Simply Good Foods – Strategic Update & Mid-term
Outlook – 26 February 2021
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Specialist: Mike Rodriguez (MR)
Title:
Moderator: Nyree Hinton (NH), Third Bridge Sector Analyst
Former National Sales Director, Convenience, Foodservice Channels at Quest Nutrition
Agenda:
1. Simply Goods Foods' (NASDAQ: SMPL) nutritional snacking trends and category growth drivers
2. Atkins growth strategy update, new distribution and channel opportunities
3. Quest Nutrition acquisition progress
4. Mid-term outlook
Contents
Q: What’s your market overview for nutritional snacking and what were the pre-coronavirus trends?
Q: How are the trends in nutritional snacking different from the trends in the savoury and sweet snack
segments?
Q: How would you describe the pre-pandemic growth trajectory in the nutritional snacking industry?
Q: How has consumer behaviour changed? Which demographics are driving the changes in nutritional
snacking consumption?
Q: Could you outline Simply Good Foods’ brand portfolio and the target audience? Is there anything else
aside from the affluent part you mentioned? Is Simply Good targeting a new demographic?
Q: What would you classify as the longer-lasting structural coronavirus impacts on Simply Good’s core
categories and nutritional snacking? You mentioned how protein bars have been impacted because people
can’t go to the gym. How have offerings such as cookies, confections and RTD [ready-to-drink] shakes been
affected by the pandemic?
Q: Could you elaborate on the distribution aspect? Which channels have undergone the most change due to
coronavirus across e-commerce, mass channel and convenience?
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Q: Why do you think Simply Good decided to divest its protein business?
Q: Do you think the Simply Good portfolio is robust enough to handle the change in consumer behaviour
and cutting back on non-essentials? Do you think it can cope with the impact from increased
unemployment?
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Q: How would you rate Simply Good’s performance on the trend of consumer preferences towards healthier,
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unprocessed foods? Do you think the business overall is taking full advantage of this opportunity?
Q: Can you expand on Simply Good’s Quest Nutritional acquisition? What do you think is the Quest value
prop to consumers?
Q: Is the consumer demographic for Quest different than the one for Atkins, given that both groups want a
healthier lifestyle?
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Q: What could be some unforeseen issues with the product execution or innovation for Quest’s RTD shakes?
Q1 FY21 sales in the retail channel were flat.
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Q: How much of a focus should Simply Good’s management place into chips, cookies and other products
doing well in the coronavirus operating environment, especially as the bar category continues to
underperform?
Q: Is Simply Good likely to exceed, meet or undershoot its USD 20m cost synergy target for the Quest
merger? The majority is expected to be achieved in 2021-22.
Q: What might be the main drivers for Simply Good’s Atkins brand? Is there anything to note about its
consistency or convenience?
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Q: Do you expect e-commerce to continue contributing increasingly more sales for the Atkins brand overall?
E-commerce sales increased 77% in 2020, representing 9% of all sales in the brand. What are your thoughts
on this performance?
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Q: Would you say Atkins is overexposed to the away-from-home product category? I think the brand
experienced overall sales weaknesses, despite the elevated at-home consumption and accelerated consumer
adoption of health and wellness.
Q: How would Atkins’ 2020 revenue growth compare to 2021? Is it struggling to increase revenue and if so,
why?
Q: Could you outline Simply Good’s competitive landscape within the nutritional-snacking market? You
mentioned GNC. Who are the big players?
Q: Could you elaborate on the business diversification? What advantages does Simply Good have over
competitors in the segment? What weaknesses does it have?
Q: What might be Simply Good’s appetite to complete further deals, following the Quest acquisition?
Q: Would you consider Simply Good to be a likely acquisition, especially given that so many of the very big
names are trying to get into healthier nutritional offerings. What are your thoughts here?
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Q: Why do you think the bigger names struggle to make a compelling offer for nutritional snacking? You said
the big brands struggle to build a meaningful presence in this segment, and that the small brands and
companies are ultimately driving the innovation and growth.
