Laird Superfood, Inc.
Q2 2021 Earnings Call Transcript

Published: 11 Aug 2021

[Operator:]

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.

[Reed Anderson:]

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 closed. 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 that 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.

[Paul Hodge:]

Thank you, Reed, and 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 incurring with the earnings release this afternoon. After careful consideration, I've decided now is the 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 and friends and co-Founders Laird and Gabrielle, my family and a ton of Sisters Oregon where we become an integral part of the local economy. There's been a privilege to lead this company for the past six years and I'm extremely proud of all we've accomplished together and such a short period of time. By bolstering the expertise of our team, it only enhances our competitive decision and makes the long trip potential even more compelling and mightier. Okay. So, now I'll start with a brief summary of who we are and what we do as well as provide a review Q2 highlights or key growth drivers. I'll then turn the call over to Scott McGuire our Chief Operating Officer; and Valerie Ells, our CFO, 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 better-for-you brands in the $759 billion grocery industry. Our business is Omni-channel 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 and nutrition and migration that we need to perform from sun-up to sun-down 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 the second quarter results. Total sales increased 64% to $9.80 million driven by continued momentum in a D2C business, or strong results in grocery and a solid contribution from a new particulars. Online sales were 57% or $2.1 million, a 94% growth in D2C year-over-year, despite the prior year period including a meaningful consumer shift to online purchasing in light of COVID. As you know, we are native digital, and our strength in nutshell continue to prove itself a 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 three times the CPG industry average and over 2/3rds 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 climb with 15% improvement from Q2 2020 for all the company's history. And we've seen a 20% improvement in second order rate and a 2020 cohort reorder rate compared to the 2019th cohort. Finally, average order value or AOV continue to improve as well, rising 30% year-over-year, now on par with our pre-free shipping AOVs. Result in wholesale illustrates a growing strength in solid base we continue to build an aggressive business. With second quarter, wholesale on total increased 77%, a 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 wonky 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. The addition of strong demands in those product trends on shelf and new door wins from the prior year period, losses are continuing to prevent in spoils and waste for refrigerated product, reducing these 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 adds for refrigerated liquid creamer in the second quarter include vegan yolks, and we're now under approximately 2600 total doors in this product line. Equally important the new doors with the placement have additional flavors in our existing doors such as our Sumac flavor and 340 , improving on our points of distribution and expanding our shelf presence and comments. And finally, and not be overlooked, is a continued growth of our shelf stable business. Excluding club sales, our shelf stable business have growth a 42% this last year. Reflecting our expanded days for both coffee products and powder creamers. From a mix 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 the refrigerated liquid creamers. Hydration and beverage enhancing supplements increased 54%. By better prebiotic daily greens in the strong contribution from our Renew Rest & Recover product in May. Coffee, tea, and hot chocolate increased 36% or by one of our foundational products that this was followed closely by some more gains in the new functional coffees as well as regular coffee. And finally, Harvest snacks and other food items, our newest category drove $1.3 million in incremental sales. Our Harvest snacks and other food items include our Pili Nuts and Harvest Dates, our recently launched brownie and cookie baking mixes, then of course our newly acquired Picky Bar pipelines, bars, oatmeal and granola. We view these new categories performance a strong evidence that for brand platform approach continue to take hold in our existing customer's daily ritual, as well as introducing new customers in 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 the rebranding efforts and systems integrations. We are of course running new lessons as we go which we plan to implement in potential future acquisitions. But overall, at this point, we are very happy with the progress. Despite the significant progress across most topline drives and despite delivering on our commitment to achieve shelf life extensions and waste reductions for our refrigerated liquid creamer, we did encounter a setback related to our shelf stable liquid creamer which we viewed as an important revenue driver for the second half 2021. At the very end of June and in 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 Septembers plan. They will 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 we often just see in 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 to become available. In addition, we have pivoted into alternate flavor profiles, food formulations still meet our high standards. We had planned to move forward our coconut-based creamer first. Then given the new information, we'll be pushing forward with our oat & nut-based creamer as a first shelf stable launch. We have seen really solid oat & nut performance since watching our powder creamer in this high growth category including a new customer acquisition. And we also believe we can produce this product more easily towards standards. We are still very optimistic that the shelf stable creamer will be a strong growth driver for us both in wholesale and ecommerce but unfortunately with the facts the other day, 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 and maintain integrity of our brand and a strong gross and entry that affords along with driving long-term value for all our stakeholders. And on that note, a quick update and maintain integrity of our brand and a strong growth and entry that affords along with driving long-term value for all our stakeholders. And on that note, a quick update on our ESG initiatives. Last time we discussed our ESG initiatives, we highlighted three incredibly exciting cost promises, together we can meet the donating 1.5 million meals of Feeding America, reducing the impact of our online sales by building a carbon-neutral last mile with aiding projects in First Environment. And supporting our critical care workers and first responders at the keep it safe through this pandemic with . Regarding Feeding America, we are in track with our pledged noting 1.5 million meals to American space increasing security with over 500,000 meals currently on deck. Regarding in projects, the process of planting a 100,000 mangrove trees cost 900 hectares in 10 years be on, albeit sort of carbon-neutral last mile door from online orders. And with Houdini, we recently completed the first of our Houdini activations by giving over 3000 everyday cereal bundles at no charge, to the brave critical care workers and first responders are keeping it safe. An effort, financially supported by our partner Danone. Beyond these larger costs projects, our internal sustainability team has been constantly working on many smart which possibly effect every aspect of our company. These efforts are quarter or company's mission values and something of which we are very proud. To summarize, in Q2 despite some challenges, we can deliver strong growth across multiple channels, we're on our portfolio with introduce some new innovative products, further expanded our customer base and begin to integrate Picky into the organization. Our brand platform approach continue to demonstrate its power. And our build up platform now covers multiple large camps, 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.

