Healthy Living Consumer Products: Industry Update, Deal Review and ‘Hot’ Categories Natural Products Expo West Michael Burgmaier Nicolas McCoy Managing Director Managing Director March 2017 o. 508-251-5702 o. 508-251-8205 c. 207-232-2480 c. 508-954-4931 [email protected] [email protected] 2 What the Whipstitch Team Has Been Up To 2016 by the Numbers • Three M&A Transactions • Four Private Placements • One Unannounced Deal • Three New Team Members • Eight New Associated Industry Experts (Our “Stitching Crew”) • Ten Speaking Events with Emerging Consumer Companies • One Stitching Crew Lobster Bake 2017 Transactions Bill Moses Joins the Whipstitch Team as • Several transactions expected to close Senior Operating and Strategic Advisor in first half of 2017, for example: • Former Co-Founder, Chairman/ CEO of KeVita Probiotic Drinks o Nutrient-dense Superfood Company • Founder, angel investor and o Sports Nutrition and Supplement strategic advisor to several on- Company trend functional CPG ventures • Owner of Casa Barranca Winery o Better-for-you Snack Company • Charity advocate & non-profit board member 3 Contents . Whipstitch Capital Overview . Healthy Living: Industry Overview and Deal Update / Whipstitch’s Top 11 Healthy Living Consumer Trends . SPINS Market Update: Produced for Whipstitch’s Industry Analysis . Food & Beverage M&A and Private Placement Deal Data 4 Whipstitch – A Bank Solely Focused on the Healthy Living Market Whipstitch [hwip-stitch] Noun. The stitch that passes over an edge, in joining, finishing, or gathering. • Launched October 2015 by Nick McCoy and Michael Burgmaier • Focused exclusively on innovative consumer companies • Financial Advisory on M&A and institutional private placements • Participate in over 15 consumer industry events/year • Lead events such as all-day financing seminars, networking events • The Whipstitch team has completed >50 consumer transactions; select recent deals: 5 Whipstitch Differentiation: This is What We Do Focus You Get the Top Experience . All we do is consumer; . We work with you to . Over twenty years of 90%+ food and develop a strategic investment banking beverage plan and execute experience . We know how to talk . 100% credibility with . High-touch, high-quality about your company – investors and strategics no learning curve We Are Not the Typical Advisors, Nor Do We Want to Be Won’t Tell You What You Want to Hear; We Tell You the Truth Our M.O.: Under-promise and Over-Deliver – Ask Our Former Clients… 6 Whipstitch is Co-Founded and Led by a Seasoned, Highly- Experienced Team Nick Michael McCoy Burgmaier . 20+ years of investment banking . 15+ years of investment banking, experience; co-founder, Silverwood consulting and VC experience Partners . Principal of VC firm CEI Community . Investment Banking Group at Gleacher & Ventures Co. (First Albany; now Jefferies) . Consultant at Bain & Co., Inc. Director of M&A at Allmerica Financial . Frequent author and speaker at BevNet Corp. Live, Expo West, NCN and more . Senior Associate, Corporate Development, . MBA from Tuck School of Business at Wheelabrator Technologies Dartmouth College; MPP, Duke; BA . MBA in Finance from Wake Forest Economics, Boston College University; BS Business Admin. UNH 7 A Deeply Experienced Whipstitch Team The 24/7 Team Senior Associate Senior Associate Analyst . 3 years consumer IB . 5 years consumer IB and PE . Experience in PE at New Forest experience at Silverwood experience at Silverwood, Capital Partners Kamylon Capital . Avid sports enthusiast; Exercise . Outdoor activity enthusiast . Happily retired NCAA athlete Physiology degree from BYU . Based in San Diego, CA – the who has never lost the spirit of . Love of the outdoors, on path competition Greg most beautiful place in the Tim Taylor to become future Bear Grills country.. (except summers in . Human test subject, just look at Ucich Sousa Lynch . Proud husband and father of Maine, says Burgmaier his desk drawer full of vitamins newborn who loves the sound incessantly) and supplements of her own cry The Extended Team With Support From the STITCHING CRE Senior Operating and . Consultant to natural and . Founder of Campo Verde specialty food and beverage Strategic Advisor Solutions providing consulting companies to natural and organic . Former Co-Founder, Chairman/ . Co-Author of Natural Products companies CEO of KeVita Probiotic Drinks; Field Manual and The Sale’s . acquired by PepsiCo in 2016 Private label expertise; Manager Handbook previously with Trader Joe’s . Founder, angel investor and and Whole Foods strategic advisor for several on- Bob Kim Bill Moses trend functional CPG ventures Burke Greenfeld . Owner of Casa Barranca Winery; the first certified organic winery in central coast California . Ellis Island