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Laird Superfood Inc (LSF) Q4 2020 Earnings Call Transcript

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LSF earnings call for the period ending December 31, 2020.

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Laird Superfood Inc. (LSF -13.85%)
Q4 2020 Earnings Call
Mar 11, 2021, 5:00 p.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Ladies and gentlemen, thank you for standing by, and welcome to the Laird Superfood, Inc. fourth quarter and full-year 2020 financial results conference Call. [Operator instructions] I'd now like to hand the conference over to Ms. Ashley DeSimone, managing director at ICR, to begin.

Ashley DeSimone -- Managing Director, ICR

Thank you. Good afternoon, and welcome to Laird Superfood's fourth quarter and full-year 2020 earnings conference call and webcast. On today's call are Paul Hodge, chief executive officer; Valerie Ells, chief financial officer; and Scott McGuire, chief operating officer. By now, everyone should have access to the company's fourth-quarter earnings press release released today after market close.

This is available on the Investor Relations section of Laird Superfood's website at Before we begin, please note that all of the financial information presented on today's call is unaudited. And during the course of this call, management may make forward-looking statements within the meaning of the federal securities laws. These statements are based on management's current expectations and beliefs and may involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements.

Please refer to today's press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. And now I'd like to turn the call over to Paul Hodge, chief executive officer of Laird Superfood. Paul?

Paul Hodge -- Chief Executive Officer

Thank you, Ashley, and aloha, everybody. It's a pleasure to be speaking with you in regards to our fourth quarter and full-year earnings report. To start with, I want to congratulate our team for amazing 2020 results. In spite of COVID challenges, we saw net sales growth of 98% over 2019.

We executed a successful IPO, and we launched innovative new products and entered new categories, including our liquid creamer, several snack products, our functional coffees, as well as Activate and Renew products to round out our Daily Ritual Healthy Living as we believe better food will lead to a better world. 2020 was truly an epic and amazing year and trust that this team is committed to working hard every day to also make 2021 another amazing year. On today's call, I'm going to hit on the main drivers of our business we think you will probably be most interested in. To start, for all of our new investors, I'll give you a two-minute summary of who we are and what we do.

We will then jump into our growth drivers in liquid creamer. And I'll hand over to Scott McGuire, our COO, to discuss his work on operational efficiencies; before Valerie Ells, our CFO, discusses the financials. As always, we want plenty of time for Q&A. So to start off our new investors to the company, Laird Superfood is a high-growth, plant-based natural food manufacturer with an open-ended growth opportunity in the $759 billion grocery industry.

We believe Laird Superfood is going to be a leader among the consumer industry's better-for-you brands, and we're mission-driven with global TAM appeal on trends and with an outsized e-commerce revenue contribution. At Laird, we believe better food leads to a better world because when people are healthier and feel good, they make better decisions. Our products provide daily, sustained energy, nutrition and hydration that we need to excel throughout our days from sun up to sun down as part of our daily ritual, starting with our Superfood coffee and creamer. Our mission is simple: We make products that deliver great taste and great quality.

We want our product to be convenient, easy to use, affordable and available to all. It's important for us to be able to provide these high-quality natural products at accessible pricing when you look at the price per serving. And we can do this while providing trusted, authentic products to the mass market. We accomplish this by vertically integrating self-manufacturing and direct sourcing whenever possible to eliminate the middlemen.

But also, the vertical integration gives us oversight to ensure sustainable and ethical practices through all phases of our supply chain from farm to fork. We have an omnichannel sales approach, and I'm constantly impressed by our leadership online as a native digital platform. In the fourth quarter, 61% of our business was online. We also sell wholesale and grocery mass and drug, as well as foodservice, where we're in the early innings, but our products are a natural fit, and we see tremendous long-term opportunity.

So first, we'll talk about growth drivers. Overall sales remained very strong. In 2020, we saw a 98% net sales growth year over year, including 108% growth in wholesale and 90% growth in online sales. So there's four topics here in growth I need to touch on.

One, the crown jewel of this business is our online sales. We saw a new customer acquisition growth of 192% in 2020 over 2019 and 201% in Q4 alone over Q4 of the prior year. This proves that early 2020 COVID-led pantry stocking was not just a bubble for Laird Superfood. The online growth has been sustained, and we don't foresee any slowdown in the near future.

Our retention metrics further demonstrate this. We saw a 33% reorder rate increase for 2020 cohort compared to our 2019 cohort, taking our already strong retention to even greater levels. And our subscription business is strong and increasing as well, continuing to represent one-third of our online business. Even more impressive, we grew new subscriptions to 184% in 2020 versus 2019, further demonstrating the materially recurring nature of our revenues and customer loyalty.

