Q2 2017 - Investor Update

 

Q2 Highs

  1. New and Improved Squares – Hannah spent a TON of time in the kitchen perfecting recipes and Brady spent a lot of time working with the co-packer to get the new equipment up and running in the first half of the year. We are finally starting to see the fruits of our labor -- new Banana and Blueberry squares selling online and trickling into stores! Let us know if you would like to receive samples! 
  2. Costco Business – We continue to grow and exceed expectations in the 16 Midwest stores we are in. Through demos and digital Facebook ads, we have grown our weekly sales from $600 per store per week to $700-800 per store per week in the first 6 months. The full Midwest rotation is planned for October, and we are waiting on a decision from the Northeast Costco region.
  3. Amazon Performance – Sales are up 10X over last year and we are experiencing significant month-over-month growth. Our Variety Pack and Blueberry Chia Buckwheat skus are now routinely in the Top 10 for muesli breakfast cereals on Amazon. 
  4. Pacific Northwest – Our first expansion into the Pacific Northwest through New Seasons, a 30 store chain in the Portland area. This is the home turf of the #1 US muesli, Bob's Red Mill, so it will be a very interesting new region for us! Bring it on! 
  5. Margin Improvements: Consolidating our manufacturing and fulfillment, focusing on high margin growth and moving our squares production to our new co-packer has resulted in significant margin improvements year-to-date. This was a major focus of ours going into 2017 and we are proud of the significant progress made so far. 
  6. Interest from Strategic Investors: We have received interest from two strategic minority partners. While we are still working on how the partnership would look, we are flattered and excited about the potential value that either party would bring to the company.
  7. New Office Space – We are so excited about the possibilities to create and collaborate in our new space. Building a strong community around good food is such an important piece to our brand and culture and this new home gives us a TON of opportunities to do that. We also have even more opportunity to innovate in our test kitchen, and Hannah will no doubt be spending a lot more time there. And once the dust settles, we need to having an office warming party this fall. You will be the first to hear!   
  8. Sales Data - The latest data from SPINS confirms that we are well down the path of becoming the Top selling muesli brand in the U.S. We still have a lot of work to do but it is clear from our trajectory that our strategy is working and this goal is within reach! So awesome to see this validation! Note that this sales data does not include our Target or Costco business.

Q2 Challenges

  1. Product Quality Issues - After getting a flurry of customer complaints in during June, we discovered some quality issues on product produced in March and April. After investigating, we determined the cause was a new process for toasting of ingredients which resulted in certain nuts in seeds were going bad before our best by date. We were impressed by the responsiveness and thoroughness of our new quality team. The issue was contained to two batches and has been resolved going forward. To give you sense for how we feel when we get complaints from customers, its like someone calling your kid ugly. SO painful!
  2. Delay in New Peanut Butter Squares flavors - See item 1 under 'Highs' above. It took us so long to get our existing Blueberry and Banana skus up and running we had to push back production of our new Peanut Butter and Dark Chocolate Coffee squares. We now hope these will launch in Q3.
  3. New Traditional Retail Distribution Slowed – This is partly due to retailers going through purchasing and other restructuring, and partly due to internal distractions related to the co-packer transition and Costco launch. We are, however, in the midst of a really active category review season and are already hearing positive results. We expect the drought to end soon and to add significant distribution in Q4 2017 and into Q1 2018.

Q2 2017 Financial Snapshot

Help Requested

  1. If you haven’t yet reviewed Seven Sundays on Amazon, please do so! It helps our placement and growth tremendously. Instructions here.
  2. If you are not already, be sure to follow us on Instagram and Facebook so that you can see more of the day-to-day behind the scenes at Seven Sundays!
  3. Do you or someone you know have experience in SEO and/or growing Direct-to-Consumer an e-commerce business? Please send contact info to brady@sevensundays.com.