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Q: How strong is brand loyalty between Simply Good’s two brands, Atkins and Quest?
Q: Who do you think is the biggest threat to the Simply Good portfolio, whether Quest Nutritional or
Atkins?
Q: What might be the key growth drivers of the nutritional-snacking industry over the next 3-5 years?
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Q: What’s your outlook for Simply Good over the next six months? Can you share some best- and worst-case
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scenarios?
Q: Is there anything you think the investor community should know regarding Simply Good’s management
team and their ability to execute on priorities?
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Simply Good Foods – Strategic Update & Mid-term
Outlook
Transcription begins at 00:00:17 of the recorded material
NH: Welcome to Third Bridge Forum’s Interview entitled Simply Good Foods – Strategic Update & Mid-term
Outlook. I’m Nyree Hinton and I will be facilitating today’s Interview with Mr Mike Rodriguez, Former
National Sales Director, Convenience, Foodservice Channels at Quest Nutrition.
Mike, before we get started with today’s Interview, please state I agree or I disagree to the following statement:
You understand the definition of material non-public information and agree not to disclose any such
information or any other information which is confidential during this Interview.
MR: I agree.
NH: Thank you, Mike. Could you start with a brief background about your previous roles in the industry?
MR: I’ve spent 25 years in the nutrition industry, 15 years with Abbott Nutrition. They purchased EAS and
Zoneperfect. I was managing that business for the convenience channel. I took a position with Detour protein
bars. I was with them for three years, and then I was with Quest as a Director for five years there, first
managing the eastern US, then managing the entire country and food service business as well, so I had three
regionals that were class reporting to me on C store, and one person on food service, and right now, I’m
working for Perfect Snacks as a Director of Sales for Perfect Snacks.
[00:01:49]
Q: What’s your market overview for nutritional snacking and what were the pre-coronavirus trends?
MR: Things that were going on pre-COVID? COVID has really affected everything, but as far as it’s pre-
COVID, I think clearly the cookie trend was hot. I think other sources of protein in different vehicles is
continuing to be low net carbs. I think frozen pizza, chips, delivering different types of items that are good for
you, that are similar to your regular purchase products but have better macro than those really the keys that
are things that were really growing. Whether it be a protein cup or a protein cookie, or a protein chip, those are
things that Quest has done that I think were really trending in a positive way.
[00:03:37]
Q: How are the trends in nutritional snacking different from the trends in the savoury and sweet snack
segments?
MR: I’ve got some charts in front of me – Salty snack has been up, and nutrition bars has been off a little bit,
and I think there’s been a shift away from protein bars into other segments, whether that be cookies, just
different delivery vehicles. I think people are getting tired of bars, and I think people want a different purchase
choice, so that’s what I think. PowerBar was out 20 years ago with just a regular protein bar, and they never
did any innovation, and I think people are looking for different ways to purchase products, rather than just
getting your standard protein bar and continuing to purchase that over and over, so they’re looking for
different things.
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[00:04:59]
Q: How would you describe the pre-pandemic growth trajectory in the nutritional snacking industry?
MR: There’s been a shift, and it’s really been away from health and fitness. GNC has filed for bankruptcy,
Europa has had financial troubles, they’re the largest wholesaler from a health and fitness perspective, and
what has really nicked away at that is e-comm. I think pre-COVID, I think things were stable, but during
COVID, I’m seeing a substantial drop off in health and fitness, or any nutritional snacking due to the trends
that are going on right now. Anyway, hopefully that answers your question.
[00:06:12]
Q: How has consumer behaviour changed? Which demographics are driving the changes in nutritional
snacking consumption?
MR: Usually it’s urban, affluent, educated consumers that are really the ones that are buying the category.
NH: How would you say their behaviour has changed?