The list of achievements of our online business is a long one. The health and revenue generation of our email list continues to multiply. Our conversion rates are twice those of the industry average, and our customer acquisition cost continues to demonstrate the effectiveness and efficiency of our organic customer acquisition strategy. All in all, our online business is best-in-class and on fire.

We consider ourselves to be leading the way in the food industry and anticipate that our online business will always be more than half of our revenues, which we love, as it gives us that direct connection to our customers and provides a highly valuable test platform for new products before we take those products and invest in wholesale rollouts. Second, when it comes to growth drivers, let's look at wholesale. We have our first step goal to get to 20,000 doors and are now one-third of the way there. And when you look at all the future opportunities in drug, grocery, mass, convenience stores, the future potential is far larger than that.

To help achieve our goal of getting our products in 20,000 doors, we have just finished building out a world-class wholesale sales team with the hire of two sales directors who each bring senior-level CPG experience to our organization, and both individuals have an extensive track record of building emerging brands and accelerating white space closure. We've also just upgraded our broker team by adding a new national broker network to cover natural, conventional, mass and drug. We have aligned ourselves with the industry's top brokers who bring significant experience building natural food brands, and this network better positions us for long-term growth across all these channels. We're also happy to announce some important recent wholesale wins for March that demonstrate our continued growth momentum.

We are launching our liquid creamer in 290 Target stores this month, as well as in Harris Teeter and Wakefern. We're starting to get solid traction for functional coffee, and we're launching in 400 new stores this month alone. Additionally, we're discussing our international strategy internally now. And while it remains low hanging for the U.S., we're aware of international opportunities as well.

And recently, we launched our Superfood shelf-stable creamers into 220 Loblaws stores in Canada. There are a lot of grocery resets happening in the back half of this year which we intend to be part of as well. We're very excited about wholesale growth for this year. Next on growth drivers, I'd like to talk about platform expansion.

As you know, we're building a brand platform which enables us to continually find innovative products with large TAMs that's online and take those winners to the wholesale channels. To name a few in testing, functional coffee. I believe this is going to be a multibillion-dollar market in the next five years. In the fourth quarter, we launched our second functional coffee, Boost Coffee, the first-ever coffee with vitamin D from plant-based whole food sources.

This complemented our initial functional mushroom coffee released mid-2020. And in January of 2021, we further expanded this product set with our third functional coffee, Focused Coffee, which includes functional mushroom extracts and botanical adaptogens for cognitive support. We're working on a deep pipeline of highly innovative functional coffee products which we will continue to release in the coming quarters, and we're excited to be leading the charge when it comes to innovation and creating functionality in this category. We launched pili nuts and harvest dates in Q4, the first test into the massive, healthy, better-for-you, whole food snack category.

Pili nuts, which launched first, was a huge success. We saw impressive immediate demand. And since the launch of pili nuts, Himalayan salt, they're seventh best-selling SKU, and cacao is our 11th best-selling and Amazon SKU. This is especially impressive, considering we sold out on day one of inventory on hand, and we're out of stock for a full month after launch.

Additionally, after spending years of formulating to get it just right, we have launched our newest Activate product, our prebiotic daily greens. This product includes 18 Superfoods, functional mushrooms, prebiotics and Shilajit, which is an amazing Superfood from high in the Himalayan mountains. This product not only provides your needed daily micronutrients but also to develop to support your microbiome, which is an incredibly important element for our overall health that researchers are just beginning to fully understand. And finally, on growth drivers, I'd like to touch on M&A.

We are seeing a lot of M&A activity in the marketplace, and opportunities are coming our way, but we have a deliberate and measured approach here. We look for a number of things that can be innovative products, manufacturing capability, unique talent or supply chain opportunities. But we're in the early stages of our corporate development strategy and is our intention to prove out the power of this growth opportunity. We believe we can rapidly plug new products into our platform while not distracting from a current mission and their critical internal growth projects.

Now gross margins and liquid creamer. As everyone knows, as we have been talking about, we are facing some temporary compression in margins due to higher shipping costs in our online channel and due to our new liquid creamer launch, which is due to short shelf life and associated distribution efficiency issues we're dealing with there. Specifically to liquid creamer, we set goal to have these issues resolved in the first half of this year, and we believe we are still on track to hit that goal. In the meantime, we have started to get some wins by optimizing the supply chain and working to make significant improvements to our fresh products.

