Welcome to Bellring Brands Second Quarter 2021 Earnings Conference Call Webcast. Hosting the call today from Bellring Brands are Darcy Davenport, President and Chief Executive Officer and Paul Groves, Chief Financial Officer. Today's call is being recorded and will be available for replay beginning at 1:30 p. M. Eastern Time.
And Associates. The passcode is 588-5539.
And
Chief Financial Officer. It is now my pleasure to turn the floor over to Jennifer Meyer, Investor Relations of Bellring Brands for introductions. You may begin.
Good morning, and thank you for joining us today for Bellring Brands' and Chief Executive Officer, the Q2 fiscal 2021 earnings call. With me today are Darcy Davenport, our President and CEO and Paul Rhodes, our CFO. And Chief Financial Officer. Thank you, Darcy. Our next question comes from the line of Darcy.
Please go ahead. Thank you, Darcy. Thank you, Darcy. Our first question comes from the line of Darcy. And
Chief Financial Officer. 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,
and Chief
Financial Officer, which are subject to risks and uncertainties that should
be carefully considered by
investors and actual results could differ materially from these statements. And Chief Financial Officer. These forward looking statements are current as of the date of this call and management undertakes no obligation to update these statements.
And Chief Financial Officer. 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. Chief Financial Officer. With that, I will turn the call over to Darcy.
Thanks, Jennifer, and thank you all for joining us. Shasta. Last evening, we reported our Q2 results and posted a supplemental presentation to our website. I'm pleased to report that our results were strong with net CEO of $282,000,000 and adjusted EBITDA of $42,000,000 Net sales were up 10% despite lapping a difficult comparable in the prior year driven by and Chief Executive Officer of Pansy Living on the premier protein brand. Diamatize grew an impressive 29% this quarter and Chief
Financial Officer with strong results
across channels and further benefiting from an easier international comparable. Our first half results Chief Financial Officer, combined with continued top line momentum, give us confidence to raise our outlook for the year. We now expect net sales Exchange. We are
also raising our adjusted EBITDA guidance range to
$2,000,000,000 equaling growth of 18% to 21% and exceeding our long term algorithm of 10% to 12%. We are also raising our adjusted EBITDA guidance range to between $214,000,000 $220,000,000 Shakes. We are excited about our sales momentum. However, we continue to experience cost pressure as inflation ramps up ahead of our expectations. Shakes, which goes into effect in the Q3, combined with our clock out programs are largely offsetting the anticipated commodity and freight headwinds.
And Chief Financial Officer. On our Powder business, we are expecting significant increases on whey protein and are pursuing opportunities to mitigate this and Chief Financial Officer. Now turning to our category, brand highlights and growth strategies.
And Chief Financial Officer.
The overall community nutrition category remains stable and healthy. We continue to see macro trends such as health and wellness, and Sugar. Smacking and mainstreaming of protein driving category growth. Liquid and powder momentum remains strong with growth outpacing historic rates and Chief Financial Officer, driven by shelf space gains and strong velocities. As mobility increases, we expect category growth to accelerate, Distributors, providing additional tailwinds to the overall convenient nutrition category.
Premier Protein shake consumption grew a healthy 20% and Chief Financial Officer. This was on top of an elevated consumption quarter last year as a result of the COVID stock up. And Chief Financial Officer. Distribution gains, incremental promotional activity and strong velocity drove this growth.
Shifting Solutions. All of our channels grew
with e commerce,
food and mass leading the way, each growing nearly 60% compared to a year ago. And Chief Financial Officer. As we lap the prior year pantry deload in Q3, overall consumption has significantly accelerated in April, up 61%. And Chief Financial Officer. However, even more encouraging, we are seeing strong sequential growth with consumption up 13% versus March.
And Chief Financial Officer. We continue to make great progress against our growth strategies. Premier Protein's helpful penetration reached an all
time high of
7.4%, and Chief Financial Officer, an increase of 12% over prior year. Our repeat rate on 30 gram shapeline remains at category meeting 51%, Shifting Brands, which highlights the strength of the brand and why we continue to believe in our long term in the long term potential of this business.
