My Food Bag expands into groceries, targeting growth from $37b retail food sector

My Food Bag has started rolling out the next phase of its growth strategy, expanding into the broader online food and grocery market with a range of new products and recipes.

The company referred to the move in information provided to investors ahead of its $342 million initial public offer and NZX listing in March.

Talking to the Herald this week, chief executive Kevin Bowler confirmed the company had just started moving beyond meal kits and ready made meals as part of its strategy to expand further into the $37 billion New Zealand retail food sector.

It recently added about 20 new products to the My Food Bag Kitchen range and would build this up to around 75 “hard-to-find” products within the next few months, he said.

“We are expanding our range, and it’s really our first significant step outside weeknight meals.

“We are very much only interested in showcasing New Zealand’s products. And ideally, what we’ll do is find a range of products which are harder to find and not your average everyday sort of products.”

New products include pantry staples, baking mixes, dessert kits, healthy breakfasts and sides, as well as gourmet local cheeses, meats and ready-made meals, including My Food Bag’s own sauces and spices.

“One of my favourites is a House of Dumplings Chilli Oil,” Bowler said.

“At this present time, we’re not selling the kitchen products without a meal subscription.

“This is only available to customers that are buying a meal kit … you can add kitchen products to your order.”

My Food Bag is expected to update investors on its overall growth strategy at its first annual shareholders meeting on August 20.

In May it reported its maiden result as a listed company with a net profit of $2.4m for the year to March. Revenue was up 24 per cent to $190.7m and up $1.2m on the $189.5m forecast in its IPO documents issued in March.

However, the company’s share price has sagged since the IPO, recently trading at $1.31 – well down on the $1.85 issue price.

The sharemarket float saw existing shareholders offload 152m shares worth $282.5m, with just $54.8m raised in new equity.

Prospectus forecasts for the 2022 financial year were for revenue of $186.4m, ebitda of $34.2m and net profit of $20.1m.

My Food Bag chief financial officer Mark Winter said last month that the firm was still benefiting from a pick-up in demand during last year’s Covid-19 lockdowns.

Bowler said yesterday the new range of premium-priced grocery products would initially be a small side part of the business with the main focus remaining on the meal kits.

“You’d expect to find products that will have a reasonable premium price among our range, but still represent good value for money because they’ll be harder to find.

“We’re certainly not looking to be elite [in the industry]. We’re looking to be a good value for money but we’re not trying to compete on price with the big supermarkets.”

Bowler said the pandemic has provided them with perfect opportunities as online food sales have soared.

“It’s a perfect time for people to buy more food online. And what we are hearing from our customers is and we’re seeing in our sales is that people are wanting to buy more food online.”

The products sold on My Food Bag would predominantly be from local Kiwi producers except for a few products which weren’t found in New Zealand.

“We use very few imported ingredients. Only when we can’t find a local equivalent, an example would be pineapples or ginger, obviously, those products aren’t grown here.”

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