By midway through the year, we expect to reduce waste issues, which are contributing to margin compression and will give distributors plenty of time to manage inventories, enabling them to keep larger quantities on hand. This also gives our customers plenty of time to consume as well as providing additional efficiencies in shipping, logistics and warehousing. It's taken longer than we would like. And the truth is that we could have had resolved it faster if we were willing to compromise on our values by adding stabilizers and emulsifiers that we don't believe in.

But we are taking the longer-term solution, which is doing something new with a completely new ultraclean label product, a formula that has never been done before. We're unique in our commitment to authenticity and trust for our brand and will not compromise by simply adding ingredients we don't believe in. Having said that, we believe it's worth the wait. We feel the early launch, even with the packaging challenges, it was worth it as we have the time to test the products in the market where we have seen very strong consumer adoption and repeat purchasing where we have been selling liquid creamer.

We've seen strong shelf velocities that we didn't expect to see until the end of this year that's continually growing. And keep in mind, these strong shelf velocities are in spite of lower shelf fill rates than we would have liked due to distributor challenges, which we know are artificially lowering these numbers. This is a powerful sign as to how buyers and customers are loving our innovative functional liquid creamers. With the strong sales data emerging, we are also accelerating our efforts for our liquid creamer shelf-stable product.

We're starting to pilot this product with a new co-packer and expect to have this out in the second half of this year. We are excited for this liquid shelf-stable line to supplement our self-stable powder products for the conventional channels as with the sub-$5 price point, a great price fit for many of these more value-conscious grocery chains. And this also opens up the amazing opportunity with Amazon and our DTC channels to sell at full retail which will balance margins and increase revenues for the entire liquid creamer line. Now I'd like to turn over to Scott McGuire, our COO, to discuss operations.

Scott McGuire -- Chief Operating Officer

Thank you, Paul. Three months into this role as chief operating officer, it is so great to be a part of this team that has built an amazing platform and one that has so much potential. I'm grateful to help take this work to new levels of execution and innovation and be given the responsibility to ensure these great products be available to everyone, everywhere very fast, safe and delicious. Regarding the fourth quarter, the pandemic presented us the common production and supply challenges.

Our top priority was and is keeping people safe, securing the timely delivery of equipment and raw materials and lining up the supply chain to make sure every consumer has access to our products, very challenging. But despite these pandemic complexities, we are hyper focused on building a world-class operational business and have been making strides in efficiencies, something we will never let up on. I'd like to share some specific fourth-quarter developments in three key areas, including throughput, production and direct-to-consumer capacity; parcel costs; and people and talent. On throughput, our first production line improved significantly in Q4 versus Q3.

Leveraging a total team effort, these results were driven by the implementation of a new sales and operations planning process, execution of a production master scheduling and sequencing algorithm, continued enhancements to our preventive maintenance and the installation of automated controllers, creating visibility to real-time results. In the midst of all this, and something we are very proud of, we installed, tested and began ramp-up of our second production line. This production line helps us on four critical levels that provides redundancy. It more than doubles capacity.

It increases our ability to vertically integrate current co-packed SKUs and finally provides the critical flexibility by building our inventories in smart ways for new products, for convenience, and major peak revenue time frames. And as a result of this throughput and capacity progress, we achieved our targeted safety stocks two months sooner than anticipated. On parcel costs, this has provided us challenges in direct to consumer. Freight rate increases from parcel companies have been passed down.

It's a delicate balance and one that requires surgical and real-time attention. We saw an instantaneous rate hike mid-fourth quarter. It takes several solutions to chip away at this, and we are working on all of them, including subscription consolidations, packaging and mode optimization and strategic bundling of our offerings. Finally, regarding our people and our talent.

For the fourth quarter, we made investments to strengthen our engineering and procurement teams. This is already paying dividends in automation, reliability, sourcing, in certain cases, supply of our raw materials. Moving forward, I'd like to share a few key priorities on fiscal year 2021. We have three Ms that provide the template for all we do: manufacture more ourselves; make it more efficiently; move it smarter and faster.

For manufacturing more ourselves, we have already converted two products this year from our co-packer to our production facility, and we will convert more. Making it more efficiently, we will make investments in continuous improvement, lean practices and automation. We strive to provide real-time efficiency feedback, and we strive to eliminate tedious, redundant hard-to-staff tasks. We will do automation right, and we hope to build the flexibility to support the variety of packaging innovations we expect in all channels.

Our engineering team is literally all over this. Moving it smarter and faster in what is very exciting news we broke ground last month at our sisters campus for a new customer fulfillment center. We strive to optimize the layout for velocity, storage cost reductions, direct-to-consumer enhancements, and most importantly, amazing our customers how well we move product to them. Let me now hand it over to Val.

