The Very Good Food Co. Reports Record Holiday Sales & Production Boom!

Today, The Very Good Food Co. announced another actionpacked press release, with some particularly anticipated company updates. 

If you aren’t yet familiar with The Very Good Food Coclick here to read our introductory article outlining the company story.  

In this article, we break down the top 3 things to understand about the latest press release from VERY, and what it might mean for investors: 

1. Repeat Orders from Massive Wholesalers 

There’s no question that Sobeys and Whole Foods are not your average mom & pop retailers. As some of the largest grocers and wholesalers in the country, their standards for partners are very strict, their reach is massive, and they have the power to completely transform a food producer’s business.  

With repeat orders coming from both of these chains, we can only assume that the future potential for expanded distribution across the remainder of the Whole Foods and Sobeys network is looking far more likely. From firsthand experience in both Victoria and Vancouver, it’s rare that we see full displays of Very Good Butchers products on the shelves, with inventory often selling out extremely quickly. 

Additionally, The Very Good Food Co. has a waiting list for wholesale partners as there are currently more interested grocers than capacity to fulfill them, so we don’t anticipate this trend slowing down any time soon. A quick look at the eCommerce store at brought to light the fact that the shipping wait time has actually increased from 4-5 weeks to between 5 and 6 weeks. As a customer, you may be sad to have your precious bean burgers move further out of reach; however, as investors, increasing demand is exactly what we want.  

Think of the lineup in front of an Apple store on iPhone release day. The anticipation, excitement, and scarcity of supply make consumers want that product so much more. With two mega-facilities announced, having pent up demand could lead to a potentially explosive increase in sales. 

2. Record Sales of Holiday Product 

Now for the flashiest part of the article: increased sales. With any product, seeing a 300% year-over-year increase in sales is remarkable, but when the product is entirely complementary to the central product line? Even better. By capitalizing on seasonal demand for novel products such as The Stuffed Beast, media and other organic news outlets are more likely to feature VERY, thus creating a positive feedback loop for the company’s demand. While demand itself hasn’t been an issue for The Very Good Food Co. to date, more eyes on the story is great news for investors in the company. 

We also have Pamela Anderson to thank, whose recently announced partnership has brought a ton of attention to the story, having been picked up by networks across North America. 

There are a few figures we can use to quantify the purely financial benefit that the current holiday sales will have on VERY’s financial position. The company has released that they sold 8,000 units of The Stuffed Beast thus far, with an average retail price of CDN $44 per beast. If we look at these figures in isolation, we can see that these sales alone equate to approximately CDN $352,000 in retail sales during this time. As American Thanksgiving and Christmas are still yet to come, it could be reasonably anticipated that sales for The Stuffed Beast will increase even further throughout the 2020 holiday season. 

3. Production – Current and Future 

Production could likely be the most critical facet to watch for this business throughout the near- to mid-term future. As highlighted in the previous section, supply is an issue for VERY – there are incredible amounts of grocers and customers interested in ordering vegan “meat” substitutes and current production capacity is the bottleneck for the business. 

The Very Good Food Co. has committed to improving this and has taken a few steps to ensure that the growth is intelligent and efficient. VERY hired a Director of Process & Engineering Operations in July and secured production facilities in both Vancouver and California this year. In this press release, the company announced that they have stabilized Victoria production to “11,000 lbs. per week, an increase of nearly 50% above previously reported volume”. Using production volume and revenue figures from previous financial statements, we can see that the company is currently selling product at approximately CDN $16/lb. With an increased average weekly production volume of 3,000 lbs., VERY could be seeing a CDN $190,000+ revenue boost each month. 

Upon review of the latest Q2 financial statements, the previously reported highest revenue month was ~$444,000, so this increase in revenue alone represents a 40% increase.  

While their revenue/lb. figure is likely to decrease in the future with exponential volume increases and potentially increased distribution from big-box retailers, we can use it to predict possible scenarios for VERY’s future. Let’s look at a theoretical company valuation using all the available information: 

With the current Victoria facility as the sole production point for VERY, they are achieving capacity of 11,000 lbs./week. If we extrapolate this out to an annualized amount, VERY can currently produce 572,000 lbs./year, earning an average of CDN $16/lb., thus theoretically earning CDN $9,150,000+ in topline revenue per year at the current run rate. 

We’re extremely excited about what the future of production for the company will bring. The Vancouver facility is set to produce roughly 125,000 lbs./week when it comes online (predicted to take place in spring/summer 2021), while the California facility will be able to produce roughly 550,000 lbs./week when it comes online (predicted to take place January 2021). With the California facility alone able to produce 50 times more than the current production capacity, we’re looking at a blue sky for VERY. 

What do you think? How would you value the company based on current market trends and valuations in the space? Let us know! 

DisclaimerThe Very Good Food Company is a communications client of Edge Investments, and we own shares in the company.  

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