For MamaMancini’s Holdings Inc (OTCQB:MMMB) CEO Carl Wolf, the secret to success is in the meatball.
Wolf is a veteran in the food business. He and his wife ran cheese company Alpine Lace through to a Nasdaq listing and its subsequent purchase by Land O’Lakes for $62 million in 1997.
Following the acquisition, Wolf and his wife set up an incubator for small businesses and bought an appetizer production plant. It was there that Wolf’s path crossed with Dan Mancini, a descendent of Anna “Mama” Mancini, who moved Stateside from Italy and taught her grandson all of her old world recipes.
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Given the company’s provenance, it’s no surprise that Wolf’s interest was piqued when Dan Mancini walked into the plant to claim he had made the world’s greatest meatball.
“We said, sure – and then sure enough, it was,” Wolf said.
Today, MamaMancini’s offerings have evolved from the world’s greatest meatball to include 29 different products that maintain the all-natural, no artificial ingredient and easy-to-prepare ethos of the company. MamaMancini’s products are found in more than 45,000 locations throughout the US in major grocery retailers like Walmart, Whole Foods and Kroger. With the right recipes, MamaMancini’s is on an upward growth trajectory that could see it expand internationally and list on the Nasdaq very soon.
“Everything that you try and sell has to have a reason for being,” Wolf told Proactive. “So our products are all-natural and very, very high quality. A lot of our competition have products, but they’re more commodity-oriented. We have an edge in the market for quality and as a result, we get very high repeat business.”
Plethora of options
The company touts its scalable business model in the rapidly growing prepared foods market. Consumers are flocking towards premium, organic brands at their grocery store. The perimeter of the store, where fresh foods are stocked, is consistently growing between 8 to 10% per year, while fresh and frozen meats are estimated to grow to around $63.2 billion in the next few years. Prepared foods are becoming a preferred meal choice as well. In 2018, the deli foods and prepared foods section sales were $36.6 billion, with prepared foods accounting for nearly 60% of deli sales.
All of these trends spell good news for MamaMancini’s. The company saw its profits increase by 311% in its fiscal 4Q 2021 to $1.7 million on sales of $10 million. For fiscal year 2021, MamaMancini’s delivered a $4.1 million profit on net revenue of $40.8 million.
Wolf attributes the company’s success to a number of factors, not least of which being the shift in consumer purchasing power from restaurants to grocery stores in light of the coronavirus (COVID-19) pandemic. MamaMancini’s continued to supply grocers throughout the pandemic with “minimal” impact on operations, it said in a statement accompanying its Q4 results. The revenue increase for the year was a result of increased volume in Club Store accounts in the spring as well as new products that were introduced towards the end of the year.
Catering to the consumer
“Our goal right now is to move our business up to significantly above a $50 million run rate by the end of the year,” Wolf said. “The first two quarters will be less rapid growth as compared to last year when we had short run inventory from the rush of COVID. And this year, new placements were pushed back because of COVID. So most of this will be occurring near the end of the second quarter and going into the third and fourth quarter, when we have some major new authorizations launching.”
The company announced it received authorization in 600 Sam’s Club locations, which if successful should add 10-15% additional volume to the company. The deal is for an initial 17 weeks with the option to continue. At Costco, where it sells its jumbo meatball, the firm has received authorization for rotations in the northeast US and San Francisco. Wolf is expecting further authorizations and rotations: if Costco alone is successful, Wolf estimates the partnership could represent a nearly $25 million sales opportunity.
COVID-19 did impact one of MamaMancini’s key lines of business in Whole Foods hot bars, which were shut down in March 2020. “Our first major sale was in January, which was an inventory fill,” Wolf said. “That business was lost but it will slowly come back. We’re now starting to open the hot bars, and that could be a very, very major piece of business by summer.”
Power in plant-based products
What could really propel sales is its relationship with Walmart, where it sells a family-style meal kit. After a successful test run, the company secured a formal commitment to begin shipping to around 500 stores in August 2021, but Wolf expects that number to increase to over 1,300 locations.
It’s also looking at the burgeoning plant-based market – a sector that some reports anticipate will become an $85 billion industry by 2030.
Wolf said the plant-based products are still in the planning phase, moving “a little slower than we’d hoped.” As most food companies know, it’s not easy to pivot to plant-based meals and MamaMancini’s has a reputation for quality product, no matter the ingredient. “It isn’t that you just take the meatball and put it out (as a plant-based product) – there’s a lot of refinement on it,” he said. “We have spent a lot of time and money in developing a great product.”
The company does have a product out in presentations with potential customers today and believes it could soon have authorizations for “substantial” additional business.
“We have some on QVC regularly, which is one of their top alternative food producing items. We also sell Publix, on a test basis, a plant-based pasta bowl and we think we will have additional placements, both in pasta bowls and regular products very soon. We’re in line right now to get our first orders and that will continue to grow. Also, we’re looking at plant-based foods for convenience store chains.”
Opportunity to increase margins
There’s concern that the current period of inflation will lead to higher input costs across their business, but Wolf is taking it in stride.
“We’re totally on top of it. What normally happens after an inflationary period is that once it comes down, it’s an opportunity to increase margins. It is a factor that everyone is dealing with right now but we’re totally aware and in control,” said Wolf.
Right now MamaMancini’s is on the cusp of major sales – $5 million to $20 million opportunities that could spell bigger profits very soon.
“If we can increase our sales by $30 million, we have a good shot at $6 million-plus increase in profits, which is very, very substantial,” Wolf said. “That’s our goal. I think some of that will happen. These are products that are proven, have had test markets and results, so we know we have very good products with an excellent track record. That can lead to a lot of business.”
Contact Angela at [email protected]
Follow her on Twitter @AHarmantas
Story by ProactiveInvestors
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