Valerie Ells -- Chief Financial Officer

Thanks, Scott. To round out our conversation on the P&L, operating expenses remained firmly in our control in the fourth quarter. And as we have done historically, we continued to effectively manage these expenses across the board. General and administrative expenses were 44% of net sales for Q4 2020, compared to 36% in the prior year, which reflects incremental and expected public company costs.

On an apples-to-apples basis, if we excluded those public company costs, our G&A expense would have been only 32% of net sales, down approximately 400 basis points. At 2% of net sales, research and development remains highly efficient with a rapid cash payback. And sales and equity expenses were 37% of net sales for Q4 2020, compared to 49% of sales in the prior-year period, reflecting continued effectiveness and efficiency of our organic customer acquisition strategy and the modest fixed-cost leverage available to us in this category. And now looking ahead to the coming year.

Our 2021 net sales goal remains at least $42 million, representing year-over-year growth of at least 60%. We feel confident in these numbers as our business is inherently set on a path for strong growth with our core product lines and existing direct and wholesale relationships. But the slope of the growth curve will be determined by the success of a number of initiatives in the coming year, including a liquid creamer packaging revamp in the first half, as well as launching a liquid shelf-stable option in the second half of 2021; timely and innovative new product introductions with continued strong online performance; the addition of wholesale doors, specifically the larger teams utilizing our liquid creamer as an entry point for these opportunities; and continuing to earn more product placements on shelf at larger partners and increasing the value of each one of those stores while also fostering increased brand awareness. Keep in mind that, on the cost side, expectations should continue to take shipping factors into account as we navigate the optimal balance of free shipping and increasing shipping expenses for our DTC business, including the increased shipping costs that began in the fourth quarter, and further take liquid creamer spoilage into account during the first six months of 2021, following which, our margin should begin to slowly slope upward.

With those first-half headwinds in line, we expect 2021 margins of 28% to 30%, which we plan to achieve via the liquid packaging update, optimizing of our DTC shipping and maximizing the fixed-cost leverage available to us via vertical integration. And similar to the top-line expectations, the slope of improvement in our margins will be dependent on the execution of these key initiatives as well. I would like to reiterate, however, that this coming year is just the first step toward our long-term target. We came to the public market with a very clear set of long-term goals, and we're happy to say that we remain confident in our ability to achieve them.

Over the next two to four years in 2023 to 2025, we believe this business can run with significant annual revenue growth as we begin to leverage our brand platform with gross margins north of 40% and EBITDA margins in the mid-teens. I'll now turn it back to Paul.

Paul Hodge -- Chief Executive Officer

Thanks, Val. We are building Laird Superfood for significant scale, and we want to be a multibillion-dollar brand platform. We are not making decisions for the quarter or even the year. The decisions we are making now, the investments in infrastructure, top-notch offering talent, strategy and supply chain, product segments, these are all investments into this long-term plan.

We have the arsenal and teams to develop or acquire innovative better-for-you products that have large TAM opportunities, and we're building an authentic trusted brand platform with the ability to have massive scale and growth into the future for decades to come. Thanks so much for our team and to our shareholders. Now let's open the call to Q&A. Operator?

Questions & Answers:


Thank you. [Operator instructions] And our first question will come from Bobby Burleson of Canaccord. Please go ahead.

Bobby Burleson -- Canaccord Genuity -- Analyst

Hey, everybody. Thanks for taking my questions. Congratulations on the revenue upside and the EBITDA number. Curious, Paul, on -- when you talk about M&A, and I'm curious -- how about partnerships? What are your thoughts there with big CPG, big QSR guys? We've heard announcements from other plant-based guys that are partnering with large players.

Any potential there this year?

Paul Hodge -- Chief Executive Officer

We're looking at all the opportunities. We're -- if there's an opportunity that basically enables us to build this brand, that's what it's all about. We're not making acquisitions and buying other brands that we're going to put a lot of our own marketing efforts into those brands, and it would be sort of the same concept with a partnership. We're not going to spend a lot of energy promoting other brands.

But if there is a deal that just is a win-win for everybody, we're -- we certainly look at it. And there has been opportunities we've been looking at. So we're excited about these potentials, but I can't tell you whether something will happen here or not.

Bobby Burleson -- Canaccord Genuity -- Analyst

Sure. Fair enough. And then just quickly, this is for Valerie. I guess on the gross margin guidance.

You made the comment of a slow slope upward. It seems like it would be more of a step function upward in the second half, unless there's some margin expansion potential here in the first half. Is that fair?