And Chief Financial Officer. We had
a great distribution build in Q2 with brand TDPs up 14% sequentially and 55%
and Chief Executive Officer.
Our RTD market share in tracked channels gained 2 percentage points reaching 20.2%.
And Chief Financial Officer.
Our national marketing campaign which kicked off in January performed well and was a clear contributor to our strong quarterly performance. And Shopify. Our new flavors and pack sizes continue to drive significant growth in distribution. Cafe Latte and Cinnamon Roll remain in the top 15% of the category where sold. And Chief Financial Officer.
Our newest flavor, chocolate peanut butter, was launched in e commerce during Q2. It's off to a great start, quickly becoming our 3rd strongest flavor in that channel. And premier powders also had a fantastic quarter with a track consumption up 144%, driven by both distribution and velocity. And Chief Financial Officer. Our strategy of expanding distribution to more mainstream channels is working.
The business was
up 24% domestically, driven
by club, and Instinctively driven by club, mass and e commerce channels. We identified the right products and pack sizes for these channels and the brand is responding well to dedicated media. And ISO 100 Fruity and Cocoa Pebbles are also bringing flavor excitement to the brand and driving velocities across all channels. And Chief Financial Officer. Our international sales grew 32% with both Premier Protein and Dymatize contributing.
Premier Shakes in Canada saw meaningful growth Supported by a successful club promotion in our 1st national digital media campaign. And Dymatize's international sales rebounded as we began to lap the COVID impact of prior year. To close, and Chief Financial Officer. I remain confident in our plans for 2021. Our category is healthy, providing a significant tailwind.
We have a portfolio of strong brands that target complementary consumers. Our advertising and promotions are working, driving growth and household penetration. And Chief Financial Officer. Our distribution continues to meaningfully build. Our new products are generating consumer excitement and are thriving in market.
And Chief Financial Officer and our innovation pipeline is the strongest it has ever been. We know what drives our business and our recent performance allows us to reinvest in those proven tactics and CEO of the company. I continue to be optimistic about our future and I'm thankful for all the hard work of our employees and Chief Financial Officer, who make it happen every day. I will now turn the call over to Paul.
Thanks, Darcy, and good morning, everyone. And Chief Financial Officer. Net sales for the quarter were $282,100,000 up 9.6 percent. Adjusted EBITDA was $42,200,000 down 2.8% and EBITDA margin was 15.0%. As Darcy indicated, our strong second quarter results were against a tough prior year comparable as we lap COVID related pantry loading.
And Chief Financial Officer. Premier Protein net sales increased 8.2%, primarily driven by RTD shakes. 2nd quarter results benefited from distribution gains for both existing and new products and incremental promotional activity. Perrier Protein net sales also benefited from strong growth in powder products and a favorable customer mix driven by increased FDM sales. And Dymatized net sales grew 28.8% this quarter, driven by distribution gains in club and mass and continued strong e commerce growth.
And Distributors. Favorable product and customer mix were also a benefit to net sales growth. Dymatize's international sales showed year over year growth as we began to lap COVID related declines in the prior year. Turning back to consolidated results, gross profit of $87,000,000 decreased 1.4% this quarter and With an expected decrease in gross profit margin to 30.8%. As we have previously discussed, this decline results from higher input cost, and.
Freight and planned incremental promotional activity. SG and A expenses were $48,200,000 and as a percentage of net sales declined 130 basis points and SG and A expenses in the current year included $700,000 of restructuring and facility closure costs related to our business realignment. These expenses were partially offset by $300,000 of lower separation costs, both of which were treated as adjustments for non GAAP measures. Shoe. Excluding these items, SG and A was flat compared to prior year despite $2,200,000 of higher marketing spend, reflecting expected leverage of our SG and A base.
And Chief Operating profit of $15,600,000 decreased $19,500,000 compared to prior year and was negatively impacted by 17,700,000 and CEO of Accelerated Amortization. This was a non cash expense recorded in connection with our decision to discontinue our Supreme Protein brand and Chief
Financial Officer and was treated as an adjustment for non GAAP measures.
