Welcome to Bellring Brands First Quarter 2021 Earnings Conference Call and Webcast. Hosting the call today from Bellring Brands are Darcy Davenport, President and Chief Executive Officer and Paul Rhode, Chief Financial Officer. Today's call is being recorded and will be available for replay beginning at 1:30 p. M. Eastern Time.
The dial in number is 80058 58,367 and the passcode is 1,876,009. You may begin.
Good morning, and thank you for joining us today for Bellring Brands' Q1 fiscal 2021 earnings call. With me today are Darcy Davenport, our President and CEO and Paul Rose, our CFO. Darcy and Paul will begin with prepared remarks, and afterwards, we'll have a brief question and answer session. The press release and supplemental slide presentation that supports these remarks are posted on our website in both the Investor Relations and the SEC filings section atbellring.com. In addition, the release and slides are available on the SEC's website.
Before we continue, I would like to remind you that this call will contain forward looking statements, which are subject to risks and uncertainties that should be carefully considered by investors as actual results could differ materially from these statements. These forward looking statements are current as of the date of this call and management undertakes no obligation to update these statements. As a reminder, this call is being recorded and an audio replay will be available on our website. And finally, this call will discuss certain non GAAP measures. For a reconciliation of these non GAAP measures to the nearest GAAP measure, see our press release issued yesterday and posted on our website.
With that, I will turn the call over to Darcy.
Thanks, Jennifer, and thank you all for joining us this morning. Last evening, we reported our Q1 results as well as posted a supplemental presentation to our website. The presentation provides more insight into our business, consumption and key metrics. I'm pleased to report that our fiscal 2021 is off to a good start with net sales of $282,000,000 and adjusted EBITDA of 61,000,000 dollars slightly above our internal estimates. Net sales were up 16% with Premier Protein and Dymatize both growing double digits.
As you saw in our press release, we affirmed our sales and adjusted EBITDA guidance for the full year. The quarterly cadence is largely as expected with some minor tweaks. First, we slightly over performed both sales and adjusted EBITDA in the Q1, mainly due to a shift in sales from the Q2. 2nd, inflation ramped up in the middle of the Q1. We have done a good job with our cost out strategy and have been able to offset a portion of these headwinds.
But given the expected surge in freight and additional milk protein inflation, we announced a modest price increase in our shake business starting in Q3. We will experience continued margin pressure in Q2 until the price increase is implemented, but we are confident in our full year guidance. Now turning to our category, brand highlights and growth strategies. The overall convenient nutrition category remains stable. Growth in liquids and powders accelerated this quarter and are running above pre COVID growth rates.
The adult and everyday nutrition segments are driving this growth as consumers are increasingly focused on their general health. Most of the increased penetration is coming from everyday nutrition, while growth in adult is primarily the same consumers buying more. Powders are also seeing some strong momentum resulting from increased at home consumption. Premier Protein shake consumption grew meaningfully this quarter, up 28% across tracked and untracked channels. Growth was broad based and accelerated in nearly all channels when compared to prior quarter year ago.
Healthy velocities, strong distribution gains and incremental promotions drove this growth. Food and e commerce channels led the way up 69% and 121%, respectively. This strong momentum has continued in Q2 with our 1st 4 weeks showing 17% growth across tracked and untracked channels with impressive gains in food, mass and e commerce. We continue to make great progress against our growth strategies. Premier Protein's household penetration reached 7%, an increase of 19% over prior year.
Our distribution continues to build with brand TDPs up 17% sequentially, reflecting our Q1 shelf gain. In January, we kicked off our national marketing campaign, which includes TV, digital and social media. We complemented our proven strategy of having real fans explain why they love our shakes with spots focused on our key differentiator, Amazing Taste. In the 1st few weeks of the campaign, our results are encouraging with search and website traffic exceeding the same period last year. Our new flavors and pack sizes are driving significant growth.
Cafe Latte, now in its 2nd year, and Cinnamon Roll, our newest flavor, are performing in the top 15% of the category where sold. Our upsizing initiative is off to a great start with our new 12 count driving almost 3 quarters of our growth in the mass channel. Premier is also growing outside of shakes with powders up 129% driven distribution and velocity. Diamatize had another strong quarter, up 35% domestically, with growth across all key channels. Distribution in FDM grew 38% since prior quarter with strong product expansion in the mass channel.
Our new ISO 100 products, Fruity and Cocoa Pebbles continue to be standouts, driving velocity across all channels and securing significant new distribution. Our international sales were flat year over year. Premier Shakes in Canada showed meaningful increases, but softness across the rest of the portfolio offset this growth. The impact of COVID on the global specialty channel continues to affect the DYMETYZE and PowerBar brands. However, we expect this to slowly recover later this year.