MR: 24-hour fitness, the foot traffic is down 78%. Gold’s Gyms were trafficking down 40%, so if they’re not
going to the gym, then they’re not buying healthy nutritional snacking products. People aren’t going to the
beach. I think that’s going to come back, but I think that’s definitely affected consumption. I have stuff here by
channel – each channel has been hit a little bit different than others. As a whole, grab-and-go has really been
hit harder than others, other categories of nutrition bars is off roughly 8%, just from grab-and-go consumption
being not as strong as it has been, but then salty snacks are up, cookies are up, chocolate has been up, baking
chips have been up, so it just depends on what segment you’re looking at per healthy snacking.
[00:08:09]
Q: Could you outline Simply Good Foods’ brand portfolio and the target audience? Is there anything else aside
from the affluent part you mentioned? Is Simply Good targeting a new demographic?
MR: The arch trends from Quest were urban affluent and it skewed slightly female – suburban mum also was
in there – people that were still trying to stay in shape, people that went to the gym, college-educated, making
over USD 65,000 a year.
[00:09:13]
Q: What would you classify as the longer-lasting structural coronavirus impacts on Simply Good’s core
categories and nutritional snacking? You mentioned how protein bars have been impacted because people
can’t go to the gym. How have offerings such as cookies, confections and RTD [ready-to-drink] shakes been
affected by the pandemic?
MR: I do have data here, but based on my opinion, some brands have been hit harder by COVID than others,
and certain segments have been hit harder than others. Indulging has really made out in the COVID
environment. Chips have done very well. Like I said, cookies are up, but it just depends by channel on how
that’s been affected. People have shifted to club business, away from convenience. Grocery business has also
taken a hit. It just depends by segment. Pizzas have been a little bit of a struggle. I know shakes have not
Private and confidential 5
performed to what Quest had expected. I just think having a diverse portfolio for Quest has been a good thing,
because I can tell you, some other brands have not fared as well. This is my opinion, of course, but Kind has
done a nice job of diversifying into other segments. They’re in frozen, they’re in refrigerated bars, they’re in a
bunch of other things. Clif has done as well a job, and I think that they’re struggling a little more than some of
the other brands out there.
[00:11:16]
Q: Could you elaborate on the distribution aspect? Which channels have undergone the most change due to
coronavirus across e-commerce, mass channel and convenience?
MR: Definitely, health and fitness channels have been hit the hardest. GNC and Vitamin Shoppe have been hit
really hard. E-comm has picked up most of that business. Club has also picked up that business. Purchases are
larger-quantity. People are buying more in less trips – is what the trend is right now – so anywhere there’s a
grab-and-go, it’s been tough. There’s no morning traffic. People aren’t going into the office, and that’s affected
people’s purchases, how they’re buying products.
[00:12:17]
Q: Why do you think Simply Good decided to divest its protein business?
MR: I don’t think it had momentum, to be honest. I think they’re also looking at other things, to be honest.
This is just my opinion, but I think that they’re looking at other brands. Your brand has to have cachet, and if
it doesn’t, brand loyalty, Atkins has a ton of brand loyalty, and so does Quest, where I think they may have
stepped away from that one brand to look at other things. (Talking over each other 13.06-13.08) to make
things a little clearer.
NH: It’s more to do with branding and brand loyalty? The brand consists of gluten-free and non-GMO bars,
cookies and chips – trends that are only growing. Do you think the divestiture was the right decision?
MR: You can get it to shelf and the consumer gets the final vote on if it’s going to sell or not. I haven’t looked
at any data on that brand, but I’m not sure if it had any momentum behind it. I have no idea, but that’s just my
gut feel behind it. If you’ve got a dead brand and maybe you’ve done everything you can with it. Atkins does a
great job with FDM, they’ve got a great penetration into those channels. Quest, its strengths are in C store and
health and fitness, so if it didn’t play in any of those segments, and Atkins already had it and gained
distribution on it, then moving them, that’s probably what their thoughts were.
[00:14:26]
Q: Do you think the Simply Good portfolio is robust enough to handle the change in consumer behaviour and
cutting back on non-essentials? Do you think it can cope with the impact from increased unemployment?
MR: I think it was a good purchase by Atkins. It’s a complementary brand, from a demographic perspective.
