NutraDried’s Significant Expansion Plans and Future Discussed in Interview with Mike Pytlinski

EnWave Corp. (CA:ENW – $1.94 & US:NWVCF – $1.50 & GER:E4U – €1.32) announced an C$8 million investment program to significantly grow NutraDried Food Company. Initially, a third large-scale 120kW Radiant Energy Vacuum machine will be added to rapidly expand production capacity of Moon Cheese. However, many more initiatives are in the pipeline to allow for robust commercial growth of the 100% crunchy-cheese snack that is currently sold across the United States at over 25,000 retail stores.

We were very fortunate to be able to interview Mr. Mike Pytlinski, the CEO of NutraDried, to answer some of our most pressing questions.

Smallcaps Investment Research: Mr. Pytlinski, to start, can you give us some background information on yourself?

Mike Pytlinski: I started my career as a Certified Public Accountant at Price Waterhouse with a focus on small businesses. After getting my MBA from the Kellogg School at Northwestern, I spent the next 13 years at Kraft Foods where I led the marketing and general management of such brands as Kraft Salad Dressing, Minute Rice, and Stove Top Stuffing. While at Kraft I also helped lead the strategy function for three divisions and the customer marketing function for the company.

After Kraft, I was Vice President of Marketing for Top Driver for almost four years – a private-equity backed company that changed the driver education market and drove significant growth.

Finally, prior to joining NutraDried, I was the Vice President of Marketing for Palermo’s Pizza – one of the leading frozen pizza companies in the US. There, I led the launch and expansion of Screamin’ Sicilian, the first national craft pizza, to $100MM in revenue and multiple other brands.

I grew up in the Boston area and am married living in Wisconsin with twin 16-year old sons.

What were the first things you did after you were hired to lead NutraDried in August 2018?

The Moon Cheese brand had a ton of potential when I joined but we needed to immediately develop a strategic plan, including elevated sales and marketing. This started with a major consumer research initiative where we identified our primary consumers, optimal messaging and assessing of other marketing elements.

We then set upon crafting a distribution strategy (see below) and how we could contemporize the brand. This included a major re-design of the packaging, consumer-driven new varieties, new sizes, and new messaging.

The consumer and retailer response to the new packaging has been phenomenal as it literally tested at world-class levels across all dimensions. As an example of improved messaging, we will be changing the serving size from a half to a full ounce. While a minor change, this size is standard in the industry. More importantly though it enables us to make the compelling consumer claim that we have 10g of protein, 0g of sugar and under 2g of carbs per serving. Moon Cheese is one of the few snacks that can make all of these claims with a clean ingredient label. This will be a focal point of our consumer messaging going forward.

To successfully lead these efforts, we’ve also built out our senior leadership team with strong new hires in sales, marketing, human resources and at the next level of management across the company. Combined with strong external partnerships, we’ve built a world-class team that is ready to create the next big brand. The initial trade response to our new approach and strategies has been universally positive and we’re looking forward to the consumer response in the coming months once these initiatives hit the market.

Of course, the C$8 million investment program to grow NutraDried is excellent news. Can you give some more details on what this program entails?

It starts with the addition of a new 120kw nutraREV machine to be installed in 2020. This will dramatically increase our capacity in the coming years and enable our planned distribution and velocity growth. We are also pursuing other capital projects to optimize all aspects of our operations – from planning and tracking production to drying, packaging, and storing our products.

The major growth driver for NutraDried this year, were sales of Moon Cheese at Costco. Last month, Costco started its Most Valuable Member (“MVM”) coupon program, and Moon Cheese was included. Can you already give some color on how the program is going?

The MVM program was very well-executed and well-received by Costco. As background, we delivered a $3 coupon for most of the month of September in all of the over 500 Costco U.S. stores. We expect that there will be over 1MM purchases at Costco during the promotional period and that the related revenue will be almost as much as we did across all channels for all of our prior fiscal year! We’ve recently had successful follow up meetings with each of the Costco regions and we are aligned with this important customer on our growth opportunities for the coming year.

In last week’s News Release it was mentioned that aggressive growth rates for Moon Cheese sales are expected to continue. Where do you believe total sales can realistically end up in a few years?

We have an aggressive long-term plan that reflects significant distribution and velocity growth for Moon Cheese across multiple channels. If our strategic sales and marketing efforts are successful, we believe we can achieve revenues in the range of USD $50 – $75MM, as our REV machine capacity will also allow for this level of production.

More sales, typically also means more distribution points. Currently, Moon Cheese is being sold at over 25,000 retail stores. Can you elaborate on your plans to grow that number?

We currently have an incredible list of premier retail partners that would be the envy of many brands: Whole Foods, Starbucks, Costco, Publix, Wegmans, HEB, REI, Target, TJX, and King Soopers to name a few. We’ve achieved strong velocities across these retailers to date even in advance of improved marketing (investments).

We will leverage this position and improved selling materials/personnel to aggressively pursue new distribution across not only our core retail grocery and natural channels, but also in food service, online, and convenience stores. This will be enabled by the launch of new varieties and making our varieties available across multiple sizes. Next month, we will launch our new Garlickin’ Parmesan and Cheddar Bacon Me Crazy varieties. Our consumer testing reflects that these flavors were the #2 and #3 most desired flavors and the retailer response has been terrific thus far in initial sell-in.

Regarding size innovation, we recently announced that all five varieties of Moon Cheese will be available in a new 1 oz. size (vs. our current 2 oz.). This size not only enables broad-scale sampling but also distribution in channels such as convenience stores and food service where smaller pack sizes are more prevalent.

Mr. Pytlinski, thank you very much for answering our questions. We wish you and NutraDried all the best, and we look forward to the implementation of the investment program.

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