We expect the remaining $12,000,000 of non cash accelerated amortization to be recorded in the Q3. Before reviewing our outlook, I would like to make a few comments on cash flow. We had a strong second quarter for cash flow generating $50,000,000 from operations. And Chief Financial Officer. As of March 31, net debt was $594,000,000 and net leverage was 3 times.
In February, we completed an opportunistic repricing of our term loan. This reduced our annual cash interest by approximately $8,000,000 We now expect cash interest expense for the year to be approximately $37,000,000 with $8,000,000 in both Q3 and Chief Financial Officer and Q4. Turning to our outlook. As Darcy previewed, we are raising our fiscal 2021 net sales guidance range to $1,170,000,000 to 1,200,000,000 and Chief Financial Officer with adjusted EBITDA expected to range between $214,000,000 $220,000,000 Compared to prior year, our updated guidance implies top line growth in the second half and CEO of 24% to 30% and EBITDA growth of 17% to 23%. Sales are expected to grow sequentially with EBITDA roughly split across Q3 and Q4 as a result of higher planned promotional and marketing spend in Q4.
Our revised guidance for EBITDA contemplates higher than anticipated and Institutional pressures, notably whey and milk proteins, which is expected to impact our second half gross margins. We are pleased with our performance through the first half. Our confidence in the Bellring story remains unchanged. With that, I would like to turn the call back over to the operator for questions.
And The the first question will come from the line of Ken Goldman with JPMorgan.
Hi, thank you. I just wanted to understand a little bit of the guidance. And I thought you had been saying earlier that the pricing was largely offsetting the commodities and the freight inflation. And I thought I heard at the very end you're saying that the inflation was higher than you thought and it will hurt your gross margin. So is the pricing higher as well?
I just wanted to think about the balance of that as and
Yes, sure, Ken. I'll take that. Since our February call, inflation has increased more than we expected, and Primarily the second half, the second quarter was right on track from a margin perspective of what we expected, but the second half has and Chief Executive Officer, and it's inflation really across several fronts. It's not one thing that's individually significant, but they add up. We've seen some increase and Chief Financial Officer on whey proteins and our milk proteins as well to a lesser degree freight.
So our price increase is offsetting and The inflation in the second half is just the inflation is a bit more than we anticipated last quarter. So that is weighing on our margins in the second half.
And Chief Financial Officer.
Okay. And then I know there had been some concerns or just questions really about weight loss season, Potentially coming in a bit lighter than in prior years. I understand it's not always easy to tell why a consumer is purchasing a product, but Is it your understanding that weight loss went well or did that season get shifted a little bit into your Q3? I just wanted to get a little bit of sense for how you're seeing that?
And Chief Financial Officer. Our Q2, what we kind of term as new year, new you, which I think is what you're saying, and Chief Financial Officer. We did really well. So, in the category, it just it really and Chief Financial Officer. It's dependent on what form and I think it was depressed by the on the go.
So for instance, liquids and Powders did very well, while bars did not do very well. And that was really because bars are more heavily weighted on the on the go occasion. And Chief Financial Officer. So overall, I think when you look at the category this last quarter, and Chief Financial Officer. In liquids and powders, every kind of needs state increased with the exception
and Chief Financial
Officer of Weight. And so adult was up, sports nutrition was up, everyday nutrition was up, which is really the area and Chief Financial Officer. That Premier plays and, Dymatizes in sports. Weight was down. And then when you look, across the overall convenient nutrition category, both liquids and powders were up and bars was down.
So, I do think that the people who are there's no I do think that it will come back, but I think and Chief Financial Officer. What drives the Communion Nutrition category is much bigger than just weight management.
The next question will come from the line of Andrew Lazard with Barclays.
Good morning, everybody.
Good morning.
And Darcy, with I think it's about 15 flavors now available, household penetration, right, reaching 7.4 and And obviously the significant distribution gains, you mentioned in some of the previously less developed channels. I guess the question starts to shift a little bit towards and Chief Financial Officer. How much run rate is sort of left in these things? And is there one of those particular drivers that is most important among those that I and Chief Financial Officer. How do you think about that, the room that's left to go?