Valerie Ells -- Chief Financial Officer

Step function, I don't like to speak to it that way too much because, like Scott mentioned in his comments, there isn't just one solution to the shipping side of the issues that we're facing today, for example. So yes, when we make an improvement and we start to see some of those improvements play out, I mean, we're going to head in the right direction but huge steps with every single one of those. I mean, I think you have gotten to know me well enough that I'd like to be a little bit more conservative than to overpromise on that one.

Bobby Burleson -- Canaccord Genuity -- Analyst

Sure. I was just thinking about the shape of the year for gross margins, though. You had to get to that kind of 29%. Are you thinking that maybe we get some expansion here in the first half, it's not all dependent -- it's not all kind of a midyear and then forward improvement?

Valerie Ells -- Chief Financial Officer

I think we've been pretty explicit on the shelf-stable -- excuse me, the shelf-life improvement on liquid creamer, most likely happening midyear and then targeting a shelf-stable liquid creamer to be in the second half of the year. So I'd say for those two, that's probably the most likely timing to see the improvement. On the free shipping, coupled with the DTC parcel cost challenges we're facing, I think that one will be more gradual over the course of the year, yes. Because, real time, and we're working on a lot of different solutions on that issue specifically right now and Scott's leading the charge there.

Bobby Burleson -- Canaccord Genuity -- Analyst

Great. And then just last one for me. If we think about the impact on shipping costs, the gross margin impact there, is there a split that you can kind of allude to between like a free shipping impact and the higher cost of freight in general, just a higher shipping costs in terms of how they impacted margins in Q4?

Valerie Ells -- Chief Financial Officer

No, not a problem. So when we're thinking about the compression related to the free shipping and DTC parcel cost challenge, that one's actually pretty split down the middle. If we're looking back to Q4 of last year when free shipping wasn't in play. So that's about 900 basis points from Q4 of last year to Q4 of this year.

And again, pretty split evenly down the middle there. And then the remainder of the compression we're seeing from Q4 of '19 is liquid creamer, and that's the other 500 basis points right now.

Bobby Burleson -- Canaccord Genuity -- Analyst

Great. Well, thanks for taking all the questions, guys. Yes, Paul?

Paul Hodge -- Chief Executive Officer

I was just going to add a little bit onto the free shipping as we're talking about that. Just kind of a reminder, the free shipping is one of the most powerful use of capital investments we've ever seen. When we look at 2020, our new customer cohort, three-year LTVs, $17.37 million versus our 2019 three-year new customer LTV of $8.78 million. So we increased our LTV value, $8.5 million, while we sacrificed basically $800,000 shipping income.

So it's just an incredible investment when we look at that spend, it makes everything more efficient as we've doubled our conversion rates on the website. So that means that all the ads and all the other traffic that we're bringing to the sites going to be more effective. So it's -- where we're at, at this stage in the game, it's just a really, really powerful tool that we need to keep going on.

Bobby Burleson -- Canaccord Genuity -- Analyst

Fantastic. Appreciate that additional color.


And our next question will come from Alex Fuhrman of Craig-Hallum. Please go ahead.

Alex Fuhrman -- Craig-Hallum Capital Group -- Analyst

Thanks very much for taking my question, and congratulations on a very nice quarter and a very nice year. I wanted to ask about the long-term strategy in terms of grocery stores and other opportunities in food, mass and drug because it certainly sounds like you're continuing to pursue grocery and making some nice hires on the sales side of things there. I just wanted to ask all about your comment that you envision Laird Superfood always having more than 50% of its sales coming online. Does that kind of suggest that, as you look out over the next couple of years, maybe there'll be a little bit of a less emphasis on traditional grocery? Or is it just that your online business is growing so fast that grocery will never really have the chance to fully catch up?

Paul Hodge -- Chief Executive Officer

It's the latter. We are a true online channel sales company, so we're not putting a huge emphasis on one over the other. We love our wholesale customers. We love the wholesale business.

We are, of course, taking a very methodical approach to the wholesale business. We're going to test our products online and make sure that we've got those blockbuster products picked out that we're going to make that bigger investment into the wholesale channels. Just because you're dealing with lower margins, you're dealing with costing them on the shelves. You don't want to have a miss there as far as getting products on the shelf that aren't really churning.

Our wholesale business is growing incredibly well. I mean, we doubled our door count last year, and we're over a third of our way to the goal that we set, 20,000 doors, and we think -- we're actually starting to rethink that number. We think that's a pretty conservative number, and there's a lot more opportunity when you start looking at drug and others. So we're charging hard.

