Quest Nutrition has unlocked growth from leveraging the strengthening functional confectionery trend, but the question of whether it's enough to offset declines in the Quest Bar and Atkins protein bar SKUs is still uncertain. In this latest podcast episode, I'll utilize the 2021Q2 Simply Good Foods Company (NASDAQ: SMPL) earnings report, earnings call, and supplemental presentations as the backdrop to provide broad health and fitness snacking market insights. Quest Nutrition and Atkins Nutritionals each continued to have a mixed bag of performance at the product category level, including protein bars and nutritional bars performing worse on a YoY basis (though both continue to outperform the category average). Within my last quarterly update on the Simply Good Foods Company, I provided a business case for why the company should transition to a more "snackier" product portfolio regardless of positive macro trends around consumer mobility. It looks like at least the Quest Nutrition brand was already on the same wavelength. After successfully re-releasing their Quest Peanut Butter Cups to rave reviews and strong sales velocity, they decided to build on that momentum by launching their Quest Candy Bites and Quest Candy Bar this week. In an original article that I wrote just over 3 years ago (Read it here), I called for active nutrition companies to look beyond protein bars and into more confectionary categories that they could add a functional twist to. I mentioned in that article that “if you follow the sports nutrition CPG space closely enough, you have seen some launches that would be more associated confectionery-type CPG products. While most active nutrition brands have not innovated in this manner, are these product launches an indicator of the future?” I think the resounding answer in 2021 is yes…

MusclePharm slammed home its first profitable year in company history, as the sports nutrition brand finally sees some fruits of its labor stemming from the extensive multi-year turnaround plan. For this podcast episode, I'll utilize the MusclePharm Corporation (OTCMKTS: MSLP) 2020Q4 earnings report, that was released on 3/30/2021, to breakdown the most important key updates surrounding the maker of Combat protein powder. With profitability now being achieved consistently, where does MusclePharm go from here? While the sports nutrition brand is obviously far from rewriting its history of accumulated operating losses, these results are baby steps in the right direction. It must now focus on; stabilizing falling global sales, building direct-to-consumer (DTC) capabilities, understanding its legacy role in the market, and rebuilding investor relations to build stakeholder support and optionality for the business in the future.

Even the GNC bankruptcy couldn’t take down the transformation plans that are in-process at FitLife Brands (OTCMKTS: FTLF). A national provider of nutritional supplements for health-conscious consumers, FitLife Brands markets under two brand segment names; NDS Products (sold through the GNC network) and iSatori Products (sold through a diversified retail mix of 17,000 locations). I'll utilize the recent 2020Q4 FitLife Brands  earnings report and any additional publicly disclosed information to discuss some broader strategic insights regarding the nutritional supplements market. I'll end the podcast by trying to answer the question, "where does the company go from here?"

Looking at its recent performance, GURU Organic Energy is giving off a Celsius Holdings vibe from 2-3 years ago. For those that aren't aware of the brand, GURU Organic Energy launched in 1999 as the world’s first plant-based all-natural energy drink in Quebec, Canada. In the U.S. market, they launched in  2005 with Whole Foods Market. The current CEO Carl Goyette joined in 2014 and is really credited for the recent growth of the clean energy brand. GURU Organic Energy went public in 2020 through an reverse takeover transaction, which is similar to a SPAC in the U.S., and now trades on the Toronto Stock Exchange under the ticker GURU. At a current ARR of about $4M in U.S. market sales (~$21M total), they still have a lot of heavy lifting to do if they want to make any impact in the hyper-competitive beverage category. That being said, their products are aligned with growing trends in the U.S. energy drinks market. If they can maintain the right balance of a clean, natural ingredient profile and mainstream taste and branding, while also riding the momentum of Celsius Holdings, it could allow them an opportunity to grow substantially throughout the next 12 months in the U.S. market.

How did Laird Superfood (NYSE: LSF) do at navigating the big waves of Wall Street in Year 1 as a publicly-traded company? For those unfamiliar, Laird Superfood was co-founded in 2015 by namesake Laird Hamilton, which is most famously known as the greatest big wave surfer of all-time. Laird Superfood is an emerging consumer products platform focused on manufacturing and marketing highly differentiated plant-based functional CPG. Trifecta of CPG trends are benefitting Laird Superfood; Better-For-You, Plant-Based, and Functional. Within the CPG category, there's an ongoing secular shift from highly processed legacy products that demonstrate little nutritional benefit to natural, nutrient-dense, functional and plant-based alternatives. Laird Superfood has three major product platforms, including; SuperFood Creamers, Hydration and Beverage Enhancers, and Coffee, Tea, and Hot Chocolate. These total addressable markets are growing and Laird Superfood will see strong growth in 2021, but great products only get you so far in today’s hyper-competitive CPG industry. The real point of differentiation continues to be the Laird Hamilton lifestyle that appeals to anyone that is trying to fight back Father time and taste a bit of what the aging super athlete has found that’s working for him.