I think I know your answer, but I want to get a sense of how you're thinking about it.
I and I think you probably know
my answer. The upside is still immense. And just let's add we always look at household penetration being the biggest driver. And Insurance. And household penetration, yes, is at 7.4%.
The liquids category is at 24%. And Chief Financial Officer. The overall convenient nutrition category is around 50%. So there's so much upside just in household penetration. And what's nice is the tactics that we are driving.
So our advertising, the promotional activity as well as just the distribution in new channels, and It is driving health from penetration as we've seen by the rises. From a distribution standpoint, and Chief Financial Officer. You're right, we have launched a lot of new flavors. Our flavor strategy and our upsizing initiative is absolutely working. But just to give you a sense and Chief Financial Officer.
Our space and the upside, so we have an average in track channels of about 7.5 items on shelf. One of our competitors, which has about an equal market share as us, they have 13 items on the shelf. And Chief Financial Officer. So that just gives you we have incredibly productive SKUs. And so even though our distribution is up and Shasta, 55% versus year ago, the upside potential is still very large.
Okay. Thank you for that. And then, Paul, just a quick follow-up. In terms of visibility for the rest of this year, in terms of your costs, in terms of what can be sort of locked in and what you have a sense of, do Do you have a pretty good handle on or what your maybe forward coverage might be for those things that you can cover? Trying to get a sense of how much movement and Can now change or not with respect to your cost outlook at least for this fiscal year?
Yes. At this point in the year, we have a pretty good and CEO of the protein side. Freight isn't quite as long, but again, for the most part, at this point in time, we feel pretty comfortable with our coverage and understanding and
Thank you.
The next question will come from the line of Chris Growe with Stifel.
Hi, good morning.
Good morning.
And
Chief Financial Officer. I just had a question for you on the revenue growth guidance. You had a little beat of expectations in and Chief Financial Officer. 2nd quarter, but obviously your second half is going up pretty significantly. You're seeing a nice significant increase, it seems like in April.
And I just want to and Chief Financial Officer. As you think about that guidance and you did talk about I think sequential improvements through the remainder of the year, but how much of that incremental revenue growth expectation you have? Is that and 3Q or is it really kind of split across 3Q and 4Q? Just trying to get a sense of that.
Yes, it's split across and 3Q and 4Q. So remember, Q3 of 2020 had the pretty big and troughs following COVID. So just to give you a sense, if we did and Chief Financial Officer. Exactly. If we if our results were exactly the same sales as H1, that would already be a 16% increase.
And what we have on top of that is organic growth, more distribution. We have incremental promotion in the second half and some incremental advertising. So that gives you a start and Hopefully, gets you comfortable with our build of why we're seeing a 24% to 30% growth in the back half.
And Chief Financial Officer. That's helpful. Thank you, guys. And I just wanted a question, I think for Paul, but just a bit of a follow on to the inflation question. So and Chief Financial Officer.
Could you characterize the rate of inflation in the second half of the year versus the first half of the year? I know the first half had quite a bit of inflation. And Is the second half kind of caught up to where the first half is? I realize you have pricing coming through. I'm just trying to get a sense of how that shifts from first half to second half?
And Chief Financial Officer. Yes. The second half, based on our revised guidance, we definitely have we're definitely expecting higher and Chief Executive Officer. Both milk and
whey protein cost in the
second half versus the first half. And so it is up year over year more than we had anticipated previously. And Chief Financial Officer. On the milk side, it's relatively small on a percentage basis. It's low single digit inflation, so it's not a major and CEO of the company.
We're on whey proteins, which is the primary ingredient in our powders. We're seeing much more significant increase and on those that aren't really as impactful for us this year. We do expect some impact on our order. It's more for us to get into fiscal 2022, the inflation on our Whey powder business and
Okay. So you called it seems like the second half rate of inflation below that of the first half, and So that'd be a fair characterization. And again, realizing you have some pricing coming through.
Yes, the rate of inflation, you're correct, is at a lower rate, but It's still a headwind at the second. Yes, sure.
Okay. Thanks so much for that.