Getting an extended kind of shelf life on our liquid creamer is an important part of continuing the conventional rollout where a lot of the white space lies for us. And our shelf-stable liquid creamer is an incredibly important tool as well to get on the shelf -- of those more conventional stores with that sub-$5 price point. So that's all coming this year, and we're just continuing to charge. It's a little bit a longer life cycle with grocery.

We're in category review meetings now that, I mean, that you can then place your products on the shelves toward the end of the year. So we are really hoping for third, fourth quarter to get on a bunch of those shelves through that process. And we're excited for it. We've got -- we just put in, as I mentioned earlier, a world class team.

We believe we've really now built out as of this month, the dream team of brokers who specialize in each of the different channels. Our new sales directors for east and west that have a lifetime experience filling white space, and we feel are really fit the values of the company and are going to be aggressive in that fashion. And of course, our VP of sales, Josh, has done an incredible job of restructuring, getting this into a really strong position to sell into wholesale. So we're very focused on it and excited about it, but the online business is just exploding.

It's just an incredible best-in-class business. We believe we've got the strongest online platform in this industry, period. And with the team that we have in place that's driving it, the KPIs and the growth is even getting better. So it's extraordinary.

And it's very unique for this industry that we're really excited about it. And we're not going to take our foot off the gas on the online business. And so as fast as wholesale grows, we just still believe online is going to grow faster.

Alex Fuhrman -- Craig-Hallum Capital Group -- Analyst

That's great. Appreciate that, Paul. And then more on the online. I guess, it sounds like from your comments, I mean, you're getting a really nice pickup from the free shipping promotion in terms of new customers.

And it certainly sounds like you've -- even more so than that added a whole lot of new subscriptions. Can you talk a little bit about kind of the margin impact of having customers on that subscription model as opposed to just buying individually, both today, I guess, as long as you're offering free shipping? And then if you kind of think to at some point in the future, if you were to reinstate some type of a minimum purchase for free shipping, like you had perhaps before the pandemic. I mean, what is the profitability of a subscription customer compared to just getting similar orders from customers just on their own?

Paul Hodge -- Chief Executive Officer

I may let Val talk to a couple of those points. But I will say, when you get somebody on the subscription, the lifetime value of that customer is incredible. We have very low churn. So getting them on that program, they do get a slight discount to encourage them to get on subscription.

But we've been doing a lot of work lately to really look at those subscriptions, and we've been condensing subscriptions. We've been talking about programs like, hey, cut your carbon footprint in half. And we've got an 18-month shelf life in this product since -- instead of getting every month, one day in a month, so let's get two days every two months and to make some more efficiencies on the shipping side. So we're doing a lot of work to really make those efficient, but those are very profitable -- some of our most profitable business that we have.

Valerie Ells -- Chief Financial Officer

And I think you covered it perfectly. The only real difference is that the subscriber will earn a discount, and it comes the next year. But that's a major differentiating factor there.

Alex Fuhrman -- Craig-Hallum Capital Group -- Analyst

That's terrific. Thanks very much.


[Operator instructions] Your next question comes from George Kelly of ROTH Capital. Please go ahead.

George Kelly -- ROTH Capital Partners -- Analyst

Hey, everybody. Thanks for taking my questions. So maybe just to start with the -- curious about this. So the shelf-stable liquid creamer that's launching in the back half of this year, when I think about that, I mean, you launching that through your own e-commerce and Amazon and other online channels, it seems to me like that could be a huge deal.

But I don't know if that's a big product category online or I don't have a lot of kind of industry data behind that. But could you help maybe just size how excited you are about that? Is that a big potential product category.

Paul Hodge -- Chief Executive Officer

It's a big potential product category for a couple of reasons. It's not just the online Amazon I'll talk about in a second. The real driver with this was to really fill the white space with conventional -- for that sub-$5 price point, which is really important in many of those conventional stores to have an overall lower-cost product. Yes, the powder product is actually a better value when you break it down on a per-serving basis, but the higher overall price point when you're not looking at per serving of the product of $9.99 just doesn't do as well in more kind of conscious-minded, value-minded, I guess, conventional stores.

So it opens up tens of thousands of doors for us to get into with the product, and so we've really initially started for that. Having said that, liquid creamer can do very well on Amazon. Amazon, of course, is so efficient with their shipping methods that we're really, really excited about that channel for the product and also for our DTC. What we have found on the stores that are carrying both liquid creamer and our shelf-stable creamer is we haven't been seeing any sort of cannibalization to date.

We've got still strong shelf velocities in the stores for both products in both categories. So we kind of view it as a different consumer. But we are excited. It's going to definitely move the needle.

