Could Better Choice be the Next Blue Chip Pet Stock?
A Recent Uplisiting Positions Better Choice for Massive Growth
Animal Health and Wellness has proven to be a recession proof market. As the “humanization of pets” trend continues, people are spending money on their pets in the same way they would members of their family. Riding that wave, is a company called Better Choice, which is offering health-minded consumers superior quality pet food and treats through their proven flagship brands, while expanding into international markets. .
Better Choice has recently uplisted to the NYSE, ticker BTTR, raising $40M dollars in the process. This step positions the company for greater investor visibility, while the capital raised will be used to grow the company at an increased rate. We’re excited to see Better Choice taking a big leap in 2021.
CEO Scott Lerner Dives Into the Mission of Better Choice
5 Reasons Better Choice is Set to Take Off
1) Recession Proof Market – Despite the issues caused by the pandemic, the US pet care market continues to grow at a CARG of 8%. The industry is expected to reach $275B by 2030, more than doubling within the decade.
2) Growing Revenue – Better Choice anticipates sales in e-commerce and direct to consumer will grow 15% – 20%+ on an annual basis, which represents 59% of Better Choice’s revenue today. They posted a little over $50M in gross sales for 2020, and are on track to hit $100M by 2023.
3) International Opportunity – Better Choice has secured more than $100M in aggregate minimum purchases through 2025 from key Asian distribution partners, and is one of a handful of companies in their category authorized by the Chinese Ministry of Agriculture to sell US manufactured pet food in mainland China. In 2020, sales in Asia increased by 95% YoY, and with the expansion of their popular freeze-dried offerings that growth should continue.
4) Quality Products = Quality Customers – Better Choice’s Halo and Trudog brands use real meat and whole ingredients to serve a consumer base that invests heavily in pet health. Market research by Morgan Stanley shows that 79% of their target customers (millennial females) are likely to spend more on quality products, meaning Better Choice is perfectly positioned to maximize margins and capture market share.
5) The Omni-Channel Advantage – By taking a multi-channel sales approach, Better Choice holds an edge when it comes to launching new products, reducing channel conflict, and diversifying revenue streams.
A Better Approach to Healthy Pet Products
Better Choice Company Inc. (NYSE: BTTR) is a rapidly growing animal health and wellness company leading the industry shift toward health-first pet products and services.
Better Choice takes a nutrition-based approach to animal health, and their portfolio of brands is positioned to benefit from mainstream trends toward pet care. They have a proven, multi-decade track record of success selling trusted animal products and are leveraging their established digital footprint to provide pet parents with the knowledge to make informed decisions about their pet’s health.
They sell the majority of their dog food, cat food and treats under the Halo and TruDog brands, which are focused, respectively, on providing sustainably sourced kibble and canned food derived from real whole meat, and minimally processed raw-diet dog food and treats.
We all know how successful Chewy.com has been, becoming an industry unicorn when it IPO’d in 2019. The “pet-humanization” trend shows no signs of slowing down, as consumers spend money on their pets as though they were human members of the family.
That’s good news for those looking to invest in the pet food/treat markets.
As you can see, this industry has sustained growth even through the pandemic. In the U.S. alone, the pet care market is expected to reach $275B by 2025, and that trend is born out globally.
Better Choice is a great example of a company taking advantage of these market trends, while providing excellent products. They target the healthy pet segments with their two major brands, TruDog and Halo, which focus on producing healthy food and treats.
A pet has to eat, and more consumers are choosing to feed their pets with health in mind. The ability to provide high-quality food and treats is something pet parents will pay for, even when we experience economic rough patches. Despite the difficulties of the pandemic in 2020, Better Choice was able to increase their market share and grow their revenue, with 59% of sales coming from e-commerce and DTC. They posted $50M gross sales in 2020, and are on track to hit $100M by 2023.
Moving forward, Better Choice is one of a handful of companies with authorization to sell directly in mainland China, with 20% of their net sales currently coming from international markets. Key Asian distributors recently extended a major deal, which guarantees a minimum aggregate purchase of $100M through 2025. As one of a select few companies with this international sales advantage, we’re excited to see if Better Choice Brands can become a household name in foreign markets.
Better Choice, Better Future
We believe Better Choice’s recent uplisting to the NYSE will be key to accelerating their growth across sales channels. The proceeds raised ($40M gross) are earmarked for advancing their product pipeline, expanding reach, and the pursuit of strategic acquisitions.