Gold Medal of Honor Recipient for humanitarian and business leadership 8 Stitching Crew Continued… . Founder & CEO of Emerging . Founder of The Tim Sperry . CEO of FoodState; a Brand Strategies, LLC; a Group; a consultancy focused company that has been consultancy to emerging on clients selling into the mastering the art of whole- beverage and consumer Natural, Organic and Specialty food supplements since goods co’s Marketplaces 1973 through its MegaFood . Held senior level roles with . Previously spent 20 years in and INNATE Response Diageo, Constellation Brands purchasing leadership at WFM brands Jeanne and FIJI water Tim Robert . Previously CEO of Garden Varley . Enjoys spending time with Sperry Craven of Life; led them to the #14 young daughter and husband spot on the Inc. Magazine near home in South Florida list of fastest-growing private companies . MBA from Wharton . Majority of professional . CEO of The Tecnica Group, a . Created IGNITE Sales career dedicated to winter sport and outdoor brand Management in 2007; UNFI; positions included distributor; brands include works with established Executive VP, Chief Nordica, Tecnica, Blizzard and brands as a national sales Operating Officer, and Rollerblade force to assist in scaling President of Distribution . Previously President and CEO of CPG businesses . Leadership roles at Blake’s All Natural Foods; . Referred to as a “category Rick Harvest Provision and Chris acquired by ConAgra Foods in Kent captain” in the natural and Antonelli Fairfield Farm Kitchens Licata 2015 Pilakowski organic space . Served on Board of . In 2014, named the NH Small . Former General Mills: Roles Directors for Galaxy Business Person of the Year by included directing sales Nutritional Foods, Zevia, The United States Business operations, trade National Cooperative Administration marketing and category Grocers Association, management Mary’s Gone Crackers and UNFI 9 Whipstitch in the Press: NOSH Voices: “Under Pressure, Here’s What the Big CPGs Will Do” Investment Fund/Group Example From a Whipstitch Article Strategic Published 9/13/16 Path Name Investments Venturing & Emerging • The hurt is Internal group Brands (VEB) accelerating for the big CPGs; all eight of External Fund (one LP) First Beverage Ventures the top food and NEB/North America Premium Investing beverage companies experienced sales Nutrition & Venturing declines in Q1 2016 vs. 2015 Investing -- • Despite suffering major losses, 2015 experienced strongest growth in food and Created Fund Acre Venture Partners NA - launched 2016 beverage spending over the past four years External Fund thanks to growth of small and mid-sized CPG Digitalis Ventures (backed by Mars) companies Internal Group 301, Inc. • Large CPG companies are acting: Acquiring smaller companies and investing in relatively Internal Group 1894 Ventures NA - launched 2016 early-stage, fast-growth companies • The numbers show that consumers are willing Investing -- to pay and are spending but their money is flowing away from the CPG giants Investing -- • Small CPG companies should consider Investing -- strategics for capital; entrepreneurs should look for great advisors, ask hard questions and Internal Group Cultivate Ventures NA - launched 2016 think through all possible scenarios Source: http://www.bevnet.com/news/2016/nosh-voices-pressure-heres-big-cpgs-will 10 M&A Advisory: Select Deals Led by the Whipstitch Team 11 Private Placement Advisory: Select Deals Led by the Whipstitch Team 12 Contents . Whipstitch Capital Overview . Healthy Living: Industry Overview and Deal Update / Whipstitch’s Top 11 Healthy Living Consumer Trends . SPINS Market Update: Produced for Whipstitch’s Industry Analysis . Food & Beverage M&A and Private Placement Deal Data 13 The Unstoppable Growth in Natural, Organic and Healthy Rolls On Sales of Natural products continue to rise as consumer seek healthier alternatives • Let the snowball keep rolling – total US sales of natural products increased 7.7% YoY to $195B • Growth was particularly strong in the natural and organic foods segment – up 8.5% YoY as consumers continue to seek better-for-you, functions options that are ‘clean-label’ • Natural and organic personal care sales increased 7.5% YoY as the category continues to benefit from the tailwinds created from the broader healthy-living market Total US Sales of Natural Products by Category1,2 Annual Dollar Sales $300 $250 $200 $150 $100 USD BillionsUSD $50 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E Supplements N&O Foods Functional Foods N&O Personal Care Sources: 1. New Hope 2. Nutrition Business Journal 14 Millennials ‘Wag the Tail’ of the CPG Industry – Food Brands Re-inventing Marketing Strategies Millennial generation surpassing Baby Boomer’s shaping how