00:00Talk to us a little bit about your corner of the private equity market and how you're trying to
00:04shape it. Thanks for having me. It's an exciting time in wellness. So Manitri has been eight years
00:09old. We've obviously brought brands that most people tend to say, I know that brand, it's in
00:13my fridge. I think the exciting part of this sector has been watching wellness be democratized.
00:19And so today, the fastest growing part of wellness is the person making $30,000 or less.
00:25Yeah. And I want to come back to that because when we started, we started with Vital Farms and we
00:30saw
00:30that it's not somebody making $300,000 a year. So what we are looking for is multiple daily or
00:36weekly repeat purchases. So these are your daily, your eggs, beef, your salad, your vitamins, right?
00:43The predictable part of the economy. Interesting. Talk to us a little bit about that more because
00:48certainly that's a surprising stat, especially when you think about the backdrop, the economic
00:53backdrop right now. We have persistently stubborn inflation and we're seeing food costs rise,
00:59whether you're talking about protein, eggs or produce. And I wonder how you put that in
01:06to the due diligence that you are doing on potential investments.
01:10It's an amazing question. And the one thing we've always seen is that today, a health and wellness
01:15brand, there's this view that it is more expensive. Sometimes on average, it's actually price parity
01:20with what I would call an unhealthy legacy brand due to how many inputs go into that brand. And so
01:26a lot
01:26of these better for you brands, what they've done is had control over their supply chain and less
01:30inputs. And that's what I think people have to understand is that while the price is actually
01:35on parity, it's not much more than what you are paying for a legacy brand.
01:40And, you know, you've mentioned Vital Farms, that's an investment that you've exited health aid also in
01:46recent and successful exit. And I wonder how long you're holding period typically is from,
01:52you know, first investing in a company to maybe saying goodbye.
01:57Look, we've had remarkable success. I would say when we started, I was having to explain to people what a
02:02pasture raised egg was, what a controlled environmental agriculture meant and why your salad would be a place
02:09that you could trust your lettuce. Today, which is a contentious question at this point in time.
02:15Greenhouses have been around for decades. And I think that we have always said, I went to Purdue,
02:21and we're supply chain investors that happen to have brands. And so you can underwrite to three to five
02:26years when there's tailwinds of health and wellness. But I will come back to these tend to be brands that
02:31are category leaders in large categories. So you mentioned health aid today, it's part of generous brands,
02:37we still retain 10%. We have 45% of the functional beverage market. And so the functional beverage
02:42market is winning from two massive declines, one decline in soda to decline in alcohol. So that's
02:48when we tend to look for what are the large economic shifts, and to make sure we're the category leader
02:52or category creator. Well, talk to us a little bit about how the wellness category has evolved,
02:57how you've seen it sort of expand here, you talk about the democratization. I mean, where have you seen
03:03sort of the demographics of the industry go? Well, that's been the most interesting is when we started
03:08this, I would say a lot of this would be viewed as Whole Foods paycheck. And brands also would enter
03:13to Whole Foods first. Today, brands enter Target, and Walmart and Walgreens first. And a lot of that
03:21has to do the fastest growing part of all retail today in any retailer is health and wellness. So what
03:26they are wanting is much larger quantities to get what I would say wellness for the masses. One thing
03:33I'll point out to you that's actually interesting. If you look at the data, which does show that the
03:38fastest growing part of wellness is what I would call the middle market of the US. So where we go
03:43wrong is we say that consumer in this K-shaped economy, we need to stop calling everybody one
03:48consumer. The health and wellness consumer is different than a luxury or a one time expensive
03:53good. This is, again, I would say that when we call it discretionary income, this is really what
03:59I would call the preventative spend of health and wellness. It's very predictable. Your vitamins,
04:03your protein powders, your eggs, and increasingly tampons, for example, right? So prenatal vitamins.
04:11And so it's pretty predictable of the revenue of what we see. So the multiple weekly or daily repeat
04:16purchases is what has to come by. But last but not least, if you're making under $30,000 today,
04:22are you accessing private equity? No, this is more democratized today than the alternative sector.
04:28And so when we get, okay, this is niche, this is the air one shopper, this is more accessible today
04:34for the average person to walk into the vitamin shop or walk into their Walmart than it is to go
04:38invest in a private equity sector. That's how mainstream this has become. And you have to ask why
04:44in this time mandatory has been around, we have seen we've COVID, which was a boost for our sector.
04:49I want to also come back to tariffs. Less than 0.01% of our portfolio was affected by tariffs
04:54because health and wellness today is a predominantly U.S. economy where people are making
04:58these brands, manufacturing these brands here. So this has been a boon for the American economy.
05:03And so if 68% of GDP is coming from consumer, the only growth is coming from the health and
05:10wellness
05:10spend.
Comments