I want to take a moment to discuss the business realignment we executed this quarter, which impacts both Dymatize and our international business. Over the last several years, there has become more overlap between Premier Protein and Dymatize in the U. S. As a result, we decided to combine the management of these two brands housed in Emeryville. As part of the realignment, we created a dedicated international team who will drive growth across all of our brands outside the U.
S. Regrettably, these changes result in reductions across our workforce in I want to thank our employees for all the hard work and dedication over the past years. Overall, I remain confident in our 2021 outlook. Our supply chain performance is strong and our Shake co man network is well positioned to support our growth. Our new creative is now running and our messaging is reaching more households.
Our distribution gains are driving meaningful growth and we are seeing strong brand blocks across most major retailers. Our new products are succeeding in market and our innovation pipeline is building, driving long term value for the brand. I continue to be energized by our long runway for growth and now believe we have optimized our organizational structure to truly drive those growth strategies. I will now turn the call over to Paul.
Thanks Darcy, and good morning, everyone. Net sales for the quarter were 282,400,000 dollars up 15.7 percent. Adjusted EBITDA was $60,700,000 up 3.6 percent and EBITDA margin was 21.5%. Premier Protein net sales increased 17.4% driven by RTD shakes. 1st quarter results benefited from distribution gains for both existing and new products and incremental promotional activity.
Dymatized net sales grew 16.2% this quarter, driven by distribution gains in club and mass and continued double digit growth in e commerce. International sales for DYMTIZE improved sequentially, but remained weak on a year over year basis as a result of COVID. Net sales of all other products decreased 11.2%. Turning back to consolidated results. Gross profit of $91,900,000 increased 0.7% this quarter with gross profit margin declining 490 basis points to 32.5%.
The margin decline was largely as expected and related to higher input costs, primarily milk based proteins and freight as well as incremental promotional activity. SG and A expenses were $38,300,000 and as a percentage of net sales declined 140 basis points to 13.6%. SG and A expenses in the current year included $4,600,000 restructuring and facility closure costs related to our business realignment that Darcy discussed earlier. These expenses were partially offset by $1,500,000 of lower separation costs, both of which were treated as adjustments for non GAAP measures. Excluding these items, SG and A was down approximately $1,000,000 compared to prior year and marketing spend was flat.
Before reviewing our outlook, I would like to make a few comments on cash flow and liquidity. We had a strong first quarter for cash flow generating $23,000,000 from operations. At quarter end, we had $50,800,000 of cash on hand and $150,000,000 available under our revolver. As of December 31, net debt was $635,000,000 and net leverage was 3.2x. Turning to our outlook.
We continue to expect fiscal 2021 net sales of $1,070,000,000 to $1,120,000,000 and adjusted EBITDA of $207,000,000 to 217,000,000 dollars As Darcy previewed, our quarterly pacing is largely tracking with our expectations. However, first half gross margins will be further pressured by higher freight costs before rebounding in the second half when our RTD shaped pricing takes effect. For the Q2, recall that we will lap the prior year COVID pantry loading benefit for Premier Protein, which is a headwind to our net sales and EBITDA growth, but a tailwind for our Q3. In addition, our promotional activity and advertising investments will peak in Q2 as expected. Overall, we remain confident in our full year estimates and are pleased with top line performance and distribution wins for Premier Protein and Dimetize.
With that, I would like to turn the call back over to the operator
for Our first question comes from the line of Ken Goldman of JPMorgan.
Hey, thank you. And I love the I wanted to ask about the gross margin, which of course was down a significant amount this quarter for the 3rd straight time. I get it right, you're facing a spike in dairy and freight, you've been promoting some more in some channels. I'm just wondering because I think investors and we certainly are guilty of this, have been modeling in much stronger gross margins. What can you tell us specifically?
Is there any way you can quantify what your expectations are for that line for the next few quarters or just for the year? Just in the name of sort of making sure that we don't get those negative surprises on that line item again.
Sure, Cam. Good morning. I'll take that. Yes, so coming into the year, we expected our gross margins to decline versus last year because of especially the first half was impacted more so by protein cost, and we expected to continue to make brand investments in promotional spending. So we expected gross margins to decline versus last year.
What has changed obviously is freight cost has increased, and so that's putting more pressure on our margins in the first half. So while overall for the year, we expect our margins to be down versus last year, We now expect that our second half should be above last year's gross margins because of the price increase offsetting some of these costs. So first half down, second half above last year. Keep in mind, our historical margins have been roughly around 34%, a spike in 2019 because of the price increase we took at that point in time where they got a little bit above 34%. But historically, we've been about around there.
So we expect to get closer to that as we take the price increase going into next year.
