by Post Holdings. A fast-paced and busy lifestyle is pushing consumers to switch to quick and healthy meal options. This has resulted in the increased household penetration of RTD protein shakes that promote active lifestyles. Bellring Brands had a strong 2023 Q2 with net sales reaching $385.6 million, which was up 22.3% YoY. Premier Protein (~80% of BellRing Brands total revenue) grew 26.2% YoY because it was able to exercise pricing power because of its strong brand equity in the inflationary market. Dymatize Nutrition was up 10.5% YoY stemming from price increases. Moreover, I provide two deep dives into the functional CPG portfolio's "hero SKU families" of Premier Protein RTD protein shakes and Dymatize whey protein powders. Finally, I explain why Premier Protein bringing back a collection of its slowest velocity SKUs speaks to the confidence that BellRing Brands leadership has in its production expansion plans. In the latest quarter, they saw double-digit production growth and expect to have incremental capacity in 2024 north of 20%. I’ve talked about this extensively in previous content, but the company has a plan they are executing on for additional supply which included adding capacity to existing co-manufacturing network, expanding the co-manufacturing network, and having former big poppa Post Holdings build an aseptic processing facility to produce RTD shakes. Additionally, the footprint in each of these new facilities is much larger and allows for a quicker ramp up in the case of adding more production lines. You might be wondering how a billion-dollar RTD shake product line, that’s already the market leader, can grow 100s of millions more each year? Remember, for one…Premier Protein hasn’t been able to do much marketing or pull any substantial promotional levers. Secondly, they didn’t have their full lineup of flavors on shelves at most retailers until very recently. And finally, they’re severely under-distributed in the grocery and mass channels. So, there’s A LOT more upside in the brand, believe it or not…and that doesn’t even consider Dymatize continuing its growth story.

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What if I told you there’s a 23.75 percent chance the supplement industry will be unrecognizably annihilated in the next year? While I don’t want this to be a “sky is falling” moment that creates panic and mass hysteria, we do need to walk through a very scary…very plausible “black swan event” that would completely disrupt the supplement industry as we know it today. I’ve been modeling out probabilities of certain external threats to the functional ingredient supply chain for some CPG clients, of which one is growing in concern…the geopolitical risks that are building from the growing tensions between China and Taiwan. A recent poll of more than 350 international relations experts estimated that there’s a 23.75 percent chance of a Chinese attack against Taiwan within the next year. You might think that probability is still quite low, but we’ve already seen the Chinese Communist Party increase mobilization of both the People’s Liberation Army air force and navy towards Taiwan. Similarly, the U.S. Congress greenlit a $3 billion Pentagon budget to provide military aid to Taiwan and the President just authorized $500 million worth of weapons aid to Taiwan using the same emergency authority that has been used more than 35 times for Ukraine. Which should be making us ask ourselves: Why is China making these colossal investments and why is America ramping up support? Prudence dictates that we must at least consider the worst.Now…this doesn’t guarantee a China versus United States war...and focusing on those extremes miss the bigger point that any attack on Taiwan by China would most certainly mean governmental sanctions and trillions in world trade deterioration. And we are talking many multiples of economic impact to what has happened because of the Russia Ukraine conflict. If you weren’t aware, outside of something like protein powders, the vast majority of functional ingredients used within the American supplement industry are sourced from the Chinese manufacturing sector. With the American supplement industry being “all in” on China for supply, U.S. and China relations are breaking down, and saving the supplement industry will most likely not be a matter of national security for America. That means things can get scary fast. So, what's next? I'll explore that and more...but it's important to remember that even if your supplement brand feels great about your supplier relationships now…don’t get caught sleeping at the wheel.

Glanbia is certainly making that cheddar…figuratively and literally, but which GPN brand has been cutting the cheese lately? Glanbia Performance Nutrition is one of two wholly-owned segments of Glanbia plc (LON:GLB), a multi-billion dollar global nutrition company. The brands in the Glanbia Performance Nutrition portfolio include; Optimum Nutrition, BSN, think!, Isopure, Amazing Grass, and SlimFast. I'll use the recent earnings report, earnings call, and associated news to update you on how Glanbia Nutritionals and Glanbia Performance Nutrition is performing against the complex operating environment. Glanbia Performance Nutrition had 2023 Q1 revenue growth of 4.6% YoY on a constant currency basis from strong pricing increases. Additionally, I'll dive deeper into Glanbia Performance Nutrition categorial performance (performance nutrition, healthy lifestyle, and weight management). BTW I’m thinking about the creation of a change.org petition for the Glanbia Performance Nutrition division name to be amended to The Optimum Nutrition Company. This one brand alone now accounts for 60% of the total GPN revenue. This quarter, Optimum Nutrition had 20.8% growth and even more impressive U.S. consumption growth of 36.1%. With these recent Optimum Nutrition growth numbers…I want to be one of the first to congratulate the performance nutrition brand on becoming the most recent categorical brand to reach $1 billion in annualized revenue. Finally, I talk through a recent Glanbia M&A transaction and what that could or should signal from my perspective. I know I’ve talked about this a year ago, but it feels like Glanbia is at a bit of a crossroads right now. Path number one…do nothing substantial from an outside perspective and just use excess liquidity to rebalance risk tolerance to increase marketing and/or product innovation. Path number two…add a large asset through M&A. I’ve thrown out two compelling ones lately…THG (aka Myprotein), but you’d need to divest the beauty segment. The other was the precision fermentation startup Perfect Day that would have all kinds of interesting future plays. Path number three…Glanbia should start the corporate communications around a spin off its Glanbia Performance Nutrition division into a standalone company with a dual listing in the United States and Ireland. Either way…Glanbia has certainly become an increasingly fun behemoth to watch, right?

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