Else Nutrition: Earnings, Big Y Partnership are Catalysts

Else Nutrition Holdings (TSE: BABY)(BABYF) is an Israeli plant-based food and nutrition company that develops innovative, clean, and plant-based food and nutrition products for infants, toddlers, children, and adults. With the increasing cases of dairy intolerance, there is a greater need for a sustainable, new source of protein.

With its patented, 100% natural, plant-based, dairy-free, soy-free, and healthy baby and toddler nutritional products, Else Nutrition has taken the lead in finding a solution to this problem. The company’s products are made from almonds, buckwheat, and tapioca that are free of hormones, antibiotics, gluten, and other potentially harmful ingredients.

The global baby and infant nutrition market is thriving with excellent prospects for rapid expansion, and this favorable outlook has created a good platform for companies to invest in innovative products. According to Imarc Group, the global baby food and infant formula market was valued at $45.4 billion in 2021 and is expected to grow at a 5.7% annual rate between 2022 and 2027.

Stellar Revenue Growth

For the Fiscal Year 2021, Else Nutrition generated revenue of $4.7 million, a 219% increase year-over-year, driven by the strong performance of products in both online and retail channels. The company’s product sales on Amazon doubled in 2021, and the company increased its retail presence in the United States to over 1,200 locations.

Amazon EU has also offered Else Nutrition to open a European unified account, which would allow the company to sell its items on key Amazon European marketplaces such as the UK, Germany, France, Italy, Spain, and others. The market comprises over 300 million people.

Else also completed the development of a new line of products for infants (6+ months) and toddlers called Super Cereals, which is set to launch in April 2022 in the United States.

The company began the HCP project in the United States in September 2021, an education and marketing program aimed at helping pediatricians and parents understand the nutritional benefits of plant-based infant products.

This year, the company plans to expand its product range to roughly 8-10 products and more than 20 SKUs in the United States. Else Nutrition will also launch a non-organic Toddler Omega product, Super Cereal for 6+ month babies, as well as liquid goods for kids and/or adults.

The company is also expected to enter the UK and Western Europe markets via Amazon by the end of Q2. In mid-2022, the company will start selling online in China, and all these new developments suggest strong revenue growth is on the cards for this year as well.

Long-Term Growth Potential

Else is taking steps toward achieving its longer-term goals by focusing on increasing its market share, and the successful preclinical trial is another step on the right path. Else Nutrition recently reported the completion of a successful preclinical trial on its plant-based infant food, paving the road for future commercialization.

In a neonatal preclinical model, the study results showed normal growth similar to that of dairy-based infant formula. This is an important initial step in working with the Food and Drug Administration (FDA) and other regulatory agencies.

Growing Distribution and Sales Channels

Else Nutrition has been focusing on expanding the company’s distribution network to grow its global and U.S. market share, and such an expansion would be key to securing its long-term financial goals. The company’s sales and distribution strategy, which includes Walmart, Amazon, and Kroger, all generated positive returns driven by the successful performance of its toddler nutrition products.

On Amazon, Else’s Complete Nutrition for Toddlers was recently recognized as the best-selling baby and toddler formula. On April 6, the company announced that supermarket Big Y will be adding two additional products at all locations in Q2 and extend the brand’s shelf presence and offerings of its products in the kids’ segment.

With its strategic partnership and distribution strategy, Else Nutrition is on track to expand to approximately 30,000 retail outlets, putting the company in a strong position to increase revenue and market share.

Wall Street’s Take

Turning to Wall Street, Else Nutrition earns a Moderate Buy rating based on just one Buy rating assigned in the past three months. Else Nutrition’s price target of C$3 implies 140% upside potential.

Takeaway

Else Nutrition continues to establish itself as a prominent alternative source of infant and child nutrition products globally. The company’s first-mover advantage in the plant-based protein industry and fast-growing distribution network are likely to help the company report stellar revenue growth in the coming years.

Else Nutrition’s strategic distribution partnerships and expanding product line also suggest the company is moving in the right direction to improve its global presence.

Aided by macroeconomic tailwinds and a strong balance sheet position with zero long-term debt, Else Nutrition seems well-positioned to thrive in the next decade.

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