Stryve’s “Biltong” Snacks Have all the Right Ingredients to Reward Investors – IPO Edge
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Stryve’s “Biltong” Snacks Have all the Right Ingredients to Reward Investors
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Stryve’s “Biltong” Snacks Have all the Right Ingredients to Reward Investors

  • Stryve Foods LLC is an air-dried meat snack company with a focus on wellness
  • Going public via merger with Andina Acquisition Corp. III (NASDAQ: ANDA)
  • Sales to grow more than 100{efe5d79870c08482e17ab0c97855f89429dac5f22c46026d3ca83573faec2208} annually in 2021 and 2022, driven by e-commerce, brick-and-mortar
  • Profitability expected in 2H 2021, helped by operating leverage, cost discipline
  • Shares are cheap at 2x 2022 sales, sharply below Beyond Meat, Tattooed Chef, Simply Good Foods
  • Sold in 20,000 retail locations including Walmart, Kroger, CVS, 7-Eleven, more in 2021
  • Management includes Co-CEO and Chief Marketing Officer Jaxie Alt, 17-year veteran of Dr Pepper Snapple Group
  • Private investors include actor Channing Tatum, NFL quarterback Justin Herbert

By Jarrett Banks and John Jannarone 

The wellness trend is here to stay and Stryve Foods LLC is betting the ranch on it. Investors should saddle up for the ride.

Americans are shelling out more for premium foods, including organic meat and savory snacks, as the pandemic has helped boost demand for healthy choices that’s already been one the rise for years. With Covid-19 infections still at alarming levels across the U.S., many consumers have awoken to the importance of nutrition to help support a healthy immune system.

Stryve, which specializes in air-dried meat that fits ideally in a healthy diet, is going public by merging with Andina Acquisition Corp. III (Nasdaq: ANDA), a special purpose acquisition corporation or SPAC, that raised money to find a target. Investors including actor Channing Tatum, Los Angeles Chargers quarterback Justin Herbert, as well as institutions, have poured $42.5 million into the transaction, which is set to close in the second quarter. Investors who buy ANDA shares now will see them convert automatically to shares in the newly-formed company, which will then trade under a new ticker: SNAX.

To understand Stryve, it’s important to get acquainted with its product: beef biltong, a term that may unfamiliar to some Americans. It comes from Afrikaans and refers to the process of air-drying meat, which results in a high protein, zero sugar snack.

It’s important not to confuse biltong with beef jerky, which is cooked and often includes added sugars, preservatives or worse. Importantly, the U.S. won’t allow the importation of biltong since it isn’t cooked, so Stryve has major advantage as the largest domestic producer.

Stryve currently manufactures at an Oklahoma-based factory, one of the few licensed U.S. plants that are allowed to produce biltong. Setting up a facility of significant size takes many millions of dollars and time to satisfy stringent USDA requirements.

Stryve’s lead is extending by the minute. Last fall, the Plano, Texas company rolled out Vacadillos, a dried carne seca snack aimed at Hispanic consumers who may not be familiar with its signature item. Then in mid-December it purchased Kalahari, the second biggest biltong brand in the U.S., to further strengthen its position.

The meat snack category is vast but fragmented, and has several big consumer packaged goods players. Stryve says its customers are early adopters that seek out healthy snack options, many of whom are new to the meat snack category.

Stryve’s Air-Dried Beef in a Charcuterie Board Setting

Importantly, consumers also break down evenly among males and females, and run the spectrum of incomes. That is likely a very different split than, say, Slim Jim, which reaches a legacy beef jerky audience.

In a sign that specialty food brands are increasingly becoming mainstream, Laird Superfood and Modern Meat both recently went public and Oatly is reportedly seeking a $10 billion valuation in a listing this year. Indeed, 20 years ago when Chobani entered the market, it was considered a specialty item. Now Greek yogurt is bigger in America than regular yogurt because of its health benefits.

The management team includes top-notch operators who should help the company move nimbly. Co-CEO and Chief Marketing Officer Jaxie Alt spent 17 years at Dr Pepper Snapple Group where she served as Co-Chief Marketing Officer. Co-CEO and Co-Founder Joe Oblas started ProSupps, one of the fastest growing sports nutrition brands, and co-founded Juice Stop which he grew to 150 stores in 22 states prior to exiting the business.

Stryve’s formula of vertically integrating a category to drive high margins, use speed to market and drive private label capabilities is proving a winner. One other source of revenue growth might be acquisitions that could quickly be tucked into the business.

Organic products have seen growth at retailers, prompting giants like General Mills Inc. to take notice. Such large companies often see fast-growing operators like Stryve as tasty morsels. The Hershey Company acquired Krave in 2015 and General Mills acquired Epic Provisions in 2016.

Turning to Stryve’s financial performance, the company is on an impressive trajectory. It has posted 63{efe5d79870c08482e17ab0c97855f89429dac5f22c46026d3ca83573faec2208} annualized revenue growth since inception and expects sales to double in both 2021 and 2022 – far faster than just about any publicly-traded food company.

There are several reasons to believe growth with continue – perhaps even faster than forecast. Stryve is now very widely available: The products are sold in in 20,000 retail locations including Walmart, Kroger, CVS and 7-Eleven, and will enter several more major chains including Target in 2021.

Even within stores where Stryve is sold, there is plenty of room to expand. The company has two or three items for sale in some of its biggest retail partners such as Kroger and Walmart, but sees an opportunity to expand to five. And while the company is blazing a trail in the meat snacks category, it also plans to enter other healthy verticals down the road – which would bring revenue not now included in forecasts.

Many Americans prefer to order direct these days, and Stryve has had great success online, commanding with a 40 percent repeat order rate on Amazon. But it can get better: The company launched its own website in 2020 where it can sell the same products at much better margins. By the end of the year, sales had handily topped those on Amazon.

Profitability is imminent, expected later in 2021. The key has been to spend carefully on marketing with specific ROIs in mind, build on lucrative e-commerce, and to take advantage of operating leverage. The company boasts a facility and leadership staff that can manage up to $200 million of revenue vs. $51 million expected in 2021.

Benchmarked against peers, the stock is still a deal, despite a modest run up to about $11.30 per share. That prices implies an enterprise value of 2 times 2022 sales. By comparison, Tattooed Chef, a recent IPO company, trades at 5 times, according to Sentieo, an AI-backed research platform. Some other comparable companies command far richer multiples: Beyond Meat trades at a whopping 11 times.

With its wide moat, multiple growth levers, and tailwinds from healthy living, Stryve has the ingredients to become a billion-dollar brand in short order. Investors who take a bite early are bound to be rewarded.


Jarrett Banks

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