Thank you.
Shneur. The next question comes from the line of David Palmer with Evercore ISI.
Thanks. Good morning. Just and Chief Financial Officer. Wanted to get a sense of the level of and perhaps the year over year increase in marketing and promotion and Company. Spending the quarter and sort of how you see that playing out through the year.
What I'm thinking about is you had big plans in 2020 and COVID happened. So I'm wondering if there's some leftover business and perhaps even some pivoting that you're making about how you think the consumer will be behaving coming out of COVID. So any color there would be helpful.
And Chief
Financial Officer. Yes. So our yes, go ahead.
I can take the numbers and then if you want to give and Chief Financial Officer. So you'd asked, 2nd quarter marketing was up about $2,000,000 versus last year. Our first half and Company. Marketing spend was around 4% of net sales. As we look at the second half, we expect to and Company.
As a percent of net sales in a similar high 3% to 4% range as we're really seeing the marketing and
And yes, just from a strategy and a and Chief Marketing standpoint, the advertising is working. I think the change in a and Chief Financial Officer. A slight change of strategy that we made this year versus last year is I think I've talked to you guys about our Testimonials, which we've long used our devoted fans to tell other consumers why they love the product. We will and Chief Financial Officer. We continue to use that.
What we have augmented it with is what we call taste testimonials, which is really focusing on one of the things that really differentiates and Chief Financial Officer. The premier protein brand, which is amazing taste. And we have added and Chief Financial Officer. Commercial, both digital and analog about our new the flavors. So we have one on cafe latte, we have one on caramel and Chief Financial Officer.
And they're really performing. So we actually are seeing the velocities on both of those flavors and Far exceed the rest of the line. So that has been a very positive move. And
Chief Financial Officer. It really has nothing to do
with COVID. It has more to do with just what we are getting better and better at knowing what drives our business.
And Chief Financial Officer.
Just a comment and maybe you can comment on the comment. It seems like your you almost let the functionality and CEO of your product and how consumers use your product, whether it's about immunity or meal replacement protein seeking or and The weight management aspects of that, you'll let that not be part of your message almost on purpose. Is that and How you're playing it? And do you think to your point, do you think the net effect of those need states will be positive going forward, and Chief Financial Officer, I. E.
The immunity dropping off will be more than outweighed by people looking for weight management in the future. How are you thinking about that?
You're absolutely right. What is unique about Premier is that it appeals to and Chief Financial Officer. So many different occasions, so many different need states. So, we allow consumers to fit it into their life. I mean, if you look at our campaign, Too Good TO Be Good, there is no prescription as to how they should use it.
And Chief Financial Officer. So absolutely, you nailed it. On the second question, We still think immunity so we are having we're putting an immunity claim. We changed our product And that comes out later this summer. We still think health and wellness, immunity, this is going to be a trend.
We don't think it's actually even after people are completely vaccinated, we still think it is top of mind And it will continue to drive this category. So we don't think that's going away. What I think will happen is that it's going to be and The people leaning into weight, it's just going to be additive.
Thank you. And
Chief Financial Officer.
The next question will come from the line of Pamela Kaufman with Morgan Stanley.
And Chief Financial Officer. Hi, good morning.
Good morning. Can you comment on the split between the and Change in outlook for gross margin versus your operating expenses and driving the change in your EBITDA margin outlook and Chief Financial Officer. For the year, obviously, it seems like you're facing more inflation than originally expected, but you also mentioned incremental marketing spend. So how should we think about the mix of the 2 driving your lower margin outlook?
Yes. Our lower margin outlook is Primarily being driven by lower expectations on our gross margins because of the inflationary pressures on our and Strategy. Again, our key proteins and freight. We are spending a bit more in brand investments, but it's not as much of an impact to our overall margins. And CEO
of the Does this have any implications on your and Chief Financial Officer. Margin profile as well and what impact are you seeing in the club channel as you expand and FDM.
I'll hit the I mean overall, and Paul, you can and Chief Financial Officer. Overall, our margins are pretty similar across our different businesses. So that really isn't a factor. And. FDM is a little higher, but nothing dramatic.