Great. That is very helpful. Thank you. And then my follow-up, I'm curious what you experienced in terms of any pushback from your customers to the price announcement. I would assume not much just given how transparent higher dairy and freight costs are and given how there's not much elasticity in the market right now, but I just wanted to get any color I could from you on that.
Thanks.
Customers, as you guys know, customers never like a price increase, but they understand why we're doing it. As you explained, they're seeing the same inflation as we are. So they understand it. And remember, we took price 2 years ago and everyone behaved very rationally. Customers reflected it at shelf, elasticities were very close to our estimates.
And so we expect the same this time.
Your next question comes from the line of Andrew Lazar of Barclays.
Good morning, everybody.
Good morning.
Hi. First off, I guess with regard to Premier, I know price mix was down about 4.5% as a result of some of the incremental promotional activity. I mean that as you mentioned was part of the pressure on gross margins. I guess could you discuss a little bit how you evaluate the trade offs between incremental revenue generated versus the margin pressure? And I guess more of the optics, right, of what some might call perhaps lower quality growth or a reliance on promotion?
And I guess put it another way, what gives you the confidence that the incremental promotional spend is and continues to be an effective use of funds?
So our focus as we have walked you guys through is building household penetration. We continue to believe that that is the biggest driver of long term value and growth for specifically Premier Protein. We knew we were going to one of the strategies to increase helpful pen is raising marketing and promotion this year to drive that. We know that once we get trial on this brand, because of our over because of our repeat rates that are over 50%, we will have a loyal consumer. So as we if you look at 'twenty one promos, they are actually very similar to 'twenty, except for we tested an incremental club promotion in Q1, which is what you're seeing in the numbers.
But other than that, they're actually fairly consistent with some as you guys know, we have our bigger push in Q2 and Q4, and then we added the Q1 promotion as well.
Okay. Thank you for that. And then Paul, as you mentioned heading into the Q1, it was expected that pretty much all of the EBITDA growth in fiscal 2021 would occur in the second half. And obviously, you had 3.5% growth that you realized in EBITDA in the Q1. And obviously, fiscal 2Q is expected anticipated to be down to off.
I guess, is 2Q anticipated to be down to basically offset this so that you still kind of have that same cadence of virtually all the EBITDA growth in the second half? And then similarly on sales, I think it was expected sales in the first half would be up high single digit. Obviously, Q1 was up far greater than that. If it was to hold to the first half guidance that you initially gave on sales, that would imply deceleration in sales to maybe minus 1 to plus 3 in the second quarter. But given you have so much momentum, I don't know if that still holds.
So I'm just trying to put this in perspective, what you did in the Q1 based on what your initial sort of first half guidance was, if you get my drift?
Yes, I think I do. So our thinking on first half growth is still in line with our original expectation. I think Darcy touched on in her prepared remarks that we did see a little bit of a shift into Q1 versus Q2. So we just whenever you're loading these large promotions, sometimes they load us a bit differently than you expect. And so what we believe we've seen is a bit of a pull in Q1, a little harder than expected.
So that obviously falls out in Q2. And then with the freight headwinds, obviously, that puts additional pressure on our Q2 as well. So we really think our first half is largely intact. There's just a little bit of a shift between the first and second quarter, no concerns about the sequential revenue top line.
Great. Thanks so
much to you both.
Thank you. Thank you.
Your next question comes from the line of Brian Holland of D. A. Davidson.
Yes, thanks. Good morning. So I wanted to probe that or this implied Q2 growth a little bit further. It sounds like, I guess, that some of that pull in from Q2 is maybe related to that club promotion that you referenced. But I'm just curious if there's anything I mean, obviously, there's something at the end of the quarter here when we start to lap the initial demand surge around COVID.
I mean, is that just something where you feel like you don't have enough visibility on? So why not just stick with the same cadence through the first half and see how that laps because or is there something else in one of these channels that we need to be mindful of because again you're accelerating in scanner through January that ran concurrent with the promotion at Costco, So no cannibalization there. So it seems like a lot of momentum going into that second half of March. So anything that we should be mindful of other than just the maybe just trying to be mindful of the COVID comp?
Certainly, as we're lapping last year, yes, the COVID comp was a big tailwind for us in the Q2 of last year. I think we previously estimated that being at the high single digit. It drove high single digit growth for us last year that we're obviously lapping. So that does obviously weigh on your growth rates from last year to this year. Regarding the business minimum, we do feel like it's still strong.
There's nothing that I've seen or we've seen that would suggest that there's any reasons for concern. But everything we've seen from a revenue side has been tracking to our expectation again with just a bit of a shift from Q1 into Q2 from Q2.
I'm sorry, Paul, just to confirm that, you said high single digit contribution from sort of the COVID demand surge in Q2, that's how much that contributed?
