Q2 2016 - Investor Update

 

Highlights

  1. Our new Muesli Squares and Minne Muesli cups were picked up by Sprouts and will launch in October. They will join our 12-oz muesli which landed in Sprouts stores in June.
  2. We have two peanut butter-based Muesli Squares in development as well as multi-packs that will launch later this year. Reach out if you’d like us to send you some production trial samples!
  3. We attended the Summer Fancy Food Show in New York in June, which resulted in potential new business opportunities with several alternative channels like major airlines, club stores and online retailers.
  4. We began tracking store level data for Whole Foods, Target and Kroger, and have seen same-store sales increase over 40%, 15% and 50%, respectively, during Q2.
  5. In July, we partnered with Amplio, a premier, Boulder-based sales team that focuses exclusively on building and growing brands on Amazon.
  6. Our Banana Toasted Pecan Muesli Square was a 2016 Eco Excellence Finalist!
  7. We completed our Live for Everyday brand video. Despite the poor actors (except Emry and Louis who nailed it), we think it turned out pretty well!
  8. We have BIG meetings coming up in the next 4-6 weeks, including Costco Midwest, Target (snacks), Publix, HEB and Delta Airlines – send us your good vibes!
  9. We found a perfect non-profit partner in Sheridan Story. Working through them, we will be sponsoring Stonebridge School, a Minneapolis Public Charter School specializing in providing services for homeless and highly-mobile families. Starting in September, we will be filling backpacks on Fridays to help fill the food gap that many children experience on the weekends. If you are local and would like to volunteer with us, please reach out!

New Places to Find Seven Sundays:

  1. Giant Eagle (PA, OH, WV, IN, MD)
  2. Sprouts (national)
  3. Natural Grocers (national)
  4. DeCicco’s (NY)
  5. Kings Food Markets (NJ, NY, CT)
  6. Balducci’s (CT, MD, NY, VA)
  7. Heinen’s (IL and OH)
  8. Dierbergs Markets (MO, IL)
  9. New Leaf Community Markets (NorCal)
  10. Oliver’s Markets (NorCal)
  11. Lucky Market (NorCal)
  12. Whole Foods (new region: South)
  13. Squares availability: Sprouts (starting October), The Fresh Market, Rocky Mountain Whole Foods and Safeway stores, Kowalski’s, Dierbergs, Lucky Market, King’s, over 50 CIBO airport locations and dozens of natural and independent stores.

Our Challenges

 

 

 

  1. Out of Stocks – We experienced numerous out of stocks recently, which has resulted in management distraction, added costs, and ultimately missed sales (thankfully nominal). As such, we have moved to 2 operations and forecasting meetings per week and are raising our on-hand inventories.
  2. Continued Retail Price Issues – We are making progress here, but not as quickly as we had hoped. We are not seeing the benefits of our January price decline in many stores still. We are exploring hiring merchandising companies to help implement pricing and other in-store strategies.
  3. Strategic Investor Search – We invested several months and got to the final hour with a strategic capital partner who would have completed our investment round. Due to some dynamics within the extended family, they were ultimately unable to invest. We are in the process of reengaging other strategic and non-strategic potential investors.
  4. Muesli Cups – We have received significant interest recently by retailers in our Minne Muesli cups, with several retailers only taking our cups and not our 12-oz (something we have not seen until recently). The single serve cereal category is still a “wildcard” for most retailers and we are not seeing as strong of sales for this category.

 Help Wanted

  1. Additional Investors – If you have connections with potential strategic capital partners or individual investors for Seven Sundays, please discuss with Hannah.
  2. Review us on Facebook – Head over to our Facebook page and give us a glowing review!
  3. Store Checks – If you spot Seven Sundays in the store while shopping, we’d love to see pictures! Snap a photo and text it Hannah (612-562-5316).

Financial Recap

Our last 3 months of sales through July were over $500,000, and we have already surpassed our total 2015 sales year-to-date! We are on track to more than double in size again this year. While below our original budget, we are very happy with the momentum. Sales this year over last year are impacted by the 17% price reduction that went into effect on January 1st (but is still not fully reflected on shelves), as well as the loss of chain-wide distribution at Target. We continue to pick up strategic distribution in both natural chains and supermarket grocery stores nationwide and same store sales velocity are growing double digits where we can access data.

Our costs are in line with our budget with a handful of exceptions. We expect free-fill (new distribution) costs to be higher than expected this year due to the increasing demands of retailers. We also expect packaging and labor costs on our new squares line to come down significantly later this year as we begin to recognize economies of scale with this line.