YOW (ASX) The Numbers

Originally posted by GreenTuatara ↑

Oh man.

Looks like I won't be posting here too often.

That reply from Nani.....gosh.

I can see that those with a vested interest will want to talk about the 'best' numbers. Like the specialty stores that sold over 100 units in a week. These were the standout results though. As reported by Foster, the average across all stores was 35-40 eggs per week.

"The first data point from specialty confectionary retailers Loli and Pops (stocked the product for 8 weeks) which management published in the recent corporate presentation have been exceptionally encouraging. The Yowie product sold 50+ units per store per week at launch, 35-40 in steady state and 100+ units in top turnover store. What’s impressive about these preliminary statistics is the unit price is at the high end US$3.75"

I think 564xxl's idea of extrapolating the Aussie market is fine for speculating on the size of the potential market (if he had used the 17m steady state annual rate rather than the one off 100m launch year), but so far Yowie has shown that reaching this market takes time and that this will be a gradual process. They do not have the power of Cadbury behind them this time. They are having to gradually build their own networks. In Aus it was, "You want to sell Cadbury, well you now also sell Yowie". This time it will be much more of a step by step process.

I don't want to hold you guys back from the buzz of reveling over big numbers etc, that's part of the fun of backing these companies. The potential journey ahead. Anythings possible etc. But I'm just looking at the current 'knowns' and suggesting that it might not be a short downhill road to success like it was in Aus. I should emphasis that I do NOT think it will be a steep uphill climb either, they have a big first mover advantage with their patent. I personally just believe it will be a longer and flatter road than the short downhill some might be expecting.

When specific numbers are released on the Walmart trial you will all have the chance to ridicule my numbers and adjust them up (or down) to what the trial revealed. For now we just don't know. Perhaps the fact Foster's has been offered shares at 50c before Yowie release the Walmart numbers, is because the trial numbers actually aren't as good as hoped. Certainly the fact they are only going to start by rolling out to 1500 stores rather than higher previously touted numbers would support this idea. Plus it would make absolutely no sense for Yowie to do it if the numbers were above expectations (I think this is really the key here).

We will know more soon.

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Green

A conservative approach is definitely warranted but is also should be realistic. Some considerations that I think may change your mind on some of your numbers/analysis.

1. Using Lolli and Pops in steady state as a proxy for Walmart steady state volumes is not appropriate. Foot traffic, positioning, and pricing will all be considerably better in favour of Walmart - with particular emphasis on foot traffic.

2. The average sales numbers represent raw product ability only. There has been no attempt to market nor create the brand yet. The funds raised here are flagged for "marketing and working capital". To assume marketing will not have a a positive impact to average volume is flawed. How much impact I am not sure but the assumption has to be positive.

3. This looks to be a global brand. We are just entering one market in one country. This is blue side I agree but some level of consideration is due given previous success and its ability to compete in a fully competitive market against Kinder over a considerable amount of time.

4. You also give zero attribution to the likelihood of Valero, Walgreens, Safeway, Et others who are and have exhibited positive sales from stocking/trials. Again, with all forms of evidence this must be considered.

5. You give no likelihood to a full rollout to Walmart.

6. There is no way if numbers were bad (imo) Walmart would even consider stocking this product. The fact that is 1500 and not 4500 is more likely a logistics preference.

The main point I guess is that the 40/wk numbers in all pribability will be way too short and given now it is a volume game so is your analysis.

Let me know if you agree.