That's what it did contribute to last year, so that would be the headwind for this year. So that's the flip between Q2 and Q3, where it's a headwind in Q2 and a tailwind for Q3.
Understood. And then if I could just ask a big picture question. I think relative to 3, 6 months ago, it feels like we'll be something similar to the dynamic that's in place today as it pertains to consumer mobility, which obviously has been beneficial to the category in your business in particular. But if we extrapolate that out further, there's forecast out there that would suggest 2x the American workforce will be working from home in some form 5 years from now versus pre COVID. So Darcy, I'm just wondering if you have done any work on that, any analysis?
And if there's reason to kind of rethink penetration growth and the repeat rates on your business in particular, I'm just curious if you have any insight
at this
point on that?
Yes. We're incredibly excited about our momentum as a business because not only yes, we have the negative of the mobility, but we have the positive of, I mean, we I walked through the category and liquids and powders are in the last 13 weeks are double the growth of the overall category. So we're seeing the tailwinds of just general health and the sentiment of consumers of really being worried about their general health and what they can do personally to improve that. So we've got that tailwind. And I think that's long term.
I think obviously it got accelerated with the pandemic, but I think that will stay front and center for a while. And so then you take that and then you put you layer on top the increase of mobility and that we are a convenience product. I think we look forward and see a lot of encouraging signs.
Appreciate the color. Best of luck.
Our next question comes from the line of Chris Growe of Stifel.
Hi, good morning.
Good morning.
Good morning. I just had a question for you, if I could, first on just to understand, maybe I can better understand the fact that this quarter had a promotional load in. And as I look at the charts and the data, I guess I was still a little stumped still on how with consumption being up so strongly for Premier of 27.5% and obviously revenues and volume for that business unit less than that, Just how that dynamic worked? And maybe more importantly, how much should come out of Q2 as a result of that load in that occurred in the Q1? Yes.
So I'll take the latter part of your question there. So our thinking is that we've seen maybe a 1% to 2% pull forward from Q1 and from Q2 into Q1. So it's not big, but it does impact obviously the growth rates a bit. So that would be that part of your question. I mean, our Q1 is typically a very heavy shipments to consumption quarter because all of the January promotions that are going on, a lot of them do load for us in the Q1.
So there's a chart in our supplemental that obviously shows that dynamic. And it's fairly consistent with last year. It was up a bit maybe from last year, which is part of that pull forward that we're talking about. But it's not meaningfully different from last year's pull in.
Yes. I think what I would add is that in untracked, we did see the we had some ship in volume in Q4 that we saw the consumption in Q1, which is I think which is the delta between the consumption and the shipments as well.
Okay. Thank you for that. I have to follow-up on that, but I understand what you're saying. Just a quick second question would be, just to get a sense of how much the inflation outlook has changed for the year? And then can you give any color around the degree of the price increase you're taking?
And maybe that will help dimensionalize the increase in cost?
Doris, you want me to take the inflation piece and then you can Sure. Yes. From an inflation perspective, the change from our original estimate, which is primarily freight, is that it will be a 75 to 100 basis point drag on the year. So that's the magnitude of the freight impact, which is ramped up really kind of late in our Q1.
And then from a pricing standpoint, just for competitive reasons, I don't think we're going to I'm not going to go into the exact price increase, but it's modest and similar to what we took 2 years ago.
Okay. And then just to be clear on that, Paul, inflation, that 7,500 basis point drag on the gross margin, is that the way that you were quantifying that?
That is exactly right.
Okay. Thanks so much for your time.
Thank you.
Your next question comes from the line of Tim Purse of Stephens Inc.
Good morning and congrats on the nice quarter. So how should we expect you to approach marketing spend this year? I know you plan to advertise on TV for an additional 3 months this year. But if you're seeing your household penetration, it's kind of like ahead of time, would you be more inclined to drive margins by pulling back on marketing spend in the back half? Or do you kind of plan to stick to that goal and pursue additional households this year?
Yes. We plan to continue with our plan from an advertising standpoint. Big picture is we are under we believe we are under penetrated. And so we know our marketing is working. We're seeing early results.
First of all, it worked last year to drive household penetration. We made some changes just to optimize it this year. And in early 1st 3 weeks, we see that it is more effective than even last year. So, we believe it is the right way to build long term value for the business and we think there's a lot of upside. So we're absolutely continuing on the path to spend to acquire new apples.
Okay. Thank you. And premier protein household penetration was up about 18% year over year, but your consumption exceeded that. So can you just talk a little bit about what you're seeing from the buying rate among existing consumers and what's driving that higher?