And so we were telling people -- or we're telling you guys end of the year and we're now really making a real concerted effort to accelerate that and try and get that done as quickly as we possibly can this year. There's a few challenges. We're doing some new things here. So we can't say exactly when and how it's going to happen is most of the shelf-stable products have ingredients in those that we're not good with.

And when you go to the co-packers, you manufacture this product, that's automatic. Oh, yes, let's just put this and this in there. We're not good with that. But we have done pilots that prove that our formula does work, and we're now working toward commercializing that product.

And we're going to move as quickly as we possibly can. So we'll certainly give you updates every quarter as far as how we're progressing.

George Kelly -- ROTH Capital Partners -- Analyst

OK. Great. That's helpful. And then maybe shifting a bit, different topic.

But with your online business, what is it -- have you seen much change in places that have opened up maybe on -- I'm talking about COVID kind of reopening sooner than others. I'm thinking some states in particular. Are you seeing much of a change in the growth rate or any of the kind of repeat buying or any of those things in those various states?

Paul Hodge -- Chief Executive Officer

No, no. We're not seeing any sort of downside in the online business. We believe that the people are still gravitating toward online, and the people that moved there are going to stay there. And we're actually still seeing growth in the whole online category in improving KPIs, so we really haven't seen any of that sort of change.

If there is a shift, of course, that's to be with these businesses. An omnichannel platform will be where they are. So they want to buy in the grocery store, we'll be there. If they're going to go back to the office and start drinking coffee there, we've got our foodservice program in play and are making moves to start to bolster that side of the business.

But we don't think the online business is going away. It's -- we've just now, because of our position, the strength that we have, how we're capitalized, we're now able to really start to reach out on the top of the funnel. And do some incredible Activation, such as the U.S. ski and snowboard team among a host of other really strong top-of-the-funnel activations that are really, really looking like strong performers, bringing more people into the funnel.

And we just don't see an end to it. We still think we're just scratching the surface. And of course, when you look at the continuing sort of broadening of the platform outside of just coffee and creamers into healthy snack products and other categories that we're now in development, it's just going to continue. There's -- we don't see an end to it.

George Kelly -- ROTH Capital Partners -- Analyst

That's excellent. And then maybe last question for me. The functional coffees that you've launched -- the comments in your prepared remarks, you seem really amped up about that whole category in general. So I guess the question is, could that be -- do you think, longer term, that could be as big as creamer for you? I mean, is that sort of a five-year growth path or longer? Can you help sort of size again that opportunity?

Paul Hodge -- Chief Executive Officer

Yes, yes. I mean, we believe it is. I mean, just look at the size of the coffee TAM. That's an indicator.

There's a massive opportunity here, and we're in the belief that people are drinking coffee -- and basically, our theory with all of our products, we want to make people healthier. But we're not telling them, "Hey, you need to go to the gym and work out for four hours." We're saying, "You're drinking coffee. Just drink this coffee instead." Do the same thing that you're doing to make it easy, and we think this is a really perfect product that paint that sort of scenario. So a lot of coffee drinkers in the U.S., majority of adults.

And now we're saying, "Do this, and it's going to give you something additional." And so we're excited about the category, and we're innovating, and we're coming up with new products. We're going to have more releases to give people choices of the things that they feel they need, what type of boost and their body they need, what type of support they need. And they can get it just through drinking their coffee. And so, to me, it's a no-brainer this is going to be a big category.

We think we're really well-positioned as -- we're the first movers here to innovate, to tie in our functional sort of benefits that we do with all of our products, bring it together and then deliver to the marketplace, first online and then through the wholesale channels that we're building because we'll have this infrastructure in place to do it. So we think we can be a mover. And I don't know how much of that market we're going to get. Nobody knows, but we're going to give it a go.

George Kelly -- ROTH Capital Partners -- Analyst

OK, great. Thank you.

Paul Hodge -- Chief Executive Officer

You bet.


[Operator instructions] Your next question will come from Bobby Burleson with Canaccord. Please go ahead.

Bobby Burleson -- Canaccord Genuity -- Analyst

Hey, guys. I'm back.

Paul Hodge -- Chief Executive Officer

I missed you, Bob.

Bobby Burleson -- Canaccord Genuity -- Analyst

My kids are misbehaving, so there might be some noise in the background. But just curious. You're talking about maybe having to revise that 20,000-doors goal, maybe higher. How much of that confidence is coming from that shelf-stable liquid creamer opportunity? Is that a big part of it? Are these completely new areas of wholesale that you guys can access? And do those doors -- you mentioned 10,000-plus doors.

Could those come in big chunks, given the price point?

