There’s a quiet boom going on in the functional foods marketplace, with sales of these products ramping to $267 billion on a global basis earlier this year – a trend that is likely to resume as the world recovers from the COVID-19 pandemic outbreak.
One company carving out a footprint for potentially dramatic sales growth in the functional foods space is Gentech Holdings Inc (OTCMKTS:GTEH).
Caught Off Guard
GenTech is worth noting right now because the company has struggled to spark serious commercial operations over the past two years despite well-conceived plans to turn that corner. That has possibly baked in some natural skepticism. As we generally like to say: skepticism is an opportunity to be exploited for keen speculators. This type of situation is often where the most dramatic gains are there to be harnessed.
The basic idea is built on the premise that doubt is the primary source of undervaluation – it is often reasonable, but occasionally misplaced.
In the case of GTEH shares, following the company’s successful launch of its “Secret Javas” line of subscription premium Brazilian-sourced CBD-infused coffees in March and its recent M&A-driven expansion into the functional foods market, that baked-in skepticism looks increasingly to be an opportunity.
To wit: GenTech just announced that, following its recent acquisition of Sinister Labs, LLC, and its popular Sinfit Nutrition brand, a top-5 functional food brand currently sold in over 2,500 GNC locations in North America and over 10,000 global physical and e-commerce stores across more than 10 countries around the world, it is launching a suite of new products designed by Sinfit that are expected to drive immediate sales growth leading to at least $1.5 million in sales in the coming year.
That’s a sharp uppercut to the skeptics as this is clear and immediate commercial-stage topline growth now lined up.
The Secret Sauce
One reason for confidence in this narrative is the fact that Sinfit – GTEH’s recent acquisition – has a well-established distribution network, including its relationship with Europa Sports, the largest sports nutrition distributor in the US, and True North Distributors, one of Canada’s largest distributors of supplies and products. That represents a significant channel with immediate growth potential in terms of new products, both previously developed by Sinfit and being developed by GenTech.
In addition, this product launch sequence appears to be something like picking up free money laying on the floor, from the standpoint of fixed-cost investments. As noted in the release, all R&D investment had already been completed for these new products, and manufacturing relationships were already established, but the launch process had been put on hold during the acquisition.
Now that the acquisition has closed, GenTech is apparently ready to commence distribution and sales activity for these new products, beginning with the new line of protein pancakes.
“Now that we have closed the transaction, we are ramping the first phase of our strategic plan, which is centered around maximizing sales through Sinfit’s established distribution footprint,” remarked David Lovatt, CEO of GenTech. “That process is based on sales outreach and vertical expansion within each end-market access point. The fixed cost investments for these products have already been made. We simply have to capitalize on that value creation. The Sinfit Nutrition Buttermilk Blaze pancakes are a perfect way to launch that process.”
It’s also important to note that this first product launch isn’t a chimp shot into space. It’s not “experimental”. It’s based on rock-solid results for Sinfit’s line of protein pancakes, which powered big sales in 2019.
According to the release, the Sinfit Nutrition Buttermilk Blaze pancake product line is a strong addition to its functional food line. This new product is an expansion of the existing range of pancake products offered under the Sinfit brand. Sinfit pancakes brought in over $800K in sales in 2019.
Functional food, defined as conventional and modified foods that include additional health benefits beyond basic nutrition, saw sales top $267 billion in February of this year on a global basis, with sales in the US reaching $63 billion, according to Euromonitor 2020.
Lovatt continued, “We are predicting that this new set of Sinfit products, in total, including the other new product lines yet to be announced after today, will add over $1.5 million in total revenues to the top line in 2021. We will start to see these products impact GenTech sales data in 2020, with new products available for purchase within the next six weeks.”
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