Yes. So about 80% let's see if I'm going to get to your question. About 80% of our growth is coming from outside the category and it's a combination of new households and buy rate. 2 of our from a strategy standpoint, our goal this year was twofold, household penetration and buy rate. And so from a household penetration standpoint, we are pushing we are increasing our marketing and our promotion as well as and then from a buy rate and coming out with new products, new flavors, etcetera.
And then from a buy rate standpoint, we have our upside initiative. So those combination is where you're seeing kind of you see the increase of household spend, but then you see the buy rate as well.
Okay. Thank you. I'll pass it along.
Thank you.
Your next question comes from the line of Bill Chappell of Truist Securities.
Thanks. Good morning.
Good
morning. I just want to
go back to just the freight issue. I'm just trying to understand, I imagine you have some freight contracts where you don't see the immediate hit as freight costs rise. And so I guess trying to understand since it is, it just you said it creeped up late in the Q1 and immediately hitting in the Q2. What ways to prevent that from as they if they creep up again in the Q2 that you haven't priced enough for that as we go into the Q3? Just trying to understand kind of what visibility you have on your freight rates and what kind of in order to price this doesn't happen again and again as we move through the year and things starting to open up?
Sure. Yes. We do have obviously some visibility into our freight costs through our providers, But it really did move up quite a bit. And I think you've seen that obviously inflation with other companies as well with COVID causing some shortages with drivers. But the really long term thinking is that, that will continue on for a period of time.
But to your point, there obviously is always risk that it goes up and there's opportunity should it come down. But we feel like we've taken we've looked at the rest of the year and looked at it at an elevated level as we've thought about the impact to our business for the rest of the year.
So I
mean just your thought is freight rigs have peaked or you're or you price for the potential peak. Is that fair?
Yes. Expiration, yes.
Okay. And then just follow-up, just any color on channels? I mean, is it safe to say club versus non club performed at a similar rate or were you I mean, it did seem like you had more promotions and obviously more new product introductions in the club channel. Any color there would be helpful. Thanks.
Yes. So
No, go ahead. I was just going
to clarify, if you meant Premier or total billering or both?
Yes. I meant, Mint Premier, sorry.
Yes. So Premier, untracked still for the quarter, overall, our consumption was up 27.5%. It was led by untracked. So untracked still was tracking ahead and driving the growth over tracked, so up about 43% and tracked being up 15%. And it was we're having really solid we continue to have really solid growth in e commerce.
We did have a promotion in e commerce, which drove some of that, which again was expected. And then we're seeing solid growth in untracked club. And then but I will say, I think some of the areas that I'm most excited about is our progress in food, specifically food and mass and getting more products on the shelf and really getting that brand lock, which is something that we haven't had before and we're seeing it in market.
Great. Thank you. Thanks.
Your next question comes from the line of Jason English of Goldman Sachs.
Hey, good morning folks.
Good morning, Stifel. Good morning.
I guess I've got 2 quick questions. Well, maybe not quick, but the first one is, how much of the growth in Diamantize is coming from these pebbles extensions? And should we be looking at these as almost like a license in and out? Or do you think there's reason to believe they could actually have durability?
So I don't have the exact number of 4 pebbles, but what but I'll separate out the growth the domestic growth from a distribution and velocity standpoint. So about 60% of the growth was coming from distribution and about 40% from velocity. A lot of that velocity is coming from pebbles and the excitement there. So and it's really coming across channels. We absolutely think it has durability.
And I think that you'll start seeing I think the excitement around I think I've explained the consumer insight to this piece. It's not just about borrowed equity. There it is steeped in solid consumer insight that basically says that the dimeatized consumer is starved of carbs. And so basically hasn't eaten sugary cereals in a long time and love it. And so because our product delivers so well on the Fruity and Cocoa Bevel experience, it really is kind of scratching that edge.
And so that is a consumer insight that can be really built upon.
Interesting. Second question, you've got a great organic
growth story here. And I'm not asking you to muddy the waters, but I do recall when you guys were initially spinning out and standing this business up on a standalone basis, part of the rationale was to be able to have a high multiple business that could acquire other high multiple businesses, other growth assets.
Where is M and A on
your agenda today? And have you seen any opportunities perhaps open up during COVID?
Yes. I think you highlighted and described it well. We do believe and we've communicated this is that we are excited the organic growth of specifically Premier, but also Dymatize is our number one priority. We still think there's a ton of upside and that really is our focus. And just to jump on, we've historically, we've talked more about Premier as being the driver of that, which it will be.
But I think the recent momentum on Dymatize really gets us excited about that growth story as well. And so that puts us in a situation where M and A is absolutely one of our growth strategy, but it becomes more of a nice to have as opposed to a need to have, which allows us to pick and choose and wait for the right opportunity as opposed to being forced to buy something because we're trying to hold up a growth rate.