The uplisting didn’t just raise Better Choice’s profile; they were also able to pay down some debt. Michael Young, Chairman of Better Choice, said this in a recent press release, “Following the conversion of the convertible notes and the estimated receipt of approximately $40.0 million of gross proceeds, Better Choice will have a net cash position of greater than $30.0 million, with the only remaining debt on the Company’s balance sheet a $12.0 million credit facility bearing interest of LIBOR plus 250 basis points.”
As Better Choice pursues their mission of becoming the most innovative premium pet food company in the world, we are encouraged by the efforts being made to grow sales across the board.
In a Business Observer piece, Better Choice outlines how they are working to become the recommended brand in stores like Petco, via a grassroots education approach. “Where we’re focusing a lot of our effort for 2022 is into the pet specialty channel — reinvigorating with Petco and other players,” Scott Lerner says. “The pet industry is driven through recommendation through store clerks. If you’re strong in that channel, we believe it will also help the other channels of business. It drives awareness across the board.” more in-store sales will translate to more e-commerce sales, and so-on. Add that to a strong subscription base and an email list over 500K strong, and Better Choice is clearly positioned to grow at an accelerated rate.
The future of this premium pet food brand looks bright. Following their uplisting on NYSE, it’s only a matter of executing a well-laid plan to become the go to brand for the health-conscious consumer. Ultimately we’re confident that Better Choice Company is a strong play in the pet care space.
Built in Customer Base – Better Choice’s brands (TruDog and Halo) have been successfully serving a loyal consumer base for decades, and their market is only expanding.
Excellent Leadership – Management team has decades of experience increasing profits and growing brands in the pet care space.
Growing Revenue Streams – Better Choice is growing their revenue in e-commerce/DTC sales, while simultaneously expanding their international presence.
Valuation Fundamentals – Comparable competitors have higher valuations such as Freshpet (FRPT) which trades higher but has comparable metrics.
Management Team Highlights
More than 100 years combined experience
Proven record of increasing sales and profitability (by an average of 30%)
Multiple awards, including Pet Age Magazine’s 2019 ICON Award
Hundreds of millions in combined sales at other leading pet food brands
Management
Scott Lerner
CHIEF EXECUTIVE OFFICER
Scott Lerner is a consumer products veteran with over 20 years of experience in the consumer packaged goods industry, having previously worked for PepsiCo, ConAgra Foods and Kimberly-Clark, where he managed iconic brands such as Naked Juice, Quaker Oats, Scott Tissue and Parkay Margarine. In 2008, Scott created his own beverage brand called Solixir, resulting in a successful exit in 2014. Following the sale of Solixir, Scott partnered with the private equity group VMG partners to become the CEO of Kernel Season’s, where he introduced new product lines, increased profitability by 30% and oversaw the sale of the company to Highlander Partners. Mr. Lerner was most recently the CEO of food brand Farmhouse Culture, where he partnered with private equity investors to reposition the brand in order to capitalize on growing health and wellness trends.
Sharla Cook
CHIEF FINANCIAL OFFICER
Sharla Cook joined Better Choice Company in April 2020, bringing more than 17 years of accounting and financial management experience for both start-ups, and mature, global organizations. Prior to joining Better Choice, Ms. Cook served as Vice President, Accounting, and Corporate Controller at a real estate investment management and property management company, where she led corporate accounting and finance, risk management, and human resources. Prior to that, Ms. Cook was Corporate Controller at Checkers Drive-In Restaurants, Inc. where she oversaw corporate accounting, tax and financial planning and analysis. Prior, Ms Cook held various positions across multiple industries with oversight of accounting, finance, and treasury. Ms. Cook began her career at KPMG LLP in Tampa. Ms. Cook is a Certified Public Accountant in the state of Florida, and holds a Bachelor of Science in Accounting from Southeastern University.
