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spk07: Thank you for standing by and welcome to the Second Quarter 2021 Earnings Conference Call and Webcast for Laird Superfood, Inc. I would now like to turn the call over to Mr. Reed Anderson of ICR to begin.
spk05: Thank you. Good afternoon and welcome to Laird Superfood's Second Quarter 2021 Earnings Conference Call and Webcast. On today's call are Paul Hodge, Chief Executive Officer, Valerie Ells, Chief Financial Officer, and Scott McGuire, Chief Operating Officer. By now, everyone should have access to the company's second quarter earnings press release filed today after market close. This is available on the investor relations section of Laird Superfood's website at www.lairdsuperfood.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 Hodge, Chief Executive Officer of Laird Superfood.
spk06: Thank you, Reid. Aloha, everybody. It's a pleasure to be speaking with you in regards to our second quarter. Before we begin the 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 earnings release this afternoon. After careful consideration, I've decided now is appropriate time for the company, my family, and me for me to start transitioning to a non-executive role. And I will be stepping down as president and CEO once we have identified my successor. After the transition, I'll remain on the board of directors and remain a major shareholder keeping me closely involved in realizing our long-term vision for the company. Most of you know my deep, unwavering passion and commitment to making Laird Superfood successful for everyone involved, shareholders, employees, friends, including my close friends and co-founders Laird and Gabby, my family, and the town of Sisters, Oregon, where we've become an integral part of the local economy. It has 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, it 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 do as well as provide a review of Q2 highlights and our key growth drivers. I'll then turn the call over to Scott McGuire, our Chief Operating Officer, and Valerie Ells, our Chief Financial Officer, leaving plenty of time for Q&A. Laird Superfood is a mission-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 Laird, we believe that better food leads to a better world because when people are healthier and feel good, they make better decisions. Our products provide the sustained energy, nutrition, and hydration that we need to perform from sunup to sundown 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 on to second quarter results. Total sales increased 64% to $9.2 million, driven by continued momentum in our DTC business, plus strong results in grocery and a solid contribution from our newly acquired Vicky Bars. Online sales were at 57%, or 2.1 million, reflecting 94% growth in B2C year over year, despite the prior year period including a meaningful consumer shift to online purchasing in the height of COVID. As you know, we are native digital, and our strength in this channel continues to prove itself with 63% of total net sales in the second quarter attributable to this best-in-class online platform. Key metrics in our online business remain very positive, underscoring the competitive strength of our model, Conversion rate remains two times the CPG industry average, and over two-thirds of our D2C business is recurring. Items on subscription increased 77%, and unique active subscribers increased 57% from the year-ago period. Retention metrics continued to climb with a 15% improvement from Q2 of 2020 for all of our company's history, and we've seen a 20% improvement in second-order rate and our 2020 cohort reorder rate compared to the 2019 cohort. Finally, average order value, or AOV, continued to improve as well, rising 30% year-over-year, now on par with our pre-free shipping AOVs. 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 and despite the lack of industry trade shows, which have historically been a key source of opportunity creation for our company. Club sales are lumpy, and we're seeing strong momentum leading into Q3. Liquid 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 in spoils and waste for refrigerated product, reducing VC spoils by over 80% since the prior year and improving fill rates to the mid-90s, 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 creamer in the second quarter included raisin yolks, and we are now on approximately 2,600 total doors from this product line. Equally important to new doors was the placement of additional flavors in our existing doors, such as our turmeric flavor and 340 sprouts locations, improving on our points of distribution, expanding our shelf presence and prominence, And finally, not to be overlooked, is the continued growth of our shelf-stable business. Excluding club sales, our shelf-stable business saw a growth of 