Makes sense. Thanks a lot. I'll pass it on.
Thanks.
Your next question comes from the line of Rob Dickerson of Jefferies.
Great. Thank you so much. Darcy, yesterday, a larger food company, who doesn't really focus specifically on protein shapes, bars, powders, stated that it seemed like your discussions with retailers and kind of what we've seen on the shelf, let's say, in the past 6 months, would suggest that maybe there's been a little bit more shelf allocated to kind of shakes and powders, right? Just given kind of the at home consumption shift, maybe there's a less attraction for the time being at least just to the more on the go bars. And then they stated though that also through those conversations with the retailers that they would think that some of that would reverse back out, right?
So maybe there's almost like a temporary mix adjustment, obviously, to cater to where demand is. So I just thought I'd ask kind of if that's what you're seeing too, if you agree with that, kind of what your perspective is and really would there be so much shift because it seems like your shift has been driven by good products and distribution gain, increased TDPs not off of COVID kind of was already planned. But then there's kind of the other commentary that is the overlay of kind of what's happening within the broader category if we think about the mix between powders and shakes vis a vis bars. That makes sense? Thanks.
It does make sense. I agree with the fact that we're seeing some shift of shelf space from bars to RTs and powders. I have not heard that that is a temporary change. I guess I look at it as retailers keep I mean very simply retailers keep items that are growing and are growing their category. And so, as I just said, 80% of our growth is coming from outside of the category.
We actually have very little growth that is coming from shifting among the category. So and we're one of the highest velocity products in the category. So, I haven't heard it. And honestly, it doesn't worry me from a Premier standpoint or a Dynatized standpoint for that matter.
Okay, great. And then I guess just quickly, obviously, the focus right now is building the core, right? There's a long runway of growth still on the current product offerings or categories as you just stated. There's the new premier cereal, right? This guy, we've seen the innovation already come out.
We discussed earlier on the post call. Are you thinking already kind of like where can we take Premier, right? We have kind of the plan in place in terms of distribution strategy and with the right offerings, we just need to execute. So maybe there's a little bit more bandwidth in terms of kind of where you could take the category into other adjacencies or for now is it just block and tackle on the core? Thanks.
That's
it. It's both. So absolutely, the bit of the core, we saw the kind of upside within our categories, but innovation is a big driver for us. We've been investing both within R and D as well as within marketing and focusing on where this brand can go. I think cereal was a good test for us.
We could see if the brand could travel outside to other categories and other heavily trafficked aisles. And I think the early results are really positive. And so we look at that. We've always thought that a growth future growth was we've talked about center of store, and I think that this bodes well for that transition. Now it's just about what is the best strategy to go to center of store.
Got it. All right. Thank you.
Thanks.
Your next question comes from the line of Ken Zaslow of Bank of Montreal.
Hey, good morning everyone.
Good morning.
Good morning.
Two questions. One is, when you think about your shelf space gains, you talk about how much shelf space you've gained? And how much do you think that's permanent? And maybe that's my first question.
So we I'm forgetting the exact numbers in my prepared remarks, but we gained substantial shelf space both on Premier and on Dymatize this last quarter. We're pretty consistently gaining PDPs. PDPs are that we communicated that we're under shelved really. Our market share would from a kind of market share versus share of shelf, we are still under shelf, so we still have room to grow. But this Q1 was a really big move.
We gained substantial, I think I mentioned this in the last call, we doubled our shelf size in a mass retailer. Coming up in the spring is the resets for some major food accounts. We will continue to see big distribution expansions within those accounts further expanding our brand lock. So and then Dymatize, we gained I think 38% TDPs in FDM, which is a big push for us and that was mainly due to a mass account and we're already seeing the velocities strong enough to hold that space and expand. So same thing on DYMETYZE where we see these food accounts which we're going to we're expecting to see some increase in DYMETYZE as well.
My second question is, when I think about expanding the Premier brand, what consumer insight did you see that would want Premier to get into a the cereal category, a category which I don't know if I could remember, but the probability of success of a new brand in cereal can't be more than 1%, right? It's a very low. So what consumer insights do you have that would give you the confidence that extending Premier into cereal versus, I don't know, other categories would be the right foray for you to get into the center of the store? Just a thought there. Thanks.
Well, the first thing is that we know that Premier, as a brand is consumed 60% of the time at breakfast. So we also know that breakfast is an occasion where consumers don't usually get enough protein. They have bagels and donuts and muffins. So and we know, as the old saying goes, it's the most important meal of the day. So that is I think the insights.
Now the second piece is just a practical application, which I would just say is we also happen to have a sister company who makes cereal. So it was a fairly easy test, to see if our brand could travel. So I think there is it's very much steeped in solid consumer insights, but also there's a practical element.
