Welcome to the Market Herald Video Q&A Podcast.
I’m Brieanna McCutcheon.
Most people, if not everyone, know someone vegan, vegetarian, or flexitarian. This is good news for companies like Naturally Splendid, which aim to provide tasty and delicious plant-based foods that fit everyone’s lifestyle.
Plant-based options are something the company knows well, offering lineups like Burgers, Garlic Kiev and Sweet Chili Tenders.
Partnering with some of the country’s largest distributors has its perks, and here to talk more about the company and where it’s going is Craig Goodwin, CEO, Bryan Carson, the Executive VP of Naturally Splendid, and George Ragogna, CFO.
TMH: The company just had its AGM, and it seems you’ve made several key strategic decisions to allow you to focus on manufacturing the Plantein line, why is this a key focus going forward this year and in years to come?
Craig Goodwin: We did have our AGM on August 30th, and at that AGM, there were several key decisions announced, structurally as well as operationally Brieanna, and structurally we applied to the exchange to approve a consolidation of the shares of Naturally Splendid, and we’re waiting for that approval right now, but operationally, the company has made several strategic decisions to focus our energies, and our resources on manufacturing plant-based entrees and we’ll be doing this under an exclusive agreement with Australia’s largest plant-based manufacturer called Flexitarian Foods. So based largely on this exclusive agreement, we have either ended or amended certain operations within the company, and this is going to allow us to focus on the manufacturing of these plant-based entrees.
TMH: You mentioned the exclusive agreement with Australia’s largest plant-based manufacturer. Can you provide an overview of what that looks like and how it benefits the Company?
Craig Goodwin: I sure can, and this is absolutely key. Naturally, Splendid has entered into an exclusive 10-year agreement to manufacture and distribute plant-based entrees in Canada with Australia’s largest plant-based manufacturer, I mentioned Flexitarian Foods. We’ve also secured the licensing rights for the name Plantein in Canada. By doing so, we’re able to leverage the success of the brand, the manufacturing techniques, and the inherent IP, all in one package as a path forward to success. So it’s incredibly important and beneficial that we already have that path forward to success with an already proven successful formula in Australia
TMH: Now, Bryan, you’re right in the heart of the company, the Test Kitchen, where the magic is done. I know there’s a vast number of products that you guys offer. How many Plantein products do you offer in Canada?
Bryan Carson: Right now, we’re offering eight SKUs in both the retail and food service markets. We also have over 30 products that have finished development by way of the R&D team in Australia. One of the benefits that we have here at Naturally Splendid and working with the Plantein team in Australia is how quickly we could get these products to market. We’ve been able to produce new products, whether it be flavours, textures, or a completely new item, in as little as 8 to 12 weeks.
TMH: From all the work the company has been doing in going to tradeshows and such, how have the products been received in Canada?
Bryan Carson: So far, the products are being very well received. We had two and a half years of COVID that disallowed us to be able to attend trade shows and get in front of the buyers and decision-makers in any of the companies where we were trying to build sales. At the end of the day, it comes down to taste. The product has to taste good, or consumers aren’t coming back to buy it, and one thing I can tell you right now that I wholeheartedly believe is we have the best-tasting plant-based meat alternative products in the market today.
TMH: So what I’m hearing Bryan is taste is a big component of the company. If it doesn’t taste good, people aren’t really going to want to eat the product, right?
Bryan Carson: That is absolutely correct, we feel the best way to judge the opportunity with Naturally Splendid and in particular with planting Canada is to try the product, and the best way to do that is to head over to any Denny’s restaurant across Canada, into a retailer that’s carrying the product or head over to the website at www.plantein.ca and order the product there. The product ships froze, it will arrive frozen, and I promise your taste is everything. You will be pleasantly surprised at what Plantein has.
TMH: Craig, what are the benefits of manufacturing for Private Label and Contract Manufacturing? Can you explain this strategy?
Craig Goodwin: It is very important to understand the opportunity of manufacturing your own brand but also private label and contract manufacturing. Our brand itself, we are able to control that, we have price advantages. We can also take the product development and launch products in a timely manner. Working with private label clients and partners is incredibly important. It gives us another opportunity to generate revenue at that same retail shelf, and in fact, we can do that with contract manufacturing clients as well. I think it’s really important to understand right now, especially in private label, that 40 per cent of consumers have bought more private label brands before the pandemic, and three-quarters of these shoppers are planning on continuing to support private label brands, and this is in part because of the increasing cost of feeding a family nowadays, that private label brand delivers value. They don’t have to advertise as much, and there are not as many marketing dollars behind. So they’re able to offer value to their clients and their consumers and shoppers, and that’s why the private label is such a great opportunity for Naturally Splendid and Plantein.