42% versus last year, reflecting our expanded base for both coffee products and powdered creamers. From a mixed standpoint, we experienced nice growth across all categories during the second quarter. Creamers grew 27% on a year-over-year basis, predominantly due to gains in refrigerated liquid creamers. Hydration and beverage-enhancing supplements increased 54%, led by our prebiotic Bailey Greens and a strong contribution from our Renew, Rest, and Recover product in May. Coffee, tea, and hot chocolate increased 36%, led by one of our foundational products, Insufuel, but this was followed closely by similar gains in our new functional coffees, as well as regular coffee. And finally, harvest snacks and other food items, our newest category drew up $1.3 million in incremental sales. Our harvest snacks and other food items include our peeling nuts and harvest dates, our recently launched brownie and cookie baking mixes, and of course our newly acquired Picky Bar product lines, bars, oatmeal, and granola. We view this new category's performance as 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 Bars, we are pleased that 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. We are, of course, learning new lessons as we go, which we plan to implement in potential future acquisitions. But overall, at this point, we're very happy with our progress. Despite the significant progress across most top-line drivers, and despite delivering on our commitment to achieve shelf-life extensions and waste reductions for our refrigerated liquid creamer, we did encounter a step back related to our shelf-stable liquid creamer. which we viewed as an important revenue driver for the second half of 2021. At the very end of June and early July, we received new information from our co-packer that due to lack of industry capacity and strong demand from their existing customers, they would not be able to deliver our product in September as planned. It 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 that are inconsistent with our values. compromising the authenticity and positioning of the Laird Superfood brand. Accordingly, we will see a delay in the launch of our shelf-stable liquid creamer until the co-packer capacity becomes available. In addition, we have pivoted to alternate flavor profiles where the formulations still meet our high standards. We had planned to move forward with our coconut-based creamer first, but given the new information, we will be pushing forward with our oat mac-based creamer as our first shelf-stable launch. We have seen really solid Oatmac performance since launching our powdered creamer in this high growth category, including a new customer acquisition. And we also believe we can produce this product more easily to our standards. We are still very optimistic that the shelf stable creamer will be a strong growth driver for us, both in wholesale and e-commerce. Unfortunately, with the facts we have today, it will most likely be delayed until 2022. While the delay in shelf stable creamer is frustrating, Remaining true to our mission and values is critical in maintaining the integrity of our brand and the strong barriers to entry that affords, along with driving long-term value for all our stakeholders. And 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. reducing the impact of our online sales by building a carbon-neutral last mile of Eden projects and first environment, and supporting our critical care workers and first responders as they keep us safe through this pandemic with IED. Regarding Feeding America, we're on track with our pledge of donating 1.5 million meals to Americans facing food insecurity, with over 500,000 meals currently on deck. Regarding Eden projects, the process of planting 100,000 mangrove trees across 900 hectares in Kenya has begun, helping us sort our carbon neutral last mile goal for online orders. And with IDME, we've recently completed the first of our IDME activations by giving over 3,000 everyday hero bundles at no charge to the brave critical care workers and first responders who are keeping us safe, an effort financially supported by our partner, Danone. Beyond these larger cause projects, our internal sustainability team has been constantly working on many smaller ESG efforts which possibly affect every aspect of our company. These efforts record 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, broadened our portfolio with the introduction of new, innovative products, further expanded our customer base, and began to integrate PICCI into the organization. Our brand platform approach continued to demonstrate its power. And although that platform now covers multiple large TAMs, we believe we are barely scratching the surface of what Laird Superfood is capable of long-term. With that, I'll turn the call over to Scott to talk about operations.