Okay. Thank you very much.
Thanks.
Your next question comes from the line of Kaumil Gajrawala of Credit Suisse.
Hi, everybody. Good morning or I guess good afternoon. Can you talk a little bit about e commerce, e commerce capabilities and maybe a bit about how much it grew, but also just how it's evolving, what sort of capital you might be putting in or investments you're making to expand that side of your business?
Yes. E commerce is a big focus for us. So just to give you a sense of kind of history and where we are, In 2019, e commerce represented 6% of our business. It now is at 10% of our business. We think that it could be 10% to 15%.
So we've invested it's also what's interesting about e commerce, what we've learned is it is a great trial driver for us. So we're actually seeing the our household penetration grow and us gain trial through e commerce and then sometimes actually then buy because our e commerce product is a little bit more expensive than in other channels, oftentimes we'll see consumers enter in an e commerce and then repeat in other channels. And just from a capability standpoint, we are expanding marketing dollars. We're actually looking at pursuing e commerce only innovation. We've increased headcount, and we have a general management kind of approach to e commerce, where we have kind of sales, marketing and operations, working together because it is a different it is a different way to go to market.
Interesting. Thank you. And then on the topic of the primary mission has been about increasing household penetration and your successes, of course, now being replicated to the best of their ability by others. But we're also going into a time where pricing is necessary, maybe promotion mitigation is necessary while competition is also increasing. So how are you thinking about just the dynamic between those 2?
Is it a little bit of a are we in the growth curve of the industry where it's a bit of a real estate grab? Or is this something that you feel like it's okay to cool the jets for a period of time and deal with the input costs and worry about some of this other stuff later?
Well, so last it's a great question. So last quarter, we came out and said that we would rather not take price. We wanted to drive top line. We felt like, we would we were comfortable with the assumptions, the cost inflation assumptions that we had incorporated in our forecast to not take price. However, we also said that if those assumptions prove to be too low and the facts come up and they are higher than that, we would adjust our course.
And that's what happened. Freight is obviously increasing as well as we saw some increase of dairy protein. So we decided to take price at the back half. We evaluated other areas like marketing, etcetera. We just felt like given our household penetration and given our marketing is working, we didn't want to pull that back.
So, I still believe that even though we're taking price, we still will increase household penetration, and we're going to be watching that closely.
Thank you.
Your next question comes from the line of John Baumgartner of Wells Fargo.
Good morning. Thanks for the question.
Good morning.
Maybe first off, Darcy, back on the promotion front for Premier. In terms of total activity for 2021, how are you sort of balancing a degree of activity between straight price discounts for consumers relative to investments for in store displays or any sort of push levers for the trade? And how does that balance differ relative to the past few years as the brand now grows penetration?
So our philosophy and not really, I wouldn't maybe it's not our philosophy. So from a promotion standpoint, a few years ago, we used to only get TPRs from a trade perspective. Now because we have tested, our brand is big enough, we've proved to retailers that actually we bring in more households when we're on display and we have quality merch. We are only doing quality merch. So, and that has made all the difference in the world from an effectiveness standpoint.
So we once hopefully you guys have seen this, but in the New Year, New You, I mean, we had displays in most retailers and large displays, sometimes multi product displays. And so and that is really important for us because we bring so many people from outside the category, and that we need to get out of the aisle to get people's eyeballs. And then once we do, we hold them, we get the repeat and we grow the category for the long term. So I think that let me see if I answered your question about promotion in the split.
No, yes, absolutely right on point there. And then I guess a follow-up just to come back to Dynatize given that your comments this morning seem, I guess, pretty bullish as the new ISO products go from the drawing board into the market. When you think about Premier exponentially surprising to the upside from the time it was acquired, I guess, back in 2013, How do you see the parallel evolving for Dymatize? I mean, just given what you're sort of learning real time about the brand and consumers, is there any reason why it couldn't evolve into a $500,000,000 business over time? I mean, are the ambitions sort of changing or growing to any extent there?
Thank you.
Yes. We are very pleased with the momentum of DYMETYZE. I think what is encouraging is how it is taking in the mass. Not that long ago, this brand was a specialty only product. And so to have and the team has done a fantastic job of repositioning it and changing and moving the channels to make it much more balanced.
It's succeeding in e commerce and again now math. If I fast forward 5 years, I still believe Premier is going to be our big brand. I expect us to have more brands than just Premier and Diamatize. But Premier will be the biggest brand just because it is the most mainstream brand. And I've talked about how we actually kind of source volume or appeal to all of the different consumers.
But Dymatize has a very solid place right for athletes in sports nutrition. It has a very clear consumer. And so, yes, I believe that it can be a much bigger brand, double the size that it is now eventually.