[Scott McGuire:]

Thanks, Paul. Our top priorities remain people safety, keeping customers' orders filled and position ourselves to handle greater complexity and greater revenues. Without taking an eye off of those who make great strides in our Picky integration and we execute flawlessly on nine new products. We have a great process for getting all those done and as I shared last couple of quarters the forums are our approach. Manufacture more ourselves, make them more efficiently, move it smarter and faster in 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 customer's growth, request and ever-changing supply chains. I'm so proud of every person on our team who rally to produce in-house six new score. That's what we call going vertical and one 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 implement projects. Additionally, with so many companies struggling with raw materials and transportation, our yearlong strategy to build inventories during pandemic uncertainties has paid off and positioned us well and finished good in raw material safety stocks. For the second quarter in a row, this was demonstrated by achieving nearly perfect customer order compliance. Move it smart 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 manufacture rates and spoils by 50%. Additionally, in May, we implemented a form of going vertical in the balance of our liquid distribution logistics and take 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, given its leverage against our parcel cost. Going forward, we are optimistic about additional subscription consolidations as well as the early returns on how Picky products mix with various parcel configurations. Finally, we agree to a partnership of two industry leaders in order fulfilment who will implement our next level execution software for a vertically integrated direct to consumer business. These will both be part of our new on campus customer fulfilment center due to open in the fourth quarter. And in my company. Finally, from day 01, we've 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 until we believe this is my company. In that line, not only is the acquisition of Picky 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 Picky team say this is my company. Now let me turn the call over to Valerie Ells our CFO.

[Valerie Ells:]

Thanks, Scott. Growth in online in wholesale channels are key factors in our second quarter performance, driving and 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 and 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 your customer base and are seeing continued traction in grocery. Well, brand and quality are key factors helping to grow our door count 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 and our liquid skews for 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 and extended shelf life and significant operational and logistical improvements late in the second quarter.