spk03: Thanks, Paul. Our top priorities remain people 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 PICCI integration, and we executed flawlessly on nine new products. We have a great process for getting all this done. And as I've shared the last couple of quarters, the four M's are our approach. Manufacture more ourselves, make it 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 customers' growth, requests, and ever-changing supply chains. I'm so proud of every person on our team who rallied to produce in-house products six new SKUs this quarter. That's what we call going vertical and we went vertical in other areas too, which I will mention in a moment. Make it 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 in finished good and raw material safety stocks. For the second quarter in a row, this was demonstrated by achieving nearly perfect customer order compliance. Move it 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 manufacturer waste and spoils 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 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 our mission of attracting new customers, but we raised our average order value again, giving us leverage against our parcel costs. Going forward, we are optimistic about additional subscription consolidations, as well as their early returns on how picky products mix with various parcel configurations. Finally, we agreed to a partnership with two industry leaders in 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, from day one, we have always been about 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. In that light, not only is the acquisition of PICCI exciting from a mission, product, and quality standpoint, it's also exciting from the talent they brought to the table. We are thrilled to have the PICCI team say this is my company. Now let me turn the call over to Valerie Ells, our CFO.
spk08: Thanks, Scott. Growth in online and wholesale channels were key factors in our second quarter performance, driving a 64% year-over-year increase in net sales to 9.2 million. As Paul highlighted, metrics in our DTC business remain very strong and continue to compare very favorably to peers in related companies. Delivering 94% growth via both core and new products, we are very pleased with our continued improvements from already strong retention, subscription, and AOV performance, among others. In wholesale, we continue to broaden our customer base and are seeing continued traction in grocery. While brand and quality are key factors helping to grow our door counts, and points of distribution in grocery, it's also important to note that we've made significant progress improving results within existing customers. For example, velocities in our liquid SKUs at Whole Foods 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 creamer-related chargebacks, stemming from shelf life issues by 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%. Factors that drove this year-over-year improvement in gross margin included an optimized BTC shipping expense and reduced liquid creamer-related chargebacks from distribution centers, partially offset by higher wholesale shipping expense and elevated co-manufacturing costs, given the gross demand for liquid creamer. Further, the margin benefit from non-recurrence of Q2 2020 air shipment fees for raw materials was largely offset by sell-through of higher cost inventories, with elevated fixed labor costs as a primary factor as we have built our team ahead of scale. On a sequential basis, Q2 growth margin was down 120 basis points, primarily reflecting elevated wholesale freight expenses, while the margin benefits of an optimized DTC shipping expense and reduced liquid creamer-related chargebacks were largely offset by the sell-through of higher cost inventory. Operating expenses were $8.5 million for the second quarter, or 92% of net sales compared to $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, with over 70% of the incremental expenses being attributable to public company factors. Non-cash 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 the creation of a reserve for prepaid inventory, both expected to be non-recurring. 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 deal and inventory reserve items. Sales and marketing costs represented 43% of net sales in the second quarter, flat compared to 43% in the year-ago period and down slightly from the sequential quarter at 45%. We expect to leverage our operating expenses as our business scales significantly in the future. With over $43 million of 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 activities, plus the net use of approximately $10 million of cash to complete the acquisition of FICCI in early May. Related to our full-year 2021 outlook, when establishing our guidance earlier this year, we noted that the achievement of top-line revenue targets would be contingent on successful outcomes of the following priorities. For refrigerated liquid creamer optimization in the first half of the year, as well as launching a shelf-stable liquid creamer option in the second half of 2021, timely and innovative new product introductions with continued strong online performance, the addition of wholesale doors, specifically some large chains utilizing our liquid creamer as an entry point for these opportunities, and continuing to earn more product placements on shelf at larger partners and increasing the value of each one of those doors while also fostering increased brand awareness. Paul discussed the progress on some of these initiatives in his remarks, but 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 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 up to expanded future store