Celsius Holdings went "to the moon”, but what happens next? For those that might not understand that "Reddit or Fintwit reference", it's a phrase used when someone thinks the price of a stock is going to see a huge increase. Celsius Holdings has skyrocketed close to 1000% in the last 12 months, but they also hit the elusive $100 million mark in yearly revenue. This is a sales target that is extremely difficult to reach for energy drink brands that also are not owned by a large beverage portfolio or have a national beverage distribution partnership. I'll further explain the impressive performance by covering information from the Celsius Holdings (Nasdaq: CELH) 2020Q4 earnings report and conference call that was recently released on 3/11/21. Additionally, I'll use that recent financial news as the backdrop to talk about larger functional energy drink categorical and strategic insights. Key points within the content piece include retail and DSD distribution increases, digital sales details with Amazon highlights, and other positive metrics that show you why Celsius Holdings is transforming itself from a niche energy drink brand into a real viable mainstream player. What’s next will be interesting for the brand, as they could grow organically to $250M in 2021 while also diversifying into RTE and other RTD (protein) through its FAST European brand that’s set to hit the U.S. market in Q2 of 2021. I still think Celsius is a bolt-on M&A target, but last year's aggressive stock moves (even with the pullback) has pushed the market cap above $3B making the deal extremely expensive at this current timing.

While the Vitamin Shoppe had arguably the most challenging year of its 44-year history, it ended up coming out of 2020 smelling like roses. How is that possible? To help express this notion, I'll run through The Vitamin Shoppe 2020Q4 earnings report that was released 3/10/2021 under its owner Franchise Group Inc. While the financial information in the report continues to be relatively small, I was able to collect insightful information on the quarterly performance from the Franchise Group conference call, previous corporate press releases, and public interviews from CEO Sharon Leite and other leadership team members at the specialty supplement retailer. Additionally, I'll explain the recent merchandising partnerships with WW (Weight Watchers),  CTRL, Martha Stewart CBD, and CBD private label activity. Finally, I talk about my previously predicted operating model change to franchising at The Vitamin Shoppe that was given more formality by Franchise Group CEO Brian Kahn speaking out the "value of the franchise potential" for franchisees and the portfolio.

Other original content mentioned in this podcast:

Read just about any fitness article that mentions the consumption of alcohol and it have you believing it will absolutely destroy any of your physique goals. So, why have more fitness-focused companies aligned themselves with alcoholic beverages? Fact is, negativity towards alcohol within a healthy person's life wasn't always so grim, as advertising in the 1920s said “Guinness is good for you!” Today's "sensationalism drives consumerism mindset" has tried to replace balance, but three shifts in the last 10 years have fitness-focused and alcoholic beverage brands converging and leveraging common ground. The strongest functional CPG lifestyle brands (ie. Alani Nu) will continue to push the boundaries on product development that expands outside of traditional categories. Additionally, the trend of partnering with alcoholic beverages on marketing activations is only getting started as fitness-focused brands embrace the reality that being “hardcore chicken/veggies/rice 24/7/365" is about as valuable as those plastic trophies single-minded fitness competitors ruin their lives for in today's dynamic business environment. 

Historically speaking, there were these unwritten rules that children were off limits to functional CPG brands, but do those rules hold weight anymore? That being said, most of us have been drinking ready-to-mix supplement powders from birth with brands like Similac essentially being a watered-down vitamin/mineral-fortified meal replacement shake. As we grew older, we continued to take Flintstones vitamins and Carnation instant breakfast powders. Almost all of those early functional products came from brands within multi-billion-dollar CPG portfolios...so I guess it was OK, right? That "monopoly" on kids' functional CPG products slowly started to erode over the last 5-7 years as Millennial parents grew up with more information on nutrition. In this latest podcast episode, I'll deep dive into how the “COVID-19 Effect” sped up what was happening with the trend and also what could happen in the future with product development and marketing towards the youth market. 

How is the American economy doing? According to the Federal Reserve’s latest Beige Book, most businesses remain optimistic regarding the next 6-12 months as economic activity expanded in the first part of 2021, but what about the CPG industry specifically? The Beige Book is a Federal Reserve System publication that collects mostly qualitative information, gathered directly from District sources. This consumer data creates an opportunity to characterize dynamics and identify emerging trends in the economy that may not be readily apparent in the available quantitative economic data. Additionally, most CPG businesses today are offered nationally through e-commerce or large brick and mortar retail chains, so it’s important to understand that America is not a one-size-fits-all economy, especially during the coronavirus. Because of that, the Beige Book can potentially help you with regional insights that can be applied to create advantages in your business. To save you time from reading the whole document that comes out every 45 days, I started a content series that takes five CPG industry related highlights that I found most insightful from the latest Beige Book, such as consumer confidence growing in the Middle Atlantic Region, logistics demand is far exceeding supply across all modalities, and minority- and women-owned business enterprises are struggling in comparison to the national average. On CPG industry Beige Book Vol.6, I also provided some additional bonus quantitative January retail data that came from the U.S. Census Bureau and February jobs data from the U.S. Department of Labor.