[air:]

On a sequential basis, Q2 gross margin was down 120 basis points, primarily reflecting elevated wholesale freight expenses. While the margin benefits of an optimized DTC shipping expense in reduced liquid creamer related chargebacks were largely offset by the sell-through higher cost of 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 in 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 changing cash from Q1 to Q2 reflects normal operating activities plus the net use of approximately $10 million of cash to complete the acquisition of Picky in early May. Related to our full year 2021 outlook. When establishing our guidance early this year, we noticed that the achievement of top line revenue targets would be contingent on successful outcomes of the following priorities 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 products places on shelf at larger partners 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 products 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 marking 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 consumers’ daily ritual. In terms of earning more product placements on shelf at existing partners and winning new wholesale doors, we have had some meaningful wins this year such as the placement in Target, Harris Teeter, Wakefern and Stater Bros in the U.S., Yeswellness in Canada, we've also expanded item placements and CVS whole Foods, sprouts, Safeway, Farms and Civilians in , 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 reset which were previously planned for Q3 and Q4. And this will delete some of the expected wins and growth opportunities in wholesale until 2022. We remain confident in earning additional places. The timing, however, will be less than anticipated. And finally, launching a shelf stable liquid creamer options 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 creamer 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 million 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 the 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 imperial 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 our 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 market we operate in with plant based options continuing to serve as growth drivers across categories while also taking care. And more specifically to our business our direct online platform remains an exceptional performer and a strong growth driver. We did not anticipate that to change. Our grocery business continues to build an expanding base for growth in our overall wholesale run rates within very long run like. Our club business is stable with 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 the balance of the year we remain confident in our ability to drive solid growth for years to come across various categories. Paul Hodge. Paul I'll pass it back to you.

[Paul Hodge:]

Thanks everybody for your time today. As you can see from a 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?

[Operator:]

Thank you. We have our first question from the line of Bobby Burleson from Canaccord. Your line is now often.

[Bobby Burleson:]

Good morning 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 the last fall got some sensitive state, 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 that work there?

[Valerie Ells:]

Now, 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-commerce side of the house as well, which would have carried a higher margin profile that had a negative impact. And then the second piece of that is that it's the second piece of the guidance pulled down 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 at still very healthy, don't get me wrong, but it's the 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.

[Bobby Burleson:]

And then those anticipated resets that now are delayed. Is that for specifically for you? Or is that generally for those partners?

[Paul Hodge:]

No, that's generally I think, with the year COVID a lot groceries we've been talking to, they've 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 and this change is happening at that level. So nothing specific to us.

[Bobby Burleson:]

And then just one last quick one. Curious in terms of the competitive landscape there's some large players that are building 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 OatMac creamer is positioned versus some of the other scrapers?

[Paul Hodge:]

I mean, our product remains unique in the marketplace. And that's the one thing with our company and the innovation profile in our creamers are truly clean label a lot of, 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 that has led to some of the delays is we're just not willing to on the shelf stable liquid to compromise and so the old Mac itself has been a great platform. We've been seeing recently with like pumpkin spice launch reveal Mac has been actually outperforming the coconut base. It's unique. You see a lot of oat out there. You see nut. Our product has a great mouth feel, a great flavor, combining the oat, the Mac, the healthy fats from the Mac Net and having avocado oil and things like that. So it's a great product and definitely differentiated still as things like functional mushrooms, ochman calcified CLG with the 17 minerals. So we're very optimistic. We're seeing the consumer adoption of our fresh packaged liquid creamer. And it's just incredibly well, shelf lawsuits are still growing. And we think we're well positioned to play in the space and be very competitive. And of course, this is one component of our overall brand platform that we're building as well.

[Operator:]

Thank you. Our next question comes from the line of Alex Fuhrman from Craig-Hallum Capital. Your line is now open.

[Alex Fuhrman:]

Thanks for taking my question. And Paul, congratulations on taking Laird from such a small company and growing it into what it is today 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 my kind of 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 business isn't going to continue to perform really well. Rough math would kind of suggest that the wholesale channel for the back half of the year is going to be kind of flattish to where it was 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 turning beneath the surface there. How much of the lower guidance would you say is the delay of the shelf stabled liquid product and you know, 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?