placement and has helped, and will continue to help, us greatly reduce our spoils and waste. Turns on shelf are strong and continue to improve, and we continue to be optimistic on this product's ability to drive growth in grocery moving forward and for our team to continue to drive 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 those stories to consumers for the second half of the year, to continue driving trial by new and existing customers, and to encourage inclusion into the consumer's daily ritual. In terms of earning more product placements on shelves at existing partners and winning new wholesale doors, we have had some meaningful wins this year, such as new placement in Target, Harris Teeter, Wake Ferns, and Stater Bros in the US, as well as Loblaws in Canada. We've also expanded item placements in CVS, Whole Foods, Sprouts, Safeway, Bombs & Pavilions, and Impra NCG, just to name a few. And we expect to have some continued wins in the second half of 2021. However, we have been informed by various retailers that they have canceled their category reviews and resets, which were previously planned for Q3 and Q4, and this will delay some of the expected wins and growth opportunities in wholesale until 2022. We remain confident in earning additional placements. The timing, however, will be later than anticipated. And finally, launching a shelf-stable liquid creamer option in the second half of 2021. As Paul noted in his comments, we have been informed by our co-packer that our 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 streamers, 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 growth margins of 25 to 28% for the full year. Our path to continued growth margin improvement remains the same. Continue to optimize the balance of free shipping and increasing shipping expenses for our DTC business, enhance our refrigerated liquid creamer business, including driving more volume and making further logistical and operational improvements, introduce a shelf-stable liquid creamer to optimize channel margin mix, and maximize the fixed cost leverage available to us via our vertical integration through scale. We expect continued progress on these initiatives to keep us on the path toward our long-term goals. Related to 2022, Given the uncertainty in the timing of shelf-stable liquid creamer and the 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 2022 expectations at this time. However, as soon as we have more complete and reliable information for production and release date for the shelf-stable liquid creamer, we will share that with you all, and we will provide our 2022 annual guidance during our year-end call in March. What we can commit to 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 categories while also taking share. And more specifically to our business, our direct online platform remains an exceptional performer and a strong growth driver, and we do not anticipate that to change. Our grocery business continues to build an expanding base to propel growth in our overall wholesale run rates with a very long runway, Our club business is stable with a historical run rate and showing solid momentum in the early third quarter. We're pursuing additional offerings and partners in that channel to drive further growth. And with a variety of recent product launches showing solid initial results as well as some exciting launches remaining in the balance of the year, we remain confident in our ability to drive solid growth for years to come across various categories. Paul, I'll pass it back to you.
spk06: Thanks, everybody, for your time today. As you can see from our recent growth, Laird 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?
spk07: Thank you. To ask a question, you will need to press star, then the number 1 on your telephone. That's star 1 on your telephone. We have our first question from the line of Bobby Burleson from Canaccord. Your line is now open.
spk01: And best wishes, Paul, for your next endeavor. So a couple of questions here. The guidance obviously coming in, including gross margin guidance. Can you just clarify... how these unforeseen changes impacted the gross margin guidance in particular? Is it simply just a question of less fall through since you're obviously not going to be seeing the same kind of volumes in your internal production in the back half of the year, and that's the primary driver? Or is there anything else at work there?
spk08: No, I'd say primarily what we're talking about here is obviously the lower top line. And with the shelf-stable liquid creamer, that was a product that we were going to be utilizing on the e-comm side of the house as well, which would have carried a higher margin profile. So that had a negative impact. And then the second piece of that is – I'd say the second piece of the guidance pulldown 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 saw 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, still very healthy, don't get me wrong, but it's a margin profile that we love as well. It's an efficient 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 hoping for.
spk01: Okay, and in those anticipated resets, that now are delayed. Is that for specifically for you? Or is that generally for those partners?
spk06: Yeah, no, that's generally. I think with the year COVID, a lot of directories we've been talking to have just 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.
spk01: Okay. And then just one last quick one. Curious in terms of the competitive landscape, you know, there's some large players that are building, you know, 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 nut industry Oat mac creamer is positioned versus some of the other oat-based creamers.