Paul Hodge -- Chief Executive Officer

Yeah. I mean, you're absolutely right. That's really the point of this product. And as we're starting to understand these markets, we, of course, came out strong in natural, and we've got a decent ACV.

And now we're starting to set our sights on these conventional channels. We're not done with natural. We've got a lot of new SKUs to continue to add across the aisles of the grocery store in natural, but conventional is still the larger number of doors, and we're looking at places like drug. And we're seeing just how strong our refrigerated liquid creamer is performing.

The shelf turns, the shelf velocity, the consumer adoption, people love it. And if we can get this sort of high-quality product into a low-cost format -- lower-cost format into conventional shelf-stable stores, we just feel strongly we can really start to penetrate. And then once we do that, as we start to innovate new products, we're building certain products from the ground up knowing that that's really going to be the destination. We'll still, of course, test them online, but that -- the lower price point, better-for-you products that we think will do well in conventional will continue to fall so that we can then also add additional SKUs there in the future and the functional coffee being one of them as well.

So we are excited, and we're still sticking to that 20,0000-number bit. When you start to look at the natural stores, you look at the conventional network we're pursuing, when you look at the opportunity in drug, there's a much bigger price, probably closer to 40,000 or 45,000 total that we'd like to be able to access more of, and we think we can just to renew product innovation.

Bobby Burleson -- Canaccord Genuity -- Analyst

Excellent. And then just on the online business, curious what the mix of direct online was there. Is that growing faster than overall online for you?

Paul Hodge -- Chief Executive Officer

I'm sorry, Bob. You broke up just one second. Can you ask the question again?

Bobby Burleson -- Canaccord Genuity -- Analyst

Yeah, sorry. Just curious what the mix of direct was of the total online. Is that growing faster than total online and driving a bigger share of total online?

Valerie Ells -- Chief Financial Officer

It definitely is. Yes. So if we look at 2019 to 2020, DTC was up 143%. Amazon was up 40%.

And some of that, of course, is very intentional. We want the consumers to be on our platform every time that we can get them there. That's where we create the greatest long-term value possible for the brand where we have the ability to continue to engage with them, educate them, cross sell to them. So that is the goal, but we are seeing that play out as well.


Bobby Burleson -- Canaccord Genuity -- Analyst

And it seems like online, 61% of sales. Is there any reason why this couldn't get to 70%? I know that you don't want to artificially allocate revenues through channels, right? You want it to happen naturally. From what you see, I mean, could this get north of 70%?

Paul Hodge -- Chief Executive Officer

Well, it probably could. It's strong. But at the same time, we are really doing well in wholesale. As we mentioned, we just rolled out into Target and the Harris Teeter and a bunch of other chains this month actually.

So wholesale is going to be continuing to grow, especially as we -- in the next few months, kind of continue to fix the shelf-life issues with refrigerated creamer, that just means more wholesale rollouts the rest of the year. So yes, online will continue to grow, and it's going to grow aggressively. But we believe we're going to get this wholesale growth to kind of probably keep pace for a while.

Bobby Burleson -- Canaccord Genuity -- Analyst

OK. Thanks, guys. Sorry for all the questions. I appreciate all the answers.

Paul Hodge -- Chief Executive Officer

That's what we're here for. If you have any more, fire away.


[Operator instructions] And there are no further questions at this time. I'll now turn the call back over to Mr. Hodge for closing remarks.

Paul Hodge -- Chief Executive Officer

Thank you. So yes, thanks, everybody. We appreciate your support in sharing our long-term vision. Really, we just couldn't be more excited about where we are today.

We have the authentic and trusted brand, the ever-strengthening management team that's prepared to scale this company, the online channel distribution network with what we believe is the best e-com platform in the business, and we have the marketing expertise and the capital to make Laird Superfood the strongest and fastest-growing platform in the entire food and beverage industry with a realistic goal of achieving $1 billion in revenues. We're a very young company. We don't manage quarter to quarter, so I encourage investors to look at the long term. So we firmly believe we will meet or exceed our annual goals.

So just thank you, everybody, for your support and sharing our long-term vision, and we're happy to talk. Thank you.


[Operator signoff]

Duration: 47 minutes

Call participants:

Ashley DeSimone -- Managing Director, ICR

Paul Hodge -- Chief Executive Officer

Scott McGuire -- Chief Operating Officer

Valerie Ells -- Chief Financial Officer

Bobby Burleson -- Canaccord Genuity -- Analyst

Alex Fuhrman -- Craig-Hallum Capital Group -- Analyst

George Kelly -- ROTH Capital Partners -- Analyst

All earnings call transcripts

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