[Valerie Ells:]

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 a common more specifically DTC because of that, and we will see the growth spread across multiple product, excuse me categories. In DTC, we just have that much larger customer base than we did years ago, even a quarter ago. Same with a 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. But Mac 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 that we have had, and we will continue to have some steady, smaller door as we're improving the shelf life in that business. We fully expect our refrigerated liquid creamer to continue to grow with dollars 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 Costco or club in general performs better than we're taking credit for. And we are expecting continued rotations across various regions. We know we are going to have a decent third quarter of them so far already. But we are being conservative with the level of placements not where we're taking credit for in the fourth quarter. It's a great time for our product to be on shelf there was their new year, 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.

[Alex Fuhrman:]

Thanks, Valerie that makes a lot of sense. And then just thinking about liquid in general. I mean, it seems like over the past year, there have been a number of issues with some of the co-packers and the shelf life and things like that. And yet the demand clearly seems to be there from your retail partners and from your customers. And I'm sure you must have looked at potentially bringing back manufacturing and how 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?

[Paul Hodge:]

I mean, that's something that we're constantly looking at, just as our sort of Mo we want to get that leverage and vertical integrate wherever we can. We're looking at all the options. There's this, of course, bring it directly in house manufacturer itself, there's partnerships that can be had. And then I will say on the co-packing, yes, we've been a public company. So 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 the refrigerated liquid creamer over the 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's a bit of a different process. It's a different partner. But we've now learned the best way to move the product, the best way to make it and 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 for 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 then as far as that vertical integration, there's still a lot of unknowns we need to give us some more time and we need to look at all the options like I said the partnerships, vertical integration, and co-packer.

[Alex Fuhrman:]

Great, that's really helpful, thanks Paul.

[Operator:]

Thank you. Our next question comes from the line of George Kelly from ROTH Capital Partners. Your line is now open.

[George Kelly:]

Hi, 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's Is that still the expectation?

[Valerie Ells:]

No changes there. And the Picky integration, it's going smoothly, it's going as planned, they made a very solid contribution in the first few months following the acquisition. So very much on track of what we expected no change to the previous estimate on that front. And I would say very early on what we committed to is our priority, there is the seamless integration for the consumer, and the subscription perspective really making sure that we maximize the retention of that group. And so far, that's proving to be true. And also coming up where we're really excited to get the entire line of 50 products on our website in the coming months. And also to start really telling those stories we haven't had our head or major marketing and storytelling, launch was 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 of still to come. But so far, really solid progress.

[George Kelly:]

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 he's trying to gauge what is the opportunity? I guess do you think it will take longer to start to show more growth in that category, or what has been your learnings? I guess, in that business.

[Paul Hodge:]

No, we're excited for the functional copy. And you know, as I said before, I think it's going to be a huge portion of the coffee market next five years. So we're keep in mind, we just got our wholesale packaging, it was really in Q2, when we had that in hand to start selling. So we are now selling into some conventional channels and natural channels. And what we're excited about the coffee is what it, 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. We kind of have access as four 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 serves to open up those 40,000 conventional doors that sub $5 price point, it's really conventional your product, the coffee also fits into that mold where we've got the price point down now for a great organic copy with functional benefits at 12.99 a bag. That's right in line with quality kind of conventional mass market pricing, which gives us the opportunity to open doors, 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 that the reason we went down that path is we can now develop a mass market bar for $99. That gives us that third piece 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 the package of offerings for that larger conventional opportunity.

[George Kelly:]

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.

[Valerie Ells:]

So in the second quarter, liquid gross sales were just shy of 1.2 million. And then the remainder that obviously will be your shelf stable business, but really, really nice progress on the liquid side. And a lot more to come there we anticipate.

[Operator:]

Thank you. And now I will turn the call back to Paul Hodge for closing remarks.

[Paul Hodge:]

Thanks, everybody. Appreciate your time and I'm still going to be a highly active board member. I'm the one board member that lives in the area and excited for the future of the company on the big shareholder. And we're really bullish about the future of this company. We think there's an incredible opportunity long term. And thanks for your support.

[Operator:]

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.