spk06: Yeah, I mean, our product remains unique in the marketplace. And that's the one thing with our company and the innovation profile. You know, our creamers are truly clean label. There may be a lot of plant-based creamers out there, but ours definitely stands as a different product. Functional ingredients, clean label. And we've been innovating. And quite frankly, you know, that has led to some of the delays is we're just not willing to, on the shelf-stable liquid, to, you know, compromise. And so, you know, the OatMac itself has been a great platform. We've been seeing recently with, like, Pumpkin Spice launch where the OatMac has been actually outperforming the coconut base. It's unique. You see a lot of oat out there. You see macadamia nut. Our product has a great mouthfeel, a great flavor, combining the healthy fats from the mac nut and having avocado oil and things like that. It's a great product and definitely differentiated. It still has things like functional mushrooms, acumen, calcified sea algae with the 72 minerals. So we're very optimistic. We're seeing the consumer adoption of our fresh packaged liquid creamer, and it's just doing incredibly well. Shelf velocities are still growing, and we think we're well-positioned to play in this space and be very competitive. And, of course, this is one component of our overall brand platform that we're building as well. Okay.
spk01: Thanks, guys.
spk06: Thanks, Bobby.
spk07: Thank you. Our next question comes from the line of Alex Furman from Craig Howland Capitals. Your line is now open.
spk02: Hey, guys. Thanks for taking my question. And, Paul, congratulations on taking Laird from such a small company and growing it into what it is today and getting the company public. Wish you all the best in whatever you have next in store for yourself. I did want to ask a little bit. about the guidance for the year. Just by my rough math here, if you think about how well the online business has been growing, and it sounds like there's really no reason to think that that business isn't going to continue to perform really well, rough math would suggest that the wholesale channels for the back half of the year is going to be kind of flattish to where it was, you know, last year and in the first half of the year. So can you kind of unpack that a little bit? Obviously, there's a lot of things kind of kind of turning beneath the surface there. You know, how much of the lower guidance would you say is the delay of the shelf-stabled 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.
spk08: Yeah, sure. So in terms of the guidance, the majority of the pull-down would be related to the shelf-stable liquid creamer. And then I would say the remainder, a smaller portion, would be related to the club business. But the biggest driver in the second half, you're right on there, it will remain Econ and more specifically DTC. Because of that, we will see the growth spread across multiple product categories. In DTC, we just have that much larger customer base than we did a year ago, even a quarter ago. Same with the portfolio. We have a lot more products to utilize to drive that growth. And Q3, Q4, I think Paul just mentioned one of them. We have a handful of new products coming out. Boatmax Pumpkin Spice is a great one that is already showing amazing new customer acquisition, like you mentioned. The shelf-stable liquid creamer 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. We have had, and we will continue to have, some steady smaller door ads. We're improving the shelf velocities in that business. We fully expect our refrigerated liquid steamer to continue to grow its dollar contribution. It's doing really well so far. We're really happy with the progress we've made there. I'd say the one thing that could always... show up and cause some lumpiness is, you know, if Costco or Club in general performs better than, you know, we're taking credit for. And we are expecting continued rotations across various regions. And we know we are going to have a decent third quarter with them so far already, but we are being conservative with the level of placement that we're taking credit for in the fourth quarter. It's a great time for our product to be on shelf there with their new year kind of movement they do every year. But we are not being overly bullish with the assumed placement at that point in time.
spk02: Thanks, Val. That makes a lot of sense. And then, you know, just thinking about liquid in general, I mean, it seems like, you know, over the past year there have been a number of issues with some of the co-packers and, you know, the shelf life and things like that. And yet the demand clearly seems to be there from your retail partners and from your customers. I'm sure you must have looked at potentially bringing that manufacturing in-house. Can you talk a little bit about what you've seen out there, how much that might cost if you were to just get around co-packers completely and bring that product development in-house?
