I'm reaching out with an update as the initial effects of Covid-19 have begun to transition into a new normal for all of us, as well as for TCD. We now have a far clearer assessment of the magnitude of Covid-19 effects on our sales, supply chain and necessary strategy to adapt and grow through this pandemic. What a whirlwind! Our  sales jumped immediately when we pivoted to a keto brand, followed by a complete standstill due to Covid-19. We’re grateful that our manufacturer has reopened for limited production runs, so we do have some product to sell to e-commerce customers. Yet, like so many companies, Covid-19 has greatly affected our 2020 revenue, strategy and pipeline. The setbacks have included:

• More than 70% of our retail and distributor customers, many of whom are smoothie bars and gyms, are still closed or having to close again after briefly reopening.
• We worked very hard on launching with GNC this last April, though due to their recent bankruptcy announcement, at this point we are simply hoping that they honor their terms and pay their invoices. We will reassess the relationship at a later date.
• New business development has halted as buyers for grocery chains are not presently reviewing new items.

It’s not all negative however…Even with the lost revenue from having been shut down for several months, online sales are holding strong with a 411% increase in e-commerce revenue compared to this time last year, of which 14% are auto renewals. The grocery industry is quickly adapting… Covid-19 consumer buying habits have turned the industry on its head, with increased online versus brick and mortar purchases. Numerous industry reports predict that online grocery purchases will become and remain the new normal, with brick and mortar shopping becoming less common. So, we’ve decided to transition TCD into a primarily online keto brand while continuing to grow business with few select retailers and current convenience chains. 

We’re on our way… We’ve already developed our go-to market e-commerce strategy and budget with the assistance of a Digital Brand Strategist, who has agreed to join us as an ongoing advisor. We will officially implement this strategy in August, though several weeks ago we began to invest in limited digital ads and social media content which has already resulted in an uptick in sales. Without any additional investment, we’re slated to hit slightly above double last year’s TCD online revenue. This projection does not account for the revenue from third party e-commerce marketplaces including Amazon, Netrition and Bodybuilding.com, nor does it take into account the growth from a new digital strategy, launching new SKUs. In addition to the industry changes coupled with our need to pivot to survive, there are numerous advantages to shifting to a primarily online brand including:

• Decreased freight and warehousing fees
• Increased margins
• No required guaranteed sales agreements with brick and mortar companies.
• No pay- to-play slotting fees
• Will allow for smaller more consistent production runs.
• No more brokerage retainers.
• Can gauge KPIs in real time.
• Forecasting and projections will simplify.
• Increased control over brand messaging and product quality.
• No more typical delays related to distributors and retail chains.
• Much shorter sales cycles.

Associated Expenditures...We have received a SBA disaster relief loan, which we will not need to begin paying back for 10 months. This is allowing us to:

• Begin implementing our digital strategy.
• Launch a new SKU in Q3, in time for the holidays.

My next update will be sent after our digital strategy is set in motion. I hope you and your family stay safe and healthy.