They’re not overlaying anything that Atkins has. Like I said before, with channel strength, Quest did a great
job with social media, had brand loyalty with that. Atkins was more of a diet item and that’s where their
strength was, so you’re dealing with different consumers. You’re trying to hit different age demographics, and
it’s very complementary.
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[00:15:24]
Q: How would you rate Simply Good’s performance on the trend of consumer preferences towards healthier,
unprocessed foods? Do you think the business overall is taking full advantage of this opportunity?
MR: I’m a big fan of Quest’s innovation. I worked there for five years, and that’s one thing, that they weren’t
just a protein-bar company. They were trying to diversify into other categories, healthy snacking ,that kind of
stuff. As far as unprocessed food, they did come out with some snack bars, and they’re trying to be
minimalistic with some of the items that they have. Their bars are pressed, so they’re really trying to make it
non-GMO, gluten-free. Those things are important to consumers, so I think that they do a good job of catering
to that – my biased opinion.
[00:16:43]
Q: Can you expand on Simply Good’s Quest Nutritional acquisition? What do you think is the Quest value
prop to consumers?
MR: People that are buying Quest are looking for something with low net carbs, with a lot of prebiotic fibre,
high protein and under 200 calories, so that goes for the cookies and the bars. Pizza has similar macros. If
you’re looking for those macros, which a lot of consumers are, if you know what you’re reading on the back of a
label, then you’ll continue to buy the brand based on their macros.
NH: What were some of the immediate synergies recognised by the merger between Simply Good and Quest?
You said the products were complementary. Can you expand on that?
MR: Atkins is a diet product, and I think they’ve done a great job with distribution. Their other strengths were
food-drug-mass. Quest did a good job with food-drug-mass, too, but they had no touch in health and fitness,
they had no touch in C store, either. If you can make your portfolio a little stronger in your respective
channels, that’ll help the other brands. I don’t know how much legs Atkins will have in health and fitness and
C store. I think that those are destination products from a food-drug-mass perspective. Quest, I think, did a
good job of gaining grocery business, as well, so I don’t think that they really took any leap forward by going
over to Atkins. I don’t think there was a distribution void that Quest was missing. Quest did a good job with
social media. I think that Atkins can learn from that and try to gain social-media following. Atkins did a good
job with having a spokesperson, Rob Lowe, and I think, probably, Quest will look at something like that in the
future, to have a spokesperson against that. Different ways to going to market, and I can see they’re going to
use those ideas. Quest will use some of Atkins’ ideas, and Atkins will use some of Quest’s ideas.
[00:19:42]
Q: Is the consumer demographic for Quest different than the one for Atkins, given that both groups want a
healthier lifestyle?
MR: They are, but Barry Sears is the Atkins founder, and he saw it based on a diet. They do have some
synergies. This is just my opinion, but I think Atkins is more for a female that’s trying to diet, and Quest is
more of an active-lifestyle, younger-millennial-type consumer, so I think there are some major differences in
the demographics.
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[00:20:49]
Q: What could be some unforeseen issues with the product execution or innovation for Quest’s RTD shakes?
Q1 FY21 sales in the retail channel were flat.
MR: Again, this is my opinion, but I know the prior CEO came from Airnutrition, and they had a very heavy
club-based business. It hasn’t taken hold, from my opinion, in some channels. I know Walmart has struggled
with it, from my opinion. That Tetra Pak beverage business has done very well in club, and that’s where you’ve
got to play, so I’m not sure that grocery has really taken hold on that product.
[00:22:03]
Q: How much of a focus should Simply Good’s management place into chips, cookies and other products
doing well in the coronavirus operating environment, especially as the bar category continues to
underperform?
MR: I think that’s a wise move. Indulgence is really hot right now. They’ve got some cups, they’ve got some
different products that are more indulgent. The cookies, I think, are a wise move. Cookie total business is up
4%, so that’s continued to grow. Nutrition bars are down 8% overall. If you’ve got some trends that are
positive, salty snacks are up 8%, too, so those are trends that you want to take advantage of. Having a more
diversified portfolio protects you against headwinds when one segment is down, so I think that they’ll continue
to do that. They’ve got some pretty cool items. They’ve got some fudge-brownie candy bites that I think may
have some legs here, too. I think that’s going to take some time to gain distribution, but give that 12-18 months
and I think that may still have some legs on it.