Alex Vournas
VICE PRESIDENT OF SUPPLY CHAIN & LOGISTICS
Alex Vournas is a highly accomplished Supply Chain professional who most recently was the Director of Supply Chain at Solid Gold Pet LLC, where he oversaw global distribution and logistics and was responsible for managing multiple international and domestic co-manufactures and warehouses, outsourced transportation and ordering logistics. Among many other accomplishments, Alex was responsible for managing the logistics related to the company’s significant expansion into Asia, which culminated in a sale of the business to Hong Kong based H&H Group in November 2020. In addition to his experience at Solid Gold, Alex has been a Supply Chain Director at various companies for over 10 years, including Anheuser-Busch and Sara Lee. Alex Vournas holds a Master of Business Administration in Management from St. Louis University.
Donald Young
EXECUTIVE VICE PRESIDENT, SALES
Donald Young joins The Better Choice Company with more than 29 years of experience leading the sales organizations of several prominent pet specialty pet food brands including The Nutro Company (Natural Choice, MAX, and Greenies Brands) and Merrick Pet Care, Inc. (Merrick, Backcountry, Purrfect Bistro and Fresh Kisses Brands). Following his success at The Nutro Company, Mr. Young led the turnaround and expansion of Merrick Pet Care’s Pet Specialty business from 2010 – 2020, where he was directly responsible for growing the company from a niche brand to the #3 natural player in the pet specialty retail channel. Merrick Pet Care more than quadrupled its sales during this period, surpassing $500m in the process and ultimately leading to the sale of Merrick Pet Care to the Nestle Purina Company. Donald has also been recognized by his peers in the Pet Industry for his track record of success, winning numerous sales awards throughout his career including recognition as one of Pet Age Magazine’s 2019 ICON Winners.
Jennifer Condon
EXECUTIVE VICE PRESIDENT, DIGITAL SALES
Jennifer Condon joins Better Choice Company from Mizkan America, where she was the head of E-Commerce and Shopper Marketing for brands including Ragu, Bertolli, Nakano and Holland House. From 2014 – 2019, Jennifer led Merrick Pet Care’s E-Commerce sales platform and was directly responsible for increasing online sales to $130 million in 2019, representing a 30% CAGR over five years. In addition to her work directly with E-Commerce retailers such as Amazon and Chewy, Jennifer has experience building her own direct-to-consumer business and was instrumental in the development of Lands’ End.com. Jennifer holds a Bachelor of Arts in Sociology and Business Administration from the University of Wisconsin – Eau Claire, and a Master of Business Administration from the University of Wisconsin – Madison.
Robert Sauermann
EXECUTIVE VICE PRESIDENT, STRATEGY
Rob Sauermann joined Better Choice Company in December 2019, concurrent with the acquisition of Halo, and currently serves as the Executive Vice President of Strategy & Finance for Better Choice. Prior to joining the Halo team full-time in October 2019 as its Chief Strategy Officer, Mr. Sauermann served as an Investment Professional at Pegasus Capital Advisors. In that role, he also served on the board of Halo from 2017 through 2019, and led the successful restructuring and sale of the company to Better Choice. While at Pegasus, he deployed approximately $100 million of growth equity capital across various sectors, with a particular focus on animal health and wellness focused investments. Mr. Sauermann previously served on the boards of Organix Recycling, National Strategies, and currently serves on the board of SGV International. Mr. Sauermann began his career at Credit Suisse in New York. Mr. Sauermann is a graduate of Harvard College and holds a degree in Economics and Earth and Planetary Science.
Ryan Wilson
VICE PRESIDENT, MARKETING
Ryan Wilson is a consumer products marketing leader with over 13 years of experience in the consumer-packaged goods industry, having previously worked for Merrick Pet Care, Abbott Nutrition, Nestle Purina, and Kimberly-Clark. Ryan’s recent successes at Merrick Pet Care include turning around a declining Zukes brand, launching Merrick Fresh Kisses, and doubling the profitability of Castor & Pollux. Ryan has been recognized for his success by industry peers and received the 2018 Pet Age Vanguard Series Award for Leaders in the Pet Industry. Ryan holds a Bachelor of Arts in Marketing and a Master of Business Administration in Brand and Product Management from The University of Wisconsin – Madison.
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Name of Issuer & Ticker Symbol - Better Choice Company (BTTR)
Amount & Form of Compensation - $500,000.00 in Common Stock
Who Paid for the Campaign & Position with Company if any - Better Choice Company (BTTR)
Period of Campaign - February 4th 2021 to January 11th 2022
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Name of Issuer & Ticker Symbol - Better Choice Company (BTTR)
Number of Shares We or our Affiliates Hold - 500,000.00
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