From our customer mix, and Chief Financial Officer. Clearly, we have a large club business. I think that what as we expand into FDM, and Chief Financial Officer. Our growth in e commerce, food and drug and mass is higher and so that split will change. However, what's interesting and I think I've talked to you guys before about this is all of this Works together.
So as we these other new channels, they we have different and So there are smaller pack sizes that are launched in these other in these channels. And so people are trying the product and being introduced to the product in food, drug, math and e commerce. And then often, they are then repeating in club. And Chief Financial Officer. So really the kind of virtuous cycle works, one being more trial and then it feeds into into the club channel.
So overall, the pie just gets bigger.
Thank you. That's helpful.
Shoe. The next question will come from the line of Bill Chappell with Truist Securities.
And Chief Financial Officer.
Thanks. Good morning. Good morning. Just 2 kind of more follow-up questions. 1, and I'm right in saying that most of the pricing you're taking is list pricing.
There's no real change to your promotional calendar for the back half. Is that correct?
Correct. And going into the year, our promotional calendar was skewed towards the second half and specifically the Q4 and that's unchanged.
Got you. So covering the incremental costs are just through the list price increases, not any alterations there?
Correct. And that's on our shake business, correct.
Got you. And then second, just maybe on a follow-up on the channels. And Chief Financial Officer. Now that I think most of the planograms are reset, what kind of year was this in terms of shelf space gains, Especially at FDM, but in general, how does that compare versus last year and how does that set you up kind of going forward?
And Shelf Space this year than last year. So, we're up 55% and Chief Financial Officer. I think what's exciting is and Chief Financial Officer. We are seeing some customers we're pushing a 4 foot set, which
and Chief Financial Officer. And where we have that 4 foot
set within FDM, we're seeing tremendous market share gains, which is a little bit obvious, but And what's also happening is it's great for the category. So, we're able to sell that to across and Chief Financial Officer of FDM to our customers to really encourage them to expand the space because it will grow their category.
Great. Well, that's fantastic. Thanks so much.
Thank you.
And Chief Financial Officer. The next question will come from the line of
Kamal Gharwal with Credit Suisse. And Chief Financial Officer.
Hey, everybody. Good morning. The first question, Darcy, you opened with category growth is accelerating. You expect it to continue to accelerate. And Chief Financial Officer.
Is there is this kind of acceleration or growth kind of according to plan? Or are you seeing something perhaps different from and Chief Financial Officer.
What your view might have been
about the category a few years ago. We are hearing from a few other companies kind of demand rebounding a bit more quickly than anticipated. So is this kind of a year over year comp thing or is this something structurally seem to have shifted itself upwards?
And Chief Financial Officer. We are seeing category growth above slightly above historic rates. So just and Chief Financial Officer. We've historically seen the liquids category specifically about 5 growth of about 5%. We are seeing it between 6% 7%.
So definitely higher than the past and slightly higher than our expectations too.
And Chief Financial
Officer. Okay, great.
And then, any color
or commentary on price elasticity? Obviously, you've and Given input costs, you need to take pricing once again.
Can you
just talk about
what you've seen in the past, what you're planning for this go around? Give us a sense. And Chief Financial Officer. Yes. So we've talked about this that we took price in 2019 and and Chief Financial Officer.
We and the in market elasticities were very similar to what we projected. So those are and our pricing increase and Chief Financial Officer. This time is pretty similar to what we experienced or what we took in 2019. So we're expecting the same. I think that The upside here is that it assumes no other competitors take price.
And Chief Financial Officer. And given the far reaching inflation affecting everyone, especially in proteins and freight, and Company. We do expect competitors to follow and if that's the case then obviously our outlook will be conservative.
Okay, great. Thank you.
Thanks.
The next question will come from the line of Rob Dickerson with Jefferies.
Great. Thanks so much. And Chief Financial Officer. Darcy, I heard you earlier comment that the innovation pipeline remains robust. And Shakes.
So I just wanted to dig into that a little bit. Obviously,
the mix of
the business increasingly is going to shakes. Shakes are doing well. You're obviously highlighting shakes, right? It seems as if the bar business is just Gradually not as much of a focus, let's say. So one, I don't know if that's correct.