[00:23:25]
Q: Is Simply Good likely to exceed, meet or undershoot its USD 20m cost synergy target for the Quest merger?
The majority is expected to be achieved in 2021-22.
MR: My opinion, I don’t see it, especially with the environment we’re in, but that’s just my opinion. I know
there’s been combining sales teams, that kind of stuff. That could be a fair amount of it, but incremental
distribution and and the environment that we’re in, I think that has to taper expectations.
[00:24:33]
Q: What might be the main drivers for Simply Good’s Atkins brand? Is there anything to note about its
consistency or convenience?
MR: They’ve done a great job with distribution. They control what they control. I think it’s just the
environment that’s going to affect them the most. As soon as we come out of this COVID situation, I think
people will then get back into dieting. If you’re looking for YoY trends, as bad as 2020 was, I think you’ll
definitely see some growth in this coming year, as I think we get back into normal life. I think that’ll affect
dieting and Atkins consumption, especially in grocery.
[00:25:47]
Q: Do you expect e-commerce to continue contributing increasingly more sales for the Atkins brand overall?
E-commerce sales increased 77% in 2020, representing 9% of all sales in the brand. What are your thoughts
Private and confidential 8
on this performance?
MR: I think you’re going to continue to have e-comm have a larger piece of the business, at the cost of GNC
and Vitamin Shoppe. Those are the ones that are really bearing the brunt. It’s a channel shift, so home
deliveries continuing to be increasing. People aren’t leaving home, so Amazon continues to be a larger and
larger piece. I don’t think it’ll continue to grow what it did over 2020, but I still think there’s going to be a
growth in it.
[00:26:49]
Q: Would you say Atkins is overexposed to the away-from-home product category? I think the brand
experienced overall sales weaknesses, despite the elevated at-home consumption and accelerated consumer
adoption of health and wellness.
MR: I think it’s just got a narrow portfolio. Once you’re branded as a diet product, for you to break out and
away is not so easy. People are dieting at home, which, let me ask you this question – how do you define away-
from-home?
NH: The on-the-go channels. You mentioned the gyms – maybe the convenience stores, things like that.
MR: Away from home, I don’t think they’re as exposed as Quest is at away-from-home. Most of their business
is food-drug-mass, so immediate consumption, for Atkins, I don’t think is going to be significant. Their
business in C store was minimal. Away-from-home, if you’re looking at colleges or you’re looking at the airport
channel, they may have a SKU or two but there’s not a lot there.
[00:28:44]
Q: How would Atkins’ 2020 revenue growth compare to 2021? Is it struggling to increase revenue and if so,
why?
MR: I would say it’s probably going to be flat. COVID didn’t really hit until February, March of 2020, so they
may have one quarter of growth, but anything YoY, Q2 and Q3, Q4, I would think that, Q3 and Q4, we’re going
to come out of this thing a little bit soon. Might see some positive trends in the back half.
[00:29:41]
Q: Could you outline Simply Good’s competitive landscape within the nutritional-snacking market? You
mentioned GNC. Who are the big players?
MR: Clif, Kind, One Bar, RXBar. RXBar has been hit pretty hard. One Bar was a copycat brand of Quest, and I
think that, even though they’re a very similar bar to Quest, other than they’re using IMO as their fibre source,
they’ve continued to do a decent job of getting distribution. They’ve done a good job of the marketing. Clif has
really bared the brunt of COVID. From what I’m seeing here, and this is opinion-based, they’re off 20%-plus.
Kind has done a better job, because they’re diversifying into newer categories. You just can’t stay stagnant.
Coming into this thing, I think Quest lined themselves up pretty well with having chips, cups and cookies. If
they were just a bar company, I think they would have had it a little bit harder of COVID. Their numbers have
actually been stable. To name a few brands there.
