eResearch | Last week, Laird Superfood (NYSE: LSF), a plant-based food company, listed publicly on the New York Stock Exchange (“NYSE”), raising a total of $67 million. Laird started trading on the NYSE at $40.96 per share, after pricing its Initial Public Offering (“IPO”) at $22 per share.
Laird issued 3 million shares, which included the underwriters’ fully exercised options to purchase an additional 0.39 million shares.
Since launching its first product in 2016, Laird has grown revenue from $0.6 million to $13.1 million in 2019, increasing at a CAGR of 185%. In the same period, gross margins expanded from 25% to 39%.
Laird is driven by its mantra “Better Food, Better You”, as it strives to provide healthy alternative plant-based food products while focusing on Environment, Social and Corporate Governance (“ESG”) standards.
In the S-1 Prospectus, Paul Hodge, CEO of Laird, spoke on the environmental benefits of plant-based food manufacturing, as he said,
“All food manufacturing has an environmental impact. By focusing on plant-based alternatives, we believe we are part of a movement to reduce the carbon impact of our community’s daily lives. Further, with products like our Hydrate coconut water, we are reducing single-use containers, and taking thousands of tons of freight out of the supply chain by providing a space and weight efficient powdered alternative to refrigerated single serves.”
The funds raised are expected to be used towards working capital and general corporate purposes, in addition to potential acquisition opportunities.
Earlier this year, Laird received a $10 million investment from Danone Manifesto Ventures, an investment arm of Danone S.A. (EPA: BN). Danone S.A. is a European multinational consumer food products company that serves 120 markets.
Last year, Laird secured $32 million in private funding, which included WeWork as an investor. In partnership with Laird, WeWork made Laird’s products available at select WeWork locations. In addition, WeWork was given a seat on Laird’s board.
Laird’s stock is currently trading at $41.72 per share, a 90% increase from its listing price, with a market capitalization of $370 million and an EV/Revenue of 20x.
Laird Superfood
Laird is mainly focused on the plant-based beverage and coffee market. Laird’s products are segmented into three main categories
- Coffee Creamers (67% of total revenue)
- Coffee, Teas, and Hot Chocolate Products (16% of total revenue)
- Hydration and Beverage Enhancing Supplements (15% of total revenue)
The ingredients used in Laird’s plant-based products come from coconut and Aquamin, a mineral-rich, calcified sea algae harvested in Ireland. The ingredients were tested in various recipes over a period of 14 months. In 2016, Laird launched its first product, the Original Superfood Creamer.
PHOTO 1: Laird’s First Product – The Original Superfood Creamer
As the consumption of beverages such as coffee is a daily ritual for many consumers, it provides opportunities for Laird to gain recurrent orders from customers. In H1/2020, repeat and subscription-based customers accounted for 61% of Laird’s total revenue.
Business Model and Omni-channel Distribution Strategy
Laird is focused on creating a vertically integrated business model, leveraged by automation, and highly efficient manufacturing processes. The vertical integration allows Laird to rapidly expand production capacity while providing fixed-cost leverage on increased volumes of sales.
Only nine of Laird’s 26 stock keeping units (“SKU”) are co-packaged with manufacturing partners, while the rest of its SKUs are produced in-house.
Laird sells its products through its omnichannel distribution strategy, which includes sales from (1) online e-commerce, (2) wholesale, and (3) food services. The online channel includes business from its own e-commerce website and from Amazon.com.
Sales are mainly driven through online and wholesale distribution channels, which accounted for 57% and 41% of Laird’s total revenue in H1/2020, respectively. The food services channel is a much smaller segment servicing local and regional coffee shops and juice bars.
Financial Highlights
In H1/2020, Laird had Revenue of $11.1 million, a 104% increase from the prior year’s comparable period. In the past twelve months, Laird reported Revenue of $18.8 million, a 92% increase year-over-year.
CHART 1: Laird Quarterly Net Sales (2016-2020)
Laird’s sales have proven to be highly recurrent and resistant to economic downturns, as it reported record revenues in its most recent quarter, amid the COVID-19 pandemic. The pandemic supported Laird’s sales as consumers increased at-home coffee consumption while decreasing purchases at coffee retail stores.
However, in H1/2020, Laird reported a Net Loss of $5 million versus $3.9 million in the prior year’s comparable period. In the past twelve months, Laird’s Net Loss has expanded to $9.5 million.
Laird recently experienced increased expenses and lower margins due to the pandemic increasing costs for shipping and distribution. In addition, Laird is currently investing significantly in sales and marketing to expand its customer base.
Plant-based Beverage Market
Consumer preference is evolving toward healthier beverage products. The traditional beverage market is laden with products that have high sugar content and significant amounts of processed and artificial ingredients.
According to Markets and Markets Research, the plant-based beverage market was valued at $11 billion in 2017 and is expected to reach $19.7 billion by 2023, growing at a CAGR of 12%.
Other recent eResearch articles related to the plant-based industry:
- September 2020: Plant-based Food Industry Update – Modern Meat Goes Public, Burcon Raises $95M, and Yield Growth Changes Name to Better Plant Sciences
- July 2020: Plant-based Dairy Company “Perfect Day” Announces Extension of Series C Funding Round to $300M Led by CPP Investments
- June 2020: Three Canadian Public Plant-based Protein Companies with Little Revenue but Big Potential
