Laird Superfood Rides The Wave To Optimistic Future

It’s been a rough couple of years for Laird Superfood but after a rebrand and moving into a co-manufacturing model, the brand created by professional surfer Laird Hamilton is beginning to ride the wave back to profitability.

In March, the company reported a 40% gross margin during its fourth quarter report, a 21 percentage point swing from the same period a year ago.

Laird has turned the corner thanks to the company shifting to an asset-light production model, reducing capital burn on marketing, and prioritizing its direct-to-consumer and ecommerce distribution channels, CEO Jason Vieth told Nosh at Natural Products Expo West last month.

For the first time since going public, Laird announced positive profitability and positive cash flow in its most recent quarterly report. Company leadership happily reported on the earnings call that the company had removed the “growing concern disclosure” from its financials and estimated it had enough cash to “fund operations through 2026.”

The company has been pragmatic in how it has strategized growth, Vieth said, by not cutting corners in product formulations but instead trimmed the fat in how it deploys capital. General and administrative expenses have come down since Q4 2022 with the company focused on reining in discretionary expenses and negotiating “big-ticket items” like insurance.

Net income had finally jumped into the green in Q4, compared to a net loss of $15.5 million in Q4 2022. Additionally, Laird Superfood reported that for the first time in two years it had a positive cash gain of about $300,000 compared to burn rate -$3.2 million in Q4 2022.

Digging Out

In retracing the history of Laird’s financial struggles, its May 2021 acquisition of Picky Bars stands out as a pivotal moment. At the time, the Laird team saw synergy between Picky’s gluten-free performance bars, granolas, oatmeal and nut butters and a founding team that had a background in high-performance sports.

“Unfortunately, the Picky Bar consumer and the Laird Superfood consumer have turned out to be fairly unique,” Vieth said. “The cross-selling opportunity that the former [Laird Superfood leadership] team had identified has been significantly reduced.”

Given the limited resources of the company, Laird Superfood has put its focus on its own core product portfolio and written down the value of the Picky Bars business, Vieth said. Yet the “acquisition was instrumental and helped to expedite the launch of our Laird Superfood protein bars,” he added, which has proven to be a welcome addition to the brand’s portfolio.

The company expressed no immediate plans to offload the Picky Bars brand but will continue to launch new flavors.

Changes to Apple’s iOS operating system in 2021 that allowed users to opt out of data tracking also hurt growth.

“Companies that relied on DTC marketing and selling found that one of their primary channels for advertising was severely diminished in effectiveness — literally overnight,” Vieth said.

Laird’s new consumer acquisition strategy runs lean, with digital marketing spending cut about 80% and minimal advertising on social platforms. The company is prioritizing existing customer retention and growing subscriptions through “Surprise & Delight” activities which includes dropping samples and free gifts into subscribers baskets when they reach milestones. The renewed focus on DTC is showing signs that it may be working: DTC grew 10% year-over-year Q4 2023.

Last year, Laird experienced an issue with rancid coconut milk powder coming from one of its suppliers, in which it had to remove all its inventory from Amazon that took about six months to fully recover from and translated to a 12% decline in sales.

That’s not to say that Laird does not see brick-and-mortar retail as an avenue of growth. Wholesale sales constituted about 43% of the company’s business in 2023, up from 37% in 2022. Laird grew its retail business by 50% in 2023.

Sprouts Farmers Market currently carries nearly 25 Laird Superfood products across the retailer’s stores. Vieth noted in the Q4 earnings that there is “significant opportunity” to expand its options in Whole Foods Market stores where the retailer carries eight items nationwide.

Until recently, Laird has put very little effort into expanding into the conventional channel but is planning to invest more resources on the back of successful launches in Harris Teeter, H-E-B, Publix and Target.

New Look, New Production Model Paying Off

Last March, the brand unveiled its refreshed packaging at Natural Products Expo West replacing the surfer imagery with a subdued, tropical floral design. Despite removing Laird Hamilton’s image from the front-of-pack, the brand has ramped up its activations and marketing campaigns with Hamilton and his wife, ex-professional volleyball player Gabrielle Reece.

The rebrand came as Laird moved fully into an asset-light, co-manufacturing production structure with the closing of its Sisters, Oregon production and fulfillment facility at the end of 2022.

The move allows Laird to “better match its production levels to demand,” Vieth said, as reflected by a reduction in cost of goods sold from $30.6 million in FY 2022 to $23.9 million in FY 2023. Copacking leaves room to use ingredient procurement to drive better margins and be a framework for more efficient spending.

“Value engineering is the fool’s gold of our industry,” Vieth said. “All of the Big Food companies, and many of the smaller ones, run around picking it up off the ground while upstarts come in to attack them with higher quality, better food in preferred packaging. We refuse to go that route.”

Laird’s portfolio is focused primarily on functional coffee creamers with about 50% of gross sales coming from the category. Yet, the company is seeing demand growth in its relaunched Super Greens product and its Performance Mushroom supplements where it has “broadened our shoulders to really be that superfoods brand, not just a super creamer brand,” Vieth said in the question and answer section of its Q4 earnings call.

That’s not to say Laird is done righting the ship. With margins about 40%, Vieth expressed confidence that this was “the latest step in what has been a rather steady path of improvement.”