And then 2, it's just when you think about innovation, are you speaking and Shakes. Kind of more to other variations of the shakes, be it flavors, what have you or bigger picture, The distribution works well, velocity has worked well in certain products and categories with the brand that you might extend
and Yes. Our focus is definitely on beverages, so both ready to drink and powders. And Chief Financial Officer. We have pulled away from bars at least domestically. We are still we still have a pretty strong bar business in the EU, and So we'll continue that.
But on the bulk of our business, you're exactly right. We're focused on beverages. Yes, Our innovation pipeline, I am incredibly excited about. We have really leaned into this area organizationally, and Chief Financial Officer. And I think it's really paying off.
So we hired a new lead, what we call VP of Growth. And
Chief Financial Officer. We've added to our insights team. We've expanded our R and D
team, really to focus on and Chief
Executive Officer of Ready to drink and powders, but
really focusing on ready to drink beverages because they are very complicated to develop. And Chief Financial Officer. And when you look at the pipeline, I would we still have a few new products that are coming out later this year. I've talked about the immunity claim, and Chief Financial Officer. But also this idea of expanding flavor, we it is working.
It's working from and shareholders. A household penetration and a buy rate standpoint, so we're going to continue that. I kind of put the pipeline into it's about flavor and function. And Chief Financial Officer. And we'll continue to bring news and excitement around flavor on both of our brands.
But then we will also and Chief Financial Officer. Really elevate the function and I think that's I think what I'm excited about is we're exploring new benefit areas. And Chief Financial Officer. We're really encouraged by the results of Cafe Latte where we added the benefit of caffeine. It's opened up new occasions to what has predominantly been a breakfast occasion.
Now we're seeing people drinking shakes in kind of that late afternoon. And Chief Financial Officer. And so leveraging that success, we're already thinking about other benefit areas that are potentially new to the category. And Chief Executive Officer, but it will be likely in the beverage category. So it will be either ready to drink
or powder.
Okay, super. And then second question is just on the distribution game plan, and Chief Financial Officer. You had the example earlier of a competitor in the space that has X number of SKUs and you have fewer SKUs, right? So and Chief Financial Officer. If you're, let's say, bringing that new innovation to market and you look at the current retailers you're in now, and Chief Financial Officer.
Would you say that kind of the closer in push on potential distribution gain, and Yes, as we think forward, call it the next through 2021, it's more about getting incremental shelf and Shifting customers, a bit more so than pushing into new customers and And getting new distribution from there. So really just a new customer versus TDPs within pre existing customers.
That's it. Thanks so much.
And Shireen. Correct. We see the bigger opportunity. The bigger immediate opportunity is just more space in our existing customers. And Chief Financial Officer.
However, new channels is definitely a growth area. We've talked about recently in the last year, we and Chief Financial Officer of Research and Development Solutions. And again, it's a great trial channel. We've talked about out of home, and Associates. Kind of like the convenience and and Chief Financial Officer.
Foodservice channels, which we really haven't gone there yet, and that's a big opportunity. And Chief Financial Officer. So I would say short, the biggest immediate opportunity is definitely more space where we already are, but then we're already laying the groundwork for the new channels as well.
And Chief Financial Officer.
The next question comes from the line of Ken Zaslow Treasurer with Bank of Montreal.
Hey, good morning, everyone.
Good morning. Good morning.
Can you talk about how your business case for DYMETYZ has and Company. It seems like there's seemingly more opportunity there than maybe you initially thought years back just kind of
and Our strategy on Narmatize is and Chief Financial Officer. Around expanding the brand to mass channels is definitely working. Our focus around and ISO 100 as the flagship product line and really rallying all of the dedicated media Around that line is also working. I think flavor, excitement around these licenses, and Chief Financial Officer. Again, it's bringing kind of new life.
But I think, again, we figured out the recipe that works. And and Chief Financial Officer. I think the old dimatize of only being sold in the specialty and channel, was just too limited. The consumer is everywhere and they shop across channels. And So, expanding it.
