Do you crave sweets, salts, or fats just before you go to sleep at night? If you’re like the vast majority of people, the answer is yes. The fact is that nighttime snacking is something that’s hardwired into human beings; an act that was a life-saving necessity in the days of the caveman when access to calories was far from abundant.
Today, calories are readily accessible, and human eating habits have changed in a big way. As a result, our natural desire for the most unhealthy foods right before we fall asleep works against us, rather than for us.
That’s where Nightfood (OTCMKTS: NGTF) comes in.
The company is looking to tackle the massive, multi-billion dollar snacking industry in a unique way; creating healthy nighttime snacks designed to cure the craving for unhealthy foods while offering up better sleep quality.
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What Is Nightfood?
At first glance, you would likely see Nightfood as an ice cream company, but dig a little deeper and you’ll find that there’s much more to the story. The company offers an ice cream line inclusive of nine flavors with catchy names like Full Moon Vanilla, Midnight Chocolate, and Cookies n’ Dreams.
However, as mentioned above, Nightfood is much more than ice cream.
The company specially formulated its ice cream recipes to provide a cure for the night time craving of sweets and fats, while providing a healthy alternative to the traditional options you’re likely to have in your kitchen.
You see, the company is solving a serious problem.
While eating sugary, salty, and fatty snacks may have been a necessity for our caveman counterparts, it’s a dangerous habit today because human beings of today have access to more than enough calories during the day. As a result, when you eat a night time snack, you’re creating an excessive store of energy that leads to poor sleep quality and obesity, which come with significant health risks of their own.
So, what’s different about Nightfood ice cream?
- Lower Sugar & Fat Content. The ice creams produced by the company come with significantly less sugar and fat than your standard ice cream varieties. While the company’s treats are sweet, curing the craving, they don’t result in your body having to work to digest significant amounts of sugar and fat while you sleep.
- Casein Protein. The company’s offerings are made with casein protein, one that’s known to release amino acids slowly, helping to reduce muscle breakdown while you sleep.
- Prebiotic Fiber & Digestive Enzymes. The prebiotic fiber and digestive enzymes used in the company’s formulations are known to lead to improved sleep as well as boost stress resilience.
- Sleep Friendly Vitamins & Minerals. The company’s ice cream recipes include the use of vitamins and minerals like B6, calcium, zinc, and magnesium, all of which are proven to improve sleep quality.
- No Artificial Sweeteners. Finally, the formulations don’t include any artificial sweeteners or erythritol.
The Science Is Catching The Attention Of The Masses
The science behind the company’s ice cream products has led to a major pat on the back for Nightfood. In fact, the company’s products have grabbed the attention of the American Pregnancy Association, becoming the Association’s official ice cream for pregnant women.
So, why did one of the largest associations for pregnant women in the United States choose to stand behind Nightfood?
For all the reasons the brand makes for a great night time snack. There’s less sugar, no artificial sweeteners, more protein, sleep supporting minerals, no high fructose corn syrup, and the company’s products are a great source of protein, all of which are important aspects of a healthy diet when you’re eating for two.
The fact that the ice cream created by the company is healthy isn’t enough to make Nightfood successful. After all, no matter how healthy the product is, without distribution, there’s not much to look forward to.
Nonetheless, the company has that under control as well.
On April 20, 2021, the company announced a crucial distribution deal, putting its products in more than 1,000 Walmart stores across the country. The company’s products can also be found in various Rouses Supermarket locations as well as in stores like Kroger’s Harris Teeter, Albertson’s Jewel Osco and Shaw’s Star Market, and several other locations.
The Market Opportunity Is A Massive One
With their healthy night time snacks, Nightfood is tapping into multiple markets, all of which are massive:
- The Ice Cream Market. In the United States, sales of ice cream are expected to generate $8.9 billion in revenue for manufacturers of this sweet treat in 2021.
- The Snack Foods Market. According to Statista, the snack foods market is expected to generate well over $100 billion in revenue in 2021, with $321.34 being spent per person on treats. Moreover, about $50 billion of this category’s value lies in night time snacking.
- Sleep Aid Market. According to Research and Markets, the global sleep aid market will generate more than $78 billion in revenues in 2021. While Nightfood ice cream isn’t necessarily a sleep supplement, the company has the potential to tap into this market by pointing to the fact that their products are designed to promote better sleep habits.
- Health Food Market. Finally, Statista suggests that the health food market in the United States will grow to generate well over $800 billion in revenues for those that take part in it in the coming years.
These are all massive markets, and considering the fact that Nightfood trades with a market cap of around $22 million, tapping into even a small percentage of any of these markets would drive significant revenue. But we’re not talking about tapping into one of these markets, Nightfood is positioned cleanly within ALL of them.
Diving Into Valuation
There are huge opportunities in the night time snacking market, and the big players in the snacking industry know it. In fact, several acquisitions have taken place, showing that if you can be successful in generating even a small amount of revenue in the healthy snacks category, you can be taken over in a high value acquisition. Just look at the examples below:
- Justins. In mid 2016, Hormel acquired Justins for $289 million with the company generating less than $100 million in revenue. Moreover, Hormel had just acquired Skippy three years earlier for $700 million. With a brand like Skippy, why would the company want Justins? The goal of the high value acquisition was to enter the organic realm of peanut butter as consumers became more health-conscious.
- RX Bar. In 2018, Kellog’s acquired RX Bar for $600 million. What’s interesting is that the company was only producing about $65 million in annual revenue.
Outside of big value acquisitions, when moves are made right in the healthy snack category, serious revenue growth can be expected. For example:
- Halo Top. Halo Top proved that healthy ice cream is an overwhelmingly popular concept among consumers. While the company did $230,000 in revenue in 2013, that revenue ramped up dramatically to $50 million in 2016 and $170 million in 2017. The company was rumored to be in talks with Unilever in 2018 surrounding a potential $2 billion acquisition, which didn’t come to fruition, but that just goes to show the potential of healthy ice cream in a category that is largely ignored by the goliaths of the industry and the likely interest big players have in acquiring companies doing it right.
- Oatly. Finally, oatly produces healthy alternatives to dairy products. Last year the company generated around $400 million in revenue. Today, it’s planning an IPO with a valuation of $10 billion, and investors are eating it up. Yet another example of a healthy snack that investors are placing tremendous value on.
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The Bottom Line
The bottom line here is that the opportunity brought to the table by Nightfood is one seldomly seen. The company has a compelling brand, a product that solves multiple serious problems, and a management team that’s firing on all cylinders, resulting in nationwide distribution and accolades like being named the official ice cream of the American Pregnancy Association.
The company has proven its ability to penetrate the big box market through its relationship with Walmart, while tailoring to various other distribution opportunities within its industry.
At the same time, the market hasn’t seemed to catch up with the opportunity quite yet, making the stock a highly undervalued play that’s likely to rise to a realistic valuation in the relatively near future.
No matter how you look at it, NGTF stock is one for the watchlist.
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CNA Finance is not an investment advisor or broker/dealer. This article is for entertainment and informative purposes only and should not be viewed as a solicitation to buy or sell stock. This article is the result of a monetary relationship between CNA Finance and Nightfood under which Nightfood pays CNA Finance a monthly service fee. This article was written by Joshua Rodriguez and reflects his opinion. Nightfood was not involved in the development or editing of this article in any way and the opinions experessed herein are not necessarilly those of Nightfood.