spk06: Yeah, I mean, that's something that we're constantly looking at. Just as you know, our sort of MO, we want to get that leverage and vertical integrate wherever we can. You know, we're looking at all the options. There's just, of course, bringing it directly in-house, manufacturing ourselves. There's partnerships that can be had. You know, there's... And then, you know, I will say on the co-packing, yes, you know, we've been a public company. So, you know, people got to see the whole development process of this product. But we are making progress. I know it may not seem like that. But, you know, the refrigerated liquid creamer, you know, over this course of a 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. We've solved those problems. We've got rid of the waste issues. 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're taking those lessons learned from that. And we're now going to apply that to the shelf stable aspect of it. It's a bit of a different process. It's a different partner. But we've now learned the best way to move the product Best way to make it. And, you know, we're going to get there. We're going to get there. It's just as a public company versus a private company, everybody gets to see the whole process. And so that's what everybody's been getting this year or the past year, which is a bit unique. But we're confident we're going to get there and feeling like we're making great progress. And as far as that vertical integration, there's still a lot of unknowns. We need to give this some more time, and we need to, you know, look at all the options, like I said, via partnerships, vertical integration, and co-packers.
spk02: Great. That's really helpful. Thanks, Paul.
spk07: Thank you. As a reminder, to ask a question, you will need to press JAR, then the number 1 on your telephone. Our next question comes from the line of George Kelly from Roth Capital Partners. Your line is now open.
spk04: Hey, everybody. Thanks for taking my questions. So just a few. To start with the picky bars, expectation for the full year. If I remember correctly, when you acquired the brand, it was, I think, $4 million of expected contribution for this year. Is that still the expectation?
spk08: Yeah, no changes there. And the PICCI integration, it's going smoothly. It's 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 that front. And I would say, you know, very early on, what we committed to as our priority there is the seamless integration for the consumer and the subscription perspective, you know, really making sure that we maximize the retention of that group. And so far, that's proving to be true. And also coming up, we're really excited to get the entire line of Piggy products on our website in the coming months, and also to start really telling those stories. We haven't had our major marketing and storytelling launch with all of that platform yet, so we're excited to get 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 to a lot of the bigger grocery buyers as well in the coming quarters. So lots is still to come, but so far really solid progress.
spk04: Okay. Okay. And then next question on a different segment, the coffee business. Didn't hear a whole lot of commentary in your prepared remarks just about the coffee opportunity. So just trying to gauge, you know, what is the opportunity? I guess how do you think it'll take longer to start to show more growth in that category or what have been your learnings, I guess, in that business?
spk06: We're excited for the functional copy. As I said before, I think it's going to be a huge portion of the coffee market in the next five years. Keep in mind, we just got our wholesale packaging. It was really in Q2 when we had that in hand to start selling. 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 few products that really allows us to expand into that larger conventional space. So a lot of our products today, they're more on the natural side. You kind of have access to those 4,000 or 5,000 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 starts to open up those 40,000 conventional doors, you know, that sub-$5 price point. It's really conventional gear product. The coffee also fits into that mold, you know, where 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, you know, a quality kind of conventional mass market pricing, which gives us the opportunity to open doors again. those those larger numbers of doors and then of course the third item that we're excited about is picky bars as he just talked about you know that the reason we went down that path is we can now develop a a mass market bar for 1.99 that gives us that third piece you know next year to really focus on opening those larger kind of conventional doors to get to that broader base goal So it's sort of a part of a concerted strategy to have a package of, you know, offerings for that larger conventional opportunity.
spk04: 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 that's all I had. Thank you.
spk08: Yeah, so in the second quarter, liquid growth sales were just shy of $1.2 million. And then the remainder of that, obviously, would be your shelf-stable business. But really nice progress on the liquid side, and a lot more to come there, we anticipate.
spk07: Thank you. And now I will turn the call back to Paul Hodge for closing remarks.
spk06: All right. Thanks everybody. Appreciate your time. And you know, I'm still going to be a highly active board member. I'm the one board member that lives in the area and I'm excited for the future of the company. I'm a big shareholder and you know, we've we're really bullish about the future of this company. We think there's an incredible opportunity longterm and, Thanks for your support.
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