Foodist 3 | Overview

According to a study by German information and telecommunication association BITKOM, as many as 15 million Germans shopped for groceries online in 2014. This corresponds to 28 percent of Internet users in Germany and to a threefold increase since 2011.

Our company's growth reflects this very development: Demand for our main product, the Foodist Box that contains 6-8 high-quality delicacies and costs €24 per month, is constantly increasing. 

Foodist Gourmet Box

Development since Our First and Second Crowdfunding Campaign in May 2013 and March 2014

Some Companists are already familiar with Foodist because we launched two previous funding campaigns on Companisto in May 2013 and March 2014.As these campaigns provided us with investments of €175,000 and €295,200 respectively, we experienced rapid growth in the last 2 years.

When we launched our first crowdfunding campaign, we had 350 Foodist Box subscribers and monthly revenues of €9,600. When we launched our second campaign, we counted 1,600 monthly subscribers and €45,000 in monthly revenues.

Today, we have as many as 14,000 monthly subscribers and are generating a total of €450,000 in net revenues each month.

Comparison with Subscribers and Revenues at the Launch of the Previous Crowdfunding Campaign

With revenues of €1,438,157 in the first quarter of 2015, we have almost reached our annual revenues of 2014 and increased EBIT by €68,117. In 2015, we plan to increase revenues by over 400 % compared to last year. In other words, we plan to surpass our projection from the last crowdfunding campaign by almost 30 %.

Comparison of Projected Figures and Actual Figures and Adjustment of Projection

In spite of a higher number of subscribers, the average subscription period has increased from 10 months to 11.09 months. As we continuously evaluate the 2,000 feedback questionnaires we get every month, we can constantly improve our service and increase the average subscription period. We are also increasingly adapting the box to customer demand.

Moreover, we have managed to improve our contribution margin (the difference between revenues and variable costs). Whereas customer acquisition costs used to be approximately €12 and our profit per subscriber used to be €53 in 2014, these figures changed to €11.09 (customer acquisition costs) and €78.64 (profit per subscriber) in 2015.

Positive Development of Contribution Margin

If we deduct the costs of products, shipping, packaging, handling, and taxes, a contribution margin of approx. €8 remains, which is an increase of €1.50 per box and month compared to 2014. Revenues and the contribution margin per subscriber further increase when customers reorder individual products from the Foodist Box or purchase special boxes such as the Ladies Box, Gentlemen Box, or snack boxes.

Customer Lifetime Value Significantly Exceeds Customer Acquisition Costs

We now want to launch another equity crowdfunding campaign because we have identified major opportunities for further growth and have a strong vision for the future of Foodist. To realize this vision, we need investors that truly believe in our company, so we are turning to the crowd for the third time.

We plan to focus on additional business segments for which we need to make additional investments. Our Foodist Handel unit has recently reached the proof-of-concept phase, and we now want to expand this unit. Through this unit, we are exclusively selling the best products from our Foodist Box to the German retail industry. On 1 June, we also launched a new subscription box, our Foodist Healthy Box. We will be able to achieve considerable further growth faster through another financing round. 

In the future, we will focus primarily on our company's profitability in addition to revenue growth. This does not reflect the philosophy of many VC investors with whom we negotiated. Indeed, such investors focus mainly on revenue growth and fast internationalization, which would have a very negative effect on our profitability. At the same time, the loss caused by such a strategy would make our company more dependent on the investor for follow-up financing. Consequently, we want to keep expanding Foodist with the Companists' help and establish different revenue models on the market in order to multiply our potential profits. 

The Foodist Gourmet Box 

Foodist's core product is the Foodist Box subscription. Our subscribers receive a box containing 6-8 high-quality delicacies on the 15th day of each month and may thus constantly look forward to receiving the next gourmet surprise soon. Many products in the Foodist Box are not yet or not easily available in Germany, so they are exclusively available to Foodist customers. These products include high-quality cooking ingredients, for instance spices and oils, and spreads, snacks, dips, and beverages. Moreover, they are made solely from high-quality ingredients and are often handmade with love. In each Foodist Box, we include a magazine that informs customers of the things that make our products special, of the producers, and of recipes in which our products may be used.

Our Foodist Box may be canceled via email or telephone on a monthly basis because it has no minimum subscription period.

But the Foodist Box is meant not just to be enjoyed by our customers, but also to be used as an extraordinary gift. Our customers use the Foodist Box for occasions such as birthdays, Christmas, weddings, work anniversaries, or simply as a creative gift.

Customers may select the first delivery date and the duration of the gift subscription themselves and may have a personal message to the recipient printed on a greeting card that is inserted into the box.

Our Delicacy Shop

The delicacies in the Foodist Box always surprise our subscribers. Indeed, many of our customers are so thrilled by our selection that they want to reorder individual products.