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[00:31:22]
Q: Could you elaborate on the business diversification? What advantages does Simply Good have over
competitors in the segment? What weaknesses does it have?
MR: You’re heavily dependent on diet for Atkins.
NH: You can break it down between Atkins and Quest, in terms of their advantages and disadvantages
between them both, too.
MR: Atkins has a heavy following with diets. I think they’ve diversified their portfolio as much as they can.
They have shakes, they’ve got some other things out there. I’m just trying to think here. Maybe they might try
to get into chips or something like that, something that Quest has that they don’t. They could get into some
kinds of bites or cookies, something similar to what Quest has. Maybe they could use some of that. Like I said,
Quest has done a great job of diversifying their portfolio into pizzas. They’ve got shakes, cups, protein cups
now. They’ve got chips. They’ve done a good job, I think, weathering the storm for COVID, better than other
companies, and I think there’s probably going to be more innovation there. Jeremy, who is their R&D guy, I
think he’ll just continue to do a nice job with it.
[00:33:13]
Q: What might be Simply Good’s appetite to complete further deals, following the Quest acquisition?
MR: I think that there are other things coming. That’s just my opinion.
NH: What makes sense? Where should it expand in terms of categories? What are your thoughts on that?
MR: I hear brands such as Vega thrown around for different things. I think they’re in an acquisition mode.
This is my opinion and that’s what I’m guessing, is that there will be some other purchases down the road
here. Where would they go? I’ve heard rumours of, like I said, Vega. I don’t know. Other brands that would be
complementary. It’s tough to create momentum behind a brand, and I think they’ll probably look for brands
that are smaller and have momentum. Up-and-coming, maybe some private equity brands that are smaller.
You just never know.
[00:34:42]
Q: Would you consider Simply Good to be a likely acquisition, especially given that so many of the very big
names are trying to get into healthier nutritional offerings. What are your thoughts here?
MR: I’ll say this, being in the nutrition business for over 25 years. When a large company buys, they cannot
create health and fitness. This entire category, health and fitness, wellness, has always been small-company-
driven and has cachet because of it. Anytime big companies try to step in and create a brand, they just haven’t
been able to do it. Even though they’ve been able to gain distribution by distribution, it hasn’t been able to
stick. To answer your question, I would say yes, I wouldn’t be surprised if a big company, Nestlé or a Mondelez
or somebody, buys and says, “You’re going to be the health and wellness division of this company.” It could
happen. From what I can gather from the CEO at Simply, he’s aggressive about either acquisition or being
acquired. He’s not sitting down waiting or just milking the brand. I think he’s got eyes on other things.
Private and confidential 10
[00:36:23]
Q: Why do you think the bigger names struggle to make a compelling offer for nutritional snacking? You said
the big brands struggle to build a meaningful presence in this segment, and that the small brands and
companies are ultimately driving the innovation and growth.
MR: (1) The macros. (2) I just don’t think they have the cachet. I was at Abbott Nutrition when they bought
EAS, and they killed the brand. EAS had so much momentum, Myoplex. They had all the NFL athletes. The
one thing I’ll say at Quest is that the guys that built the brand built it on the macros, and they were
bodybuilders, they were health and fitness guys. They weren’t a food-science guy in a lab working on stuff. I
think Ron, the R&D guy from Quest who is one of the owners, he wanted to create an item that was like a
centre-store item that actually good for you, changing the macros in the products. Big companies have big
budgets, but it’s a general CPG trend. Coke buys smaller beverage brands. Big nutrition companies buy smaller
nutrition companies because they can’t pioneer, either, or do it well, in my opinion.
[00:38:22]
Q: How strong is brand loyalty between Simply Good’s two brands, Atkins and Quest?
