Could this Niche Surge after Amazon (AMZN) & Whole Foods Deal

November 13 22:17 2017

There are already whispers on Wall Street that our decade long bull run may be coming to an end soon. One trend that is certainly not on the decline is that health and quality remains king. As health-conscious consumers increasingly seek out more fresh and wholesome foods, retail sales of gourmet food now outpace that of other food products.

It’s time to be bullish on everything related to natural, great tasting, fresh ingredient food oriented companies: restaurants, food producers, packaged goods and fresh products. A slew of well-known and not-so-well-known names could benefit by this disruption in a shifting consumer preferences to favor fresh food made with quality and integrity.

Research from the latest State of the Specialty Food Industry, shows that the sale of specialty food in retail grew by 15% between 2014 and 2016. This high growth rate was driven by product innovations and the increased availability of specialty foods through mass-market outlets. In comparison, general food sales closed with a tepid growth rate of 2.3% for the same period.

Convenience shopping for quality, natural, fresh authentic prepared products driven by millennials.

Millennials love convenience shopping and want to buy delicious, natural and fresh foods wherever they shop. America’s package food giants are losing the battle for grocery retail shelf space in favor of fresh made home meal alternatives with no preservatives that are not fake food. Retail investors and speculators should look past the traditional packaged food brands, and start looking for niche alternatives. Could this be the disruption that Amazon anticipates?

Healthier for you food brands like MamaMancini’s establish an emotional connection with their customers. They are an affordable luxury that can be enjoyed regularly.

MamaMancini’s (MMMB) is marketer and distributor of
high quality authentic old world Grandma Anna Mancini’s Original recipe Italian cuisine like beef and turkey meatballs in authentic sauce, original beef and turkey meat loaves, chicken parmesan; stuffed peppers and soon ravioli lasagne. Italian food has always been popular and restaurant quality gourmet Italian food has mass appeal,not just in the U.S, but world wide.

MamaMancini’s has expanded its distribution channel, which now includes major retailers such as Costco, Publix, Shop Rite, Price Chopper, Jewel, Luckys, Lunds/Byerly’s, SuperValu, Safeway/Albertsons, Spartan Stores; Sam;s Club; Whole Foods, Shaw’s Supermarkets, Kings, Roche Brothers, Key Foods, Stop-n-Shop, Giant Stores, Giant Eagle, Food Town, Jewel; Hy Vee; Market Basket; Kroger, Shoppers, King Kullen, Central Markets, Weis Markets, Ingles, Food City; and The Fresh Market.

In it’s previous financial year ending January, 2017, MamaMancini’s showed exponential revenue growth of 43% to $18,048,792 and they achieved profitability for the first time in the third and fourth quarters of last year. The gross margin for the year improved to 36% from 29% and operating income for the fiscal year improved by more than $2.6 million, moving from negative to positive.

In their most recent ended quarter July 31, sales grew over 60% YOY and operating profits increased.

The Company believes it will have a sales run rate of over $40m by early next year and an annualized EBITDA in the $5m to $6.5m range at that time.

The purchase of Whole Foods by Amazon is setting off a war of differentiation on better quality prepared foods.

In a press release he elaborated on their growth plans, “we continue to develop new product offerings that will add value to our end-user customers that rely on great tasting food with superior nutritional profiles and minimal prep time. During fiscal 2017, we added several new products, including meatloaves and a stuffed pepper kit, both of which have received positive feedback and several key orders.”

Our gourmet appeal comes from the use of products that are all natural and which contain a minimum number of ingredients and are generally derived from the original recipes of Anna “Mama” Mancini. The company believes that their products appeal to health conscious consumers seeking to avoid artificial flavors used in many packaged foods.

By July, 2017 the company had grown the number of food retailers (supermarkets) carrying their products to approximately 11,700 supermarkets and the number of shelf placements to approximately 38,700.

In November 2017, the company announced that it had acquired Joseph Epstein Food Enterprises, a manufacturer of food products, which has been the sole manufacturer of the Company’s products since inception. Under the agreed terms, no cash or stock was exchanged between the parties. Management estimates that the acquisition will add $1.5m to $2m to margins and operating profit to the Company in the next 12 months.

Their growth strategy is driven by increasing the footprint of their brand. MamaMancini’s actively market their products via their own social channels. MamaMancini’s has a strong presence on facebook/instagram with close to 300,000 friends. The Company advertises on multiple national Sirius radio channels. Sirius has a reach of 62 million consumers each month. MamaMancini’s has been very successful live on QVC up to six times per month. QVC is the world’s largest direct to consumer marketer.

They also report an estimated 265 million consumer potential reach through their various public relations campaigns, including recent placements in Woman’s Day, Buzz Feed, and Inc.

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