TMH: Will the product manufactured in Canada be the same as what you currently import from Australia?
Craig Goodwin: You know what, it sure will be, and that’s key. Bryan touched on this a little bit earlier. Taste is everything, and we spend an enormous amount of time in an effort to make sure that we’re creating the exact same quality of product that has a fantastic taste that our consumers are getting to know. So I can assure you that the products that are manufactured in Vancouver will be equally as tasty and delicious as the product manufactured in Austria.
TMH: How much product can you manufacture in a single shift?
Craig Goodwin: When we optimize this facility here, we’ll be able to do up to 30 tons of product a day out of this one facility, and we do this out of a relatively small footprint, which of course, then creates that very healthy bottom line.
TMH: George, can you give us some timelines on when you expect to be manufacturing in your own facility and once it’s running, what effect it will have on the company?
George Ragogna: Absolutely, Brieanna, I can give you an update as to where we’re at with our current process. All our equipment right now needed to manufacture has been ordered, and we’re expecting that equipment to arrive within the next several months. We’ve already started to receive some of that equipment, like our spiral freezer. At the moment, we are waiting for a major piece of equipment coming out of China that has been delayed. The delay has really been a result of two reasons. The first is the reoccurring COVID shutdowns that are happening in China, and the other is a delay in receiving the required computer chips needed for the software to run this equipment. As we know, there’s been a global shortage of computer chips, and this has affected us as well, but we are expecting the equipment to be completed within the next 45 to 60 days and adding another 30 days to arrive in Vancouver. With these timelines in mind, we expect and have a goal of having our facility operational in Q1 of 2023.
TMH: So Q1 of 2023, food will be getting made?
George Ragogna: Correct, and one of the things that we’re excited about is once we do start manufacturing here, we’re going to see some significant effects on our bottom line with increased margins, and there’s a couple of reasons for this, Brieanna. First, the ingredient acquisition is going to be far less expensive. 80% of our ingredients are going to be coming right here from Canada. The other reason is the logistics of shipping products from Australia to Canada will be eliminated. Once we’ve adjusted for these costs, the outcome will significantly improve our bottom line. This will not only put us in a position of increased margins but will also give us a position where we can either maintain or be more aggressive with our pricing, which I think will put us in a better position overall as the market continues to expand and more competitors are coming into the marketplace
TMH: Craig, in your opinion, what’s driving growth in the plant-based market, and where does your company sit within the ever-changing market of plant-based food?
Craig Goodwin: Brieanna, there are many factors that are driving the growth in this sector, personal health, it’s unquestioned that increasing your consumption of plant-based food and reducing meat intake is good for your health. Environmentally sustainable, environmentally friendly. This is a huge driver as well, and there’s absolutely no doubt that agricultural farming has far less impact on the environment than animal farming, and we’re seeing these effects of animal farming all around us. Not that it’s the only reason for global warming or droughts around the world, but switching or at least moving more towards a plant-based diet, is going to be great for the environment, and it reduces the use of water by up to 90% by producing the same amount of protein. So whether it is a fraction of the water required for agricultural farming as opposed to animal farming, the drastically less greenhouse gas emissions or the less intrusive impact on the environment than animal farming, plant-based nutrition is truly here to stay. There’s also growing awareness and a movement towards animal welfare. All of these events, all of these conditions combined are creating an opportunity that is seeing plant-based products at the shelf grow two and a half times faster than traditional groceries. So we’re seeing nothing but an upside to this category, and we look forward to providing our delicious products to as many consumers as possible.
TMH: And lastly, how does the recent restructuring build shareholder value?
Craig Goodwin:: By focusing our attention on this plant-based manufacturing under an exclusive agreement with Flexitarian Foods, the path to success is clearly in front of us. We know the products are tasty. We know that they’re successful, they can be manufactured profitably, and all this combined will build shareholder value. So Naturally Splendid has never been more focused. We’re on the edge of our biggest opportunity ever, and as Bryan has mentioned, I encourage everybody out there to try our product just for yourself, the opportunity in front of Naturally Splendid, and we look forward to bringing more products to more people in the days to come.