The specialty channel is still very important to us and will continue to be, But we think there's a ton of opportunities. The e commerce is doing incredibly well and then there's a lot of growth within that.
And Chief Financial Officer. With that as well as the performance in Premier, do you think that your 10% to 12% long term growth algorithm is more of a floor than an actual algorithm going forward. It just seems like That 10% to 12% is it seemingly more of a floor than anything else given the change between the dimatized business and the shelf space and the momentum there? And Chief
Financial Officer. I don't think it's a floor. I still think it's a good long term algorithm. We will we're and Chief Financial Officer.
It's still a new public company,
and so we will continue to evaluate if that is the right algorithm. There's been a lot of noise and Chief Financial Officer. Since we went public, as you guys know. So just but it has held. And this year, obviously, we're exceeding it.
And Chief Financial Officer. We will continue to look and assess given our brand portfolio if it still and Move forward and if we see that there's upside, we'll update it.
Great. Thank you. Be well.
Thanks. You too.
And Chief Financial Officer.
The next question will come from the line of Jason English with Goldman Sachs.
Hey, good morning folks. And CEO. Thanks for the question, for stopping me in. Appreciate it. And congrats on another good quarter.
I guess I'm going to play the other side of that question Whether or not what the right durable growth rate is for the business. It sounds like a lot of your growth right now is coming from distribution expansion. And And if we look at one channel where you've been present for a long time, the club channel, your business has slowed a lot and we're down into low single digit type growth. So can you give us first a sense of what's happening in the club channel? And then to play devil's advocate, Should we look at that as sort of the reference point of what sustainable growth is when the distribution tailwinds aside?
And Chief Financial Officer. Yes, great question. So this quarter, you're absolutely right, club channel was low single digits. But It really is more of a factor about what is lapping. So last year, and Chief Financial Officer.
The COVID stock up really affected club. It affected it early and more and than the other channels. So we're laughing at. If you actually look at April,
and Chief Financial Officer. Our business
is up 50% and very much in line with the rest and Chief Financial Officer of the business. I mean, obviously, last, it's a lot of big numbers. So but we're still and Chief Financial Officer. And we still see upside there. Because of our long standing partnership with Club and because and Chief Financial Officer.
We go to them with new innovation just like the rest of our customers, but they're great partners and Chief Financial Officer. And we've really built the business there and we still see and I talked about earlier that cycle where we enter we get trial through these other channels and and Chief Financial Officer. Many move and repeat into club. We see that as a long term driver and model for the business.
And Chief Financial Officer. Okay. That's helpful. Thank you. And then on competitive dynamics in the liquid space, rewind the clock to the time you're and There was obviously a lot of new brands coming in, retailers were pushing with private label, the growth attracts competition always and forever.
And And you're highlighting like the sustained very stellar growth there. Are we still in sort of proliferation mode in terms of competitors trying to come in and get a piece of this? Or have we begun to sort of shake out some of that and reconcentrate the category?
And Chief Financial Officer. I mean, you described it well. This is a high growth category. Every so we're always going to be there's always going to be a lot and Chief Executive Officer, and there has been. We have seen a little bit of shakeout on the specific 30 gram competitors, and Chief Executive Officer, which seemed to hit a height when we went public.
Some of them have been discontinued, but there are some that will stay. And Chief Financial Officer. I think the way we look at it is even through all of the and Chief Financial Officer. Coming in headed entries throughout the same the last couple of years, we still have been able to grow double digits. So, I hate the comment competition is good.
But Competition is not bad, especially when you're talking about a category that has such low household penetration. It means that
and Chief Financial Officer. People are driving new households.
They're spending. They're bringing new people to the category. And we think that we bring something different to the category. And so, I think that and then just on the private label comment, and Chief Financial Officer. Interesting enough, private label this quarter has seen some softness within liquids.
We're actually down and some of the private label retailers have seen some issues around quality and supply. And Chief Financial Officer. And so, I think they're understanding that this product form is complicated. And it's kind of what we've been touting for a long time.
Makes sense. Thanks a lot. I'll pass it on. Thanks.