MR: Quest’s social-media following is strong. That’s one thing that’s really developed the brand. They were
highly interactive with cooking with the items. If you look at their social media compared to other ones that
are out there, that’s been a strength. Atkins, I really can’t comment as much. I think that’s been more a
mainstream TV-commercial diet product. From a brand-loyalty perspective, the thing with the dieting,
though, is it’s in and out. People go on diets, they go off diets. My question is, is Atkins a lifestyle choice, where
it’s consistent purchases, or are people going on diets, off diets, and that may be one of the things? You’re
always trying to get a new consumer there, where Quest, I think, is more of a steady consumer, “This is the
lifestyle I lead.”
[00:39:42]
Q: Who do you think is the biggest threat to the Simply Good portfolio, whether Quest Nutritional or Atkins?
MR: What’s the next big thing? That’s the question. Quest came out with the prebiotic fibre, low net carbs.
That was revolutionary. No one else was really doing that, soluble corn fibre, under 200 calories, what people
were looking for. That’s the thing, is what’s the next hot thing?
For Atkins, it’s going to be, what’s the next hot diet? Is it going to be the South Beach Diet? Is it going to be
paleo, ketogenic? Ketogenic has gained a little bit of momentum. That’s going to be their biggest threat, is
what’s the next big diet craze? From a Quest perspective, I think One Bar has done a nice job of nicking away a
little business on the bar business. They’ve got a similar bar, they’ve done an ice job with marketing. They were
purchased by Hershey, so they can do some more trade spend. The question is, is Hershey actually going to do
something with it, and diversify their portfolio away just from bars with One Bar? RXBar was another one that
was nicking away at Quest a little bit, as well, but they’ve since fallen off. They had a recall. That may be
revitalised, too, RXBar. I can say, from a Quest perspective, if people weren’t buying Quest, they were either
buying RXBar or they were buying One Bar.
[00:41:47]
Q: What might be the key growth drivers of the nutritional-snacking industry over the next 3-5 years?
Private and confidential 11
MR: That’s the million-dollar question. I get people asking me, “What should we be doing that we’re not
now?” I work for a refrigerated-nutrition-bar company now. I think broadening into other segments is going to
continue to strengthen portfolios. Quest has done a nice job of that, into different things, but like I said before,
what’s the trend? What’s going to be the next hot thing? That’s the million-dollar question. If I had an answer,
I think it would be… Keto has gained a little bit of headway here recently. With SlimFast, they’ve got some nice
items that have performed pretty well, but is that going to gain mass penetration? I don’t think so. What’s the
next hot diet, and then what’s the next hot nutrition brand? Usually, it’s going to be driven by something at
GNC or Vitamin Shoppe or in the gyms, “Hey, this is low-carb.” I’ll say this. I think something that could grow
in the future here is something with some kind of health-added macros, maybe omega 3s. There’s some of that
stuff out there now, but I think that that may be something that may gain some headwinds in the future.
Prebiotic, probiotics, something that’s not deliverable right now or is starting to be.
[00:43:54]
Q: What’s your outlook for Simply Good over the next six months? Can you share some best- and worst-case
scenarios?
MR: I can tell you, from a C-store perspective, I think they’ll be flat to single-digits up. Atkins, it’s going to be
positive over prior year but I don’t think it’s going to be crazy growth. Looking at the data here, I can tell it’s
probably flatter. That’s just from the data that I’m looking at. Low-single-digit growth I think is going to be
where it’s at.
[00:44:43]
Q: Is there anything you think the investor community should know regarding Simply Good’s management
team and their ability to execute on priorities?
MR: I think they’re doing everything they can. Jill has done a nice job. She’s trying to merge the two
businesses together. C store, away-from-home, they’re expecting big numbers there, and I don’t see it. The way
they’re structured, they restructured to be more regional rather than siloed by channel, and I don’t think
they’re going to get the account penetration that they think they are. Just because you’re in the market doesn’t
mean you’re an expert in the channel, so I think that that could be a problem, too. From a mass perspective,
food-drug-mass, I think they’re structured right, and they’re going to do the right things.
[00:46:00]
NH: I think that about wraps it up. Thanks, Mike. We will now end our Interview. Thank you, clients, for
joining Third Bridge Forum’s Interview today. Goodbye.
Transcription ends at 00:46:10 of the recorded material
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