For this purpose, we are operating the Foodist delicacy store. In this online store, Foodist customers may reorder our products individually whenever they want. In this way, they may create their own boxes or simply reorder certain products.

Today, customers reorder approximately 20,000 individual products from our delicacy store each month.

In addition to the monthly Foodist Box and our delicacy store, we are offering changing seasonal boxes that customers may purchase separately. Our customers use these boxes both as a gift and for their own pleasure. The boxes can be divided into 3 main categories: special occasions (e.g., Christmas and Easter), seasonal topics (e.g., barbecue), and certain grocery categories (e.g., snacks).

During the Christmas sales period, we also attracted several renowned B2B customers that ordered several thousand packages as a gift to their employees and customers. 

Foodist Handel

Development of Revenues of the Foodist Handel Unit

Through our Foodist Handel wholesale unit, we sell the best products from our boxes to select supermarkets, gourmet shops, hotels, and restaurants. On average, retailers order goods worth €300-400 per branch, and we have already placed more than 50 products in retail stores through this channel. We secure exclusive rights to the distribution of all products in Germany, and – for the first time – we delivered over 14,000 individual products to more than 100 different supermarkets and gourmet shops in May.

Our selection of products for the Foodist Handel unit is based on the over 2,000 feedback questionnaires that we receive from our customers on a monthly basis and on the reorders in our delicacy shop. Using these data, we can make reliable predictions about a product's success on the German market. 

Sales Channels

Planned Product:

In July 2015: The Foodist Healthy Box

Apart from gourmets/foodies, there is another large group that is highly interested in high-quality groceries: the healthy/athletic target group. Throughout the last few years in particular, this group has kept growing, so we also want to offer this attractive target group a subscription box from July 2015 onward: the Foodist Healthy Box.

The box will also cost €26,90 and contain 6-8 high-quality products. In order to achieve most efficient use of our office and warehouse capacities, this box will be shipped on the first day of each month.

Just like the normal Foodist Box, this subscription box will not have a minimum duration and may be canceled via email or telephone on a monthly basis.

The Foodist Healthy Box

To retain our competitive edge over the long term, we must constantly improve both our products and the processes behind them. The first nationwide provider of gourmet subscription boxes in Germany, we certainly have first-mover advantage, but we do not want to sit on our laurels.

Unique Selling Propositions at the Product Level

At the product level, our unique selling proposition is the exclusiveness of our products. Whereas some of our competitors use industrial products by major brands like Lindt or Berentzen for their boxes or use similar products in consecutive boxes, we place emphasis on product scouting and have agreed on many exclusive agreements for the German market with various producers. We test far more than 2,500 products each year, yet as few as roughly 80 products make it into one of our 12 monthly boxes. So far, more than 300 producers have become our partners, and this number increases each month. Therefore, no producers or product categories appear in two consecutive monthly boxes.

In the case of international producers in particular, we are often the first German company to order the company's products. Consequently, we can ensure maximum exclusiveness, are independent of our competitors in terms of pricing, and can achieve very attractive margins in our delicacy store.

Unique Selling Propositions and Scalability at the Process and Technology Levels

Logistics Process

In addition to optimizing our product, we focus on optimizing our processes. We have designed an internal logistics process for our 2000 m² warehouse and implemented a modern inventory management system this year, so we are already able to ship up to 50,000 orders per month. As a result, we are well prepared for future growth and able to significantly scale up our business model.

IT and Business Intelligence

Our IT and business intelligence department is another unique selling proposition. We have analyzed our subscribers very carefully, so we can both improve our product on a regular basis and increase revenues through personalized marketing. In terms of product improvement, our feedback questionnaire, which 15-20 % of customers fill out on average, has proven to be particularly helpful. When we are conducting analyses, we are now able to filter the customer lifetime value for various marketing campaigns, customer groups, or regions, thus making our marketing activities more precise. Moreover, we can provide customers who often reorder products from the same categories with personalized offers in newsletters.

Our customers are from various age groups, regions, and professions. Still, we have a core target group whose members are mostly women (56 %), are approx. 30-50 years old, and have earned an academic degree. Most members of our target group live in urban regions, and approx. 24 % of our current customers are from Berlin, Munich, and Hamburg combined. Nonetheless, we have many customers in more rural areas as well. The largest proportion of our customers is from the German states of Bavaria and Baden-Württemberg. In both of these states, we have many customers in rural areas as well. We have purposely kept the price barrier low in order to reach a larger target group than we would have reached in the luxury segment.

Target Groups

Generally speaking, we have identified three trends within our target group:

1. A lack of time: Consumers in our target group have less and less time to do the shopping and to prepare their meals.
2. Quality awareness: At the same time