Well, I'm trying to spread the word out gold Gym, so trying to
do my part for what it's worth.
Thanks for
your time.
Thank you.
Your next question comes from the line of David Palmer of Evercore ISI.
Thanks. Good morning. The question just a bit of follow-up to Rob's question about retailers giving more merchandising in shelf at the expense of bars. And obviously, that's a retailer decision. And I guess there's consumer ones behind that.
And I guess there's a thought that this was is a convenience play that bars are on the go type products and maybe the shakes are not as much and this is a temporary thing and as mobility returns, it gets better for bars. That could be one narrative. But I suspect that's simplistic and there are other consumer needs, demands that are at play here that because I have ready to drink beverage is pretty convenient too. So could you just talk about that what you're seeing in terms of the interplay and is it really one cannibalizing the other in your view?
They really have different occasions. So I mean, if you think of shakes are for the most part 60% consumed in the morning. They are more likely to be used as a meal a healthy meal replacement. Bars are much more matching oriented and they're much more on the go. I think what there are a lot of consumer trends and macro trends that are fueling the RTD and the liquid side of things as well as the powder side of things that are tailwinds to bars, but not quite as much.
And those are all around general health, immunity. If you think of so most RTDs have a vitamin and mineral blend. Those are very important to consumers. And so that when you're talking about people are trying to increase their immunity, etcetera, that becomes a more as we go more into kind of proactive health, those naturally fall within RTVs. And I think you're going to start seeing a bigger divide between RTDs and powders and bars, which have made their way much more into snacking.
Got it. Thank you. And just a question on marketing and the message, both how you market and what messages you're going to play on. And I'm wondering about the buzz creation type of stuff and how much of it is what you're trying to do in social media. I wonder, for example, did you have something to do with the users combining Premier Protein with Starbucks coffee, so that protein coffee buzz that we saw out there over the last quarter or so?
And what you're doing from a digital messaging standpoint, the things you're pushing on from a message standpoint? Thanks.
Yes, we love the prophecy. So what is so, I don't know, exciting about Premiere is our consumers create the content. We don't ask them to, they just do it because there is so much excitement and love for this brand. What we do is once they create it, we fuel it and we then kind of jump on it and give it more legs. Changes to strategies from an advertising standpoint, it's more tweaking than anything else, is we have TV, we have digital and social media.
We are adding more dollars and more time to the budget, we're talking to more people. So, we are adding consumers with different types of messages. The beauty of obviously digital and social is that you can change the message slightly depending on who the audience is. We updated creative, I said this in my prepared remarks, is it's all been about our devoted fans really telling other people authentically why they consume the product. But now we're complementing those with what we're calling we call the first ones testimonials, we call the second ones tastemonials, which is really all about taste and hitting that how amazing our consumers believe the taste is and showing it in visuals.
And then we're also supporting some of our new products with national media, we've never done before. So those are some of the changes within our strategy, and kind of how we, amplify the buzz that already happens from our consumers.
Thank you.
Thanks.
Your next question comes from the line of Bryan Spillane of Bank of America.
Hey, good morning. Just two quick ones for me. One is, I know you talked a lot about kind of where the Q1 landed versus expectations and cadence for the year. But I think I might have missed or I'm not sure I might have missed this, but just where is consumption tracked relative to what your expectations were and especially around Premier and given just the elevation and activity you've had, merchandising activity you've had, is that run ahead of what your expectations were?
Consumption is pretty consistent with our expectation. I would say with one small change is we did and I think I mentioned this maybe in some of the follow ups of the last quarter is we did see a small increase in November in some club stores when some of the additional lockdowns happen in several of the states, almost like a mini panic buy. What was interesting about it is it appears to not so people bought more, but yet but then they consumed more in the quarter. So it didn't affect our it didn't we didn't see the decrease that we saw in last March. So that was the only thing that was surprising it from a consumption standpoint.
It's just a little bit of a panic buy in November.
Okay, great. Thanks. And then just related to the price increase, should we factor in anything for customers maybe buying ahead of that price increase? So when it's effective? So I guess trying to understand just whether or not there will be any other disconnect between shipments and consumptions, just consumption related to the price increase?
Yes. We don't that's going to happen. That will happen somewhat. We do monitor that and if people if retailers put in 3 times the orders than normal, we will act on that and try to bring it down. So I wouldn't necessarily model in a massive increase.
I think And so I think we have a process And so, I think we have a process in place to address that.
Perfect. Okay. Thank you.
Thank you.
Ladies and gentlemen, we have reached the allotted time for questions and answers. We thank you for participating in Bellring Brands First quarter 2021 earnings conference call and webcast. You may now disconnect your lines and have a wonderful day.