In Focus: BranchOut Food CEO Explains Why And How His Company Is Changing The Food Industry Narrative

Rhea-AI Summary

BranchOut Food, Inc. (NASDAQ: BOF) intends to revolutionize the dehydrated food industry with its exclusive GentleDry technology. The company recently completed its IPO and secured deals with major retailers and the U.S. Army for product development. BranchOut's technology aims to reduce food waste, revitalize lost farms, and capitalize on the growing demand for healthier and sustainable food options. The company's market opportunity is significant, with potential for exponential growth through private labeling and strategic partnerships.

Positive

• BranchOut's GentleDry technology offers a game-changing approach to dehydrating food, producing high-quality, nutritious, and flavorful products.
• The company's focus on private labeling can lead to increased profitability and shareholder value.
• BranchOut's expansion into the dried fruit powder market is well-positioned to capture a substantial market share and capitalize on the increasing demand for innovative and natural food products.

Negative

• None.

BEND, Ore., July 26, 2023 /PRNewswire/ -- BranchOut Food, Inc. (NASDAQ: BOF) is on record saying they intend to change the narrative around dehydrated food. And according to Eric Healy, BranchOut Food CEO, they leverage the exclusive technology to support that ambitious goal. The company recently went public, completing its June IPO and having its shares listed on the Nasdaq market.

Shortly after its listing, BranchOut announced three deals steepening its growth trajectory. Those include deals with two of the country's largest retailers and a product development program with the U.S. Army evaluating its products for MREs (Meals Ready to Eat). Although the company is moving fast, BranchOut CEO Eric Healy took time to respond to investor questions. His responses indicate that while the past few weeks have been exciting for the company, the best is yet to come. Here's what he said: 

Q. Some companies are timely to opportunities, some are ripe to exploit opportunities, and some are both. BranchOut checks both boxes for different reasons. Explain why Branch Out, from a technology perspective, is a game changer to the food industry?

A. You've hit on two excellent points. BranchOut is a different kind of food company, changing the dynamic of getting fresh food to market, often from farm to package, in 10 days or less. We're timely because, more than ever, the global population needs a consistent and reliable food supply. With the Russia-Ukraine conflict creating enormous fertilizer product disruption, people must turn to alternative ways to stay nourished. 

Now, BranchOut certainly isn't a narrow niche player. I'm saying that we can be valuable in that area. At the same time, we can feed millions through traditional retail, evidenced by announcing two deals that put us into over 2,250 stores across the country. They see the value, and as important, as the nation's top retailers are confident of our product's sell-through rate. 

That results from having a better product, which results from having better processes to dehydrate food. For example, the global conventional drying methods such as air drying and freeze-drying use hot air or freezing and long process times. The result is low-quality products that are brown and leathery or have muted color and a chalky texture. During our GentleDry process, our fresh fruits and vegetables are never frozen, oxidized, or excessively heated. 

Combined with a very short process time, these attributes leave the dried fruits and vegetables as close to "raw" as possible. That results in noticeable vibrancy, natural colors, intense flavors, and unique textures. Considering our process also locks in most of the original nutritional value, we are a game-changer to dehydration. 

Q. That technology does more than what you mentioned. In addition to getting food from farms to package in 10 days or less, I've read that you are giving farmers worldwide a second chance at marketing opportunities, correct?

A. Absolutely, and at a time when it's needed most. In addition to farmers worldwide getting squeezed by supply chain disruptions, something that gets little coverage is the pressing issue of food waste and its impact on farmers' livelihoods and the environment. Specifically, foods with tiny blemishes, misshapes, or discoloration often get trashed or made into animal feed. That leads to millions, even billions of pounds of food, wasted annually. BranchOut Food is changing that dynamic. We value all the food grown and can ensure it gets to consumers rather than the landfill. 

To make an impact, we have forged partnerships directly with local Peruvian farmers to source imperfect fruits and vegetables that do not meet USDA aesthetic standards. The company provides farmers an additional income stream for produce that would otherwise go to waste. This mutually beneficial relationship ensures that farmers receive fair compensation and have a reliable market for their surplus of aesthetically imperfect produce. 

Simultaneously, this practice helps reduce the environmental impact caused by food waste. Our agreements in Peru will be the first of many. Our dehydration technology can utilize fresh fruit and vegetables no matter their appearance, making them a useful, nutritional, and tasty product. 

Q. An ingredient to the secret sauce of your business is your GentleDry technology, which you discussed earlier. You announced opening a facility in Peru to capitalize on its ability to provide better food to potentially millions of people. Explain why GentleDry is so valuable to people across the world?

A. It's valuable for several reasons. Foremost, our GentleDry Technology is capitalizing on producing food and vegetable products from the vast growing regions in Peru, whose conditions provide an ideal combination of climate and access to provide better food for millions of people. There's another advantage to GentleDry. 

It can appreciably eliminate waste. Before GentleDry technology, many fruits and vegetables could not be dehydrated in a delicious or editable way. We have changed that potential. Today, with GentleDry, we can dehydrate foods that were impossible with previous technologies. Not only have we introduced potentially hundreds of new foods to dehydration, but we are also doing it while providing better flavor, nutritional value, color, and texture. Simply stated, we are opening up a whole new world of healthy food products to consumers worldwide. 

Q. Supplying a global opportunity presents a lucrative proposition for BranchOut and its investors. How significant is the market opportunity, and where can BranchOut use its marketing muscles to its best advantage?

A. The opportunity is enormous, and for BranchOut, it can transform us into one of the world's Flargest food dehydrators. The U.S. snack food market is valued at $108.50 billion in 2023, expected to grow annually by 6.1% from 2023 to 2030. Additionally, the total U.S. dried fruit category reached $1.2 billion in the last 52 weeks, showing year-over-year growth of 2.9%. That's just a part of the opportunity.

The U.S. plant-based category, estimated at $8.0 billion in 2023, is projected to grow at a CAGR of 12.2% from 2023 to 2033. Moreover, the U.S. private-label food and beverages market was $229 billion in 2022 and is expected to experience a CAGR of 11.3% from 2022 to 2027. These markets align with significant trends in the food industry, including increasing demand for healthier and sustainable options, awareness of the environmental impact of animal agriculture, and the growth of private-label products driven by lower cost and quality awareness. 

With our branded and private label offerings, BranchOut can capitalize on these market trends in the U.S. and internationally. In fact, our deals with two of the country's largest retailers, which we recently announced, could help open the doors wider to international market opportunities. With a footprint in Peru, we are well-positioned to move quickly.

Q. Ironically, while many emerging companies want to own the market with their own label, BranchOut's strategy takes a different tack. Your investor presentation shows that the road to potentially exponential near-term growth is through partnerships and private labeling. Why?

A. We see value in two categories- the BranchOut Food label and private label for our customers. Currently, we see the more excellent value in the latter and have strategically chosen private labels as our primary business strategy, believing it's the fastest path to exponential growth. One key reason is that private label offers a better bottom line compared to branded products. With branded products, substantial spending is required on in-store marketing, fees for shelf placement, coupons, promotions, samples, and more. This can significantly impact profitability.

On the other hand, private label operates under predictable, contract-based arrangements where retailers pay and build their own brands. This results in a more practical and cleaner bottom line for BranchOut. Focusing on private labels can streamline operations, reduce marketing expenses, and enhance our profitability. It aligns with our goal of delivering high-quality products while optimizing financial performance.

Moreover, that model gets us to bottom line EPS faster. As a public company, we believe the multiples given from achieving profitability can generate substantial shareholder value for investors. That's a target in our crosshairs.

Q. Utilizing GentleDry, BranchOut has provided slides showing you can impact fruit and vegetable harvests by making products that the USDA deems unsellable into viable, great-tasting products- even in powder form. On a macro level, by extension, is BranchOut helping revitalize lost farms, boost economies, and revive shrinking food option markets?

A. We touched on that earlier. However, I would add that even the USDA would appreciate putting good food, while slightly blemished, to good use. And yes, we are already helping revitalize farms and communities in Peru and expect to expand our presence to benefit other geographies. Notably, you mentioned "powder" forms of dehydration. That's a market we are penetrating as well, for excellent reasons. 

Foremost, the dried fruit powder market presents a significant revenue-generating opportunity, and BranchOut is well-positioned to dominate market share. The U.S. dried fruit powder market is projected to reach USD 5.4 billion by 2030, with a robust compound annual growth rate of 6.7% between 2023 to 2030 (Source: marketdataforcast.com). This growth is driven by factors such as increasing demand for functional foods and beverages, rising health consciousness among consumers, and the growing popularity of natural and organic products.

BranchOut's competitive advantage lies in our superior technology, South American supply chain, and in-house powder milling capabilities. 

Additionally, we have the exclusive license to produce high-quality avocado powders and fragments, which have never been offered as ingredients before. By leveraging these strengths, we expect our dried fruit powder products to play a significant role in our expected revenue equation. We are confident in our ability to capture a substantial market share and capitalize on the increasing demand for innovative and natural food products.

Q. Your management and Board comprise a Who's Who list of food industry executives. Here's a question that puts you in an unenviable predicament to answer. Are they the value driver behind the expected growth in 2023, or is the BranchOut technology?

A. It's a combination of dependency on each other. Our management and Board of Directors, comprising esteemed individuals from the food industry, play a crucial role in driving the expected growth of BranchOut in 2023. Their extensive industry experience, strategic insights, and valuable connections contribute to the overall success of our company. 

However, it is essential to note that the BranchOut technology itself is a significant value driver. Our unique technology platform, including our licensed dehydration technology and in-house powder milling capabilities, enables us to deliver innovative, high-quality products to meet the evolving needs of consumers. 

The combination of our exceptional team and cutting-edge technology positions us for growth and success in the competitive food industry. Remember, while our products are best-in-class, it took people to score the major retail deals we recently announced. 

Q. BranchOut's success results from timeliness in serving a huge need and opportunity. But it may be more appropriate to describe BranchOut as a company ideally positioned and capable of changing a global food supply narrative. How will BranchOut invest to ensure that the future remains bright for investors and consumers?

A. Many great points. Yes, we are timely. Yes, we have excellent technology. And, yes, our food can feed potentially millions. And we will continue to invest our resources to sharpen an already successful business strategy. Without exception, BranchOut is committed to investing strategically to allow expedited growth for the company. 

That includes allocating resources to research and development, expanding our production capabilities, and optimizing our supply chain to meet growing demand. Additionally, we will prioritize sales and marketing initiatives to increase consumer awareness and engagement while also focusing on sustainability efforts such as upcycling and reducing food waste. By making these investments, BranchOut aims to drive growth, deliver value, and positively impact the lives of millions through sustainable and healthier food options.

Keep in mind that since our IPO, we have signed major retail deals, including one with the U.S. Army, to evaluate our foods for MREs. While we think the scale to date is impressive, I would say that we are just getting started. The back half of 2023 will be an exciting time for our company. And results will benefit farmers, consumers, and investors. The best way to phrase what's in store is to say: Stay tuned, learn about BranchOut Food from our website, and watch the news wires. We should have plenty to say. 

End Interview

About BranchOut Food Inc. 

BranchOut is an international food-tech company delivering truly great natural snacks and real superfood ingredients enabled by their licensed dehydration technology. The Company is a leading provider of high-quality dehydrated fruit and vegetable-based products and its commitment to quality and innovation sets it apart as a trusted brand and private label supplier.

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SOURCE BranchOut Food, Inc.

FAQ

How does BranchOut's GentleDry technology impact the food industry?

BranchOut's GentleDry technology revolutionizes the dehydrated food industry by producing high-quality, nutritious, and flavorful products.

Is BranchOut focused on reducing food waste and revitalizing farms?

Yes, BranchOut's partnerships with farmers worldwide aim to reduce food waste and provide marketing opportunities for surplus produce, revitalizing lost farms and communities.

What is BranchOut's market opportunity and growth strategy?

BranchOut has a significant market opportunity, focusing on private labeling and strategic partnerships to drive exponential growth and capitalize on the increasing demand for healthier and sustainable food options.

How does BranchOut plan to invest in the future?

BranchOut is committed to investing in research and development, production expansion, and sustainability efforts to drive growth, deliver value, and positively impact the lives of millions through sustainable and healthier food options.