Vitamin Shoppe just reported Texas-sized sales growth, but that isn’t the only Texas news the specialty supplement retailer recently shared! I'll utilize the 2021Q2 Franchise Group (NASDAQ: FRG) earnings report and conference call to provide segment-level financial details for The Vitamin Shoppe. More importantly, I'll supply you with a range of insights and updates surrounding The Vitamin Shoppe key topics such as, Franchising Strategy, International Expansion, Sponsorship Activity, Merchandising Strategy, and M&A Activity. While 27% YoY growth and 45% in-store positive comps will not be sustainable long-term, The Vitamin Shoppe is executing at a high-level within a CPG category that is in high-demand. Maybe the most impressive stat of this quarterly performance was that they grew QoQ sequentially, as the first quarter is usually the strongest quarter in terms of revenue with the New Year’s resolution crowd spending on supplements. At a run rate now at around $1.2B, it would bring them back to the 2014-2016 revenue height of company but achieved with a smaller store fleet. Since The Vitamin Shoppe is shielded in the public markets by the Franchise Group ownership, its turnaround hasn’t been front and center, but overlooking it would be a mistake.

The Vitamin Shoppe Franchising Details = https://youtu.be/BKZW1dwnfUQ

How is Nestle progressing in its pursuit to become a health and nutrition powerhouse? In recent years, CPG giants have scrambled to add more health and nutrition brands into their portfolios, as consumers spend more on these categories. When CEO Mark Schneider joined Nestle in 2016, he brought a unique perspective because of his healthcare industry experience. In my opinion, this changed the long-term trajectory of Nestle. No longer would it be just another CPG portfolio that’s anchored to slower-growing legacy food and beverage products that in-part made Americans a “sick society.” Nestle would instead pivot to become a health and nutrition powerhouse that would be a part of the solution. If you aren’t familiar, Nestle actually has a ~$4 billion segment called Nestle Health Science that contains a number of brands in three categories; Medical Nutrition, Consumer Care, and Pharmaceuticals. This brand portfolio has grown substantially in the last 2-3 years, and it will continue growing once The Bountiful Company acquisition is finalized later this year. In this podcast episode, I'll cover what Nestle's near-term focus is and how it folds into a larger long-term vision.

Have you ever wanted to own an important piece of supplement industry history? How about one that has category creating lineage to the most popular supplement among U.S. adults? If that has you intrigued, then the newest supplement brand portfolio to file its IPO paperwork is right up your alley! So, who is this historically significant supplement brand portfolio? The Better Being Company…huh? Who is that, right? Prior to the recent rebrand, The Better Being Company was known as Nutraceutical International. The functional CPG portfolio was founded in 1993, but its brand holdings started way back to 1932 (KAL Vitamins). Outside of KAL, The Better Being Company owns several other brands within the categories of dietary supplements, beauty, and personal care products. The most notable brands (the core brands) include; Solaray, Zhou Nutrition, Nu U Nutrition, Heritage Store, Zand Immunity, and Life Flo. You might have noticed an increased amount of public market activity with functional CPG brands that include holdings within the dietary supplements category. I'll explain how these categorical businesses are benefitting from durable secular trends tailwinds and what strategic initiatives The Better Being Company will be focusing on as a soon to be publicly-traded company.

The beverage industry is in the beginning of a new era. For the last several years, beverage brands have been “skating on ice” trying to meet the everchanging consumer demands for functional “better for you” packaged beverages that provide convenience. It’s really this “cat and mouse” game where consumers become more selective in their purchases, thus forcing beverage brands to make adjustments. With that said, what are four trends in the beverage industry that could have market share reshuffling power in the near term?

Functional Beverage Trends Covered Include:

In a beverage category controlled firmly by Gatorade for decades, will the massive marketing push of BioSteel be enough to make a material impact? With CBD regulation being stalled for the last few years in the U.S. market, the original strategic plan of Canopy Growth acquiring sports nutrition brand BioSteel to commercialize cannabis-focused supplements was also on the back burner. That being said, the companies decided to pivot and focus on bringing “the best kept secret in professional sports” hydration product to the mainstream consumer by offering it in packaged beverage form. Why a pivot to this magnitude could even have a chance to be successful is because Canopy Growth just so happens to be minority-owned (38.6%) by the $9 billion alcoholic beverage portfolio Constellation Brands. BioSteel has been leveraging Constellation's beer distribution network throughout the last few months to launch its sports drink beverage in the U.S. market. This has helped them quickly capture market share by landing large retail accounts like CVS, Walmart, and QuikTrip. While it's still very early days, BioSteel is already the 7th biggest sports drink brand according to IRI. Though this is hardly clean data, Canopy Growth reported growth of “Other CPG Revenue” (which I assume is mostly BioSteel) had substantially grew in the last quarter to 149%. What’s driving this recent growth? BioSteel has massively increased its partnerships with high-profile sports teams/leagues and star athletes. Question remains though if it's enough to win market share from PepsiCo owned Gatorade or Coca-Cola owned BODYARMOR. 

Link to Canopy Growth & BioSteel M&A Content (10/2/19) = https://youtu.be/2UsZDEgCYfE

If the fitness content is good enough for Michelle Obama than the company that owns it should be good enough for the public markets, right? Are you confused? Don’t worry…the connection between the former first lady, her favorite workout program p90x, and the stock market will make sense after you consume this content. In mid-February 2021, Beachbody announced it would go public through a three-way merger agreement with Forest Road Acquisition Corp. (SPAC), which had ties to former NBA star Shaquille O’Neal and former TikTok CEO Kevin Mayer, and at-home connected fitness company MYX Fitness. The goal of the merger is to build a uniquely integrated health and wellness subscription company that directly competes with leading digital fitness brands such as Peloton. It will do this by combining Beachbody’s fast-growing digital subscription business and extensive library of live and on-demand workout classes with MYX Fitness connected fitness equipment capabilities. Just as streaming opened up the media world, I believe that connected fitness will open up the wellness world. Fitness has always been about connection, but now digital connectivity has made new experiences and business opportunities possible. We are still in the earliest stages of connected fitness, but the long-term winners will need to be great at four different pillars; hardware, software, content, and community. That being said, it will be exciting to see if the Beachbody Company can excel at each of those areas and compete with the likes of Peloton.

OpenFit & Ladder Supplements Video = https://youtu.be/eEQDGTzAMaM

Celebrities continue to seek additional ways to monetize their personal brands, so it shouldn’t surprise anyone that they would look at one of the fastest growing sub-categories of the CPG industry, right? Along with the fact that dietary supplements has been one of the most exciting, fast-moving, and highest growth areas within the CPG industry…is that they’re relatable. Around 80% of today’s adult Americans take some form of vitamins, minerals and supplements and that obviously includes tons of celebrities, high-profile entrepreneurs, public personalities, and even a past U.S. President. If this content sounds vaguely familiar, it’s because this is actually Part 2 of a fun video that I uploaded in late-January of 2020 that highlighted a dozen celebrities, high-profile entrepreneurs, and public personalities that you didn’t know owned or still owns some piece of a supplement company. If you haven’t checked out Part 1, you missed names like Beyonce, Oprah Winfrey, and Tony Robbins, which I bet you didn’t know owned supplement companies. Want to check that video out? It can be watched here = https://youtu.be/4g-BcRPBYj0

Now, for Part 2…I found a dozen more famous people that were or still are an entrepreneur/investor in the supplement industry.

Will a passionate and loyal consumer base be enough to push Zevia towards public market gains? On June 25, 2021, Zevia filed its S-1 document to the SEC with the intention of raising up to $100 million from the sale of common stock shares through an initial public offering. For those not aware, Zevia was founded in 2007 by Ian Eisenberg and husband/wife lawyers Derek and Jessica Newman. It was actually two years earlier when the three founders learned about stevia from a California friend who was a "health food nut." At that point, they said “we should start a soda company using this.” They hired a flavor artist to create a formula that eliminates stevia's bitter aftertaste. The product took various iterations to master (especially the cola flavor), but the founders knew there was a growing subset of people that were looking for a natural diet soda that could replace all the artificial sweeteners and sugary sodas. When Zevia was in R&D mode and even initially commercialized, the plant-based natural zero-calorie sweetener stevia wasn’t allowed to be a food additive, so it was sold as a dietary supplement. Will the founding team grew Zevia to four employees and net sales of just under $7 million, it was sold to ex-Kashi executive and SPINS founder Paddy Spence in 2010. Under the control of a seasoned natural/organic industry leader that also authentically lives a sugar-free lifestyle himself, Zevia has blossomed into a powerhouse beverage brand over the last decade. In this podcast episode, I'll run through the current financial snapshot of Zevia, sales/customer breakdowns, product platforms, and it's ESG/B-Corporation values. Finally, I highlight consumer mega-trends that Zevia should benefit from that will also drive continued category growth.

With the massive acceleration in growth from Quest Nutrition and the Atkins Nutritionals brand showing life again, will The Simply Good Foods Company become the next $1 billion active nutrition CPG portfolio? As usual, I’ll start by running through some high-level financial data to update you on how The Simply Good Foods Company (NASDAQ: SMPL) performed recently, but more importantly provide context for expand strategic commentary on trends within the health and fitness snacking space. Instead of my normal focus on Quest Nutrition, I zoomed in on two trends that could help further improve the Atkins Nutritionals growth story (Return to Work and Off-Cycle Resolution Season). Fact is, the Simply Good Food Company continues to be uniquely positioned with two large-scale channel-diversified U.S. brand leaders in the attractive nutritional snacking category that’s still underpenetrated. With well calculated price increases, as well as productivity gains, the company should be able to offset much of the inflation concerns that competitive brands are dealing with now. This will enable them to maintain gross margins and continue to invest in initiatives that drive growth. Additionally, the Simply Good Foods Company is spinning off $90M in quarterly positive cash flows and has an improving debt ratio that will allow it to find an attractive M&A target within the next year. I continue to be impressed by how well the team is operating against the complex environment and I continue to believe SMPL has a bright future.

Before keynoting the IPA World Congress + Probiota Americas 2021 - Digital Summit, I sat down with Danielle Masterson (Senior Correspondent - NutraIngredients-USA) to talk about the growing WalMazon Effect within the supplement retail landscape. Additionally, we talked about how specialty supplement retailer GNC recently teamed up with Walmart and The Vitamin Shoppe started franchising for the first time in the company's history. Finally, I shared my expectations for GNC and The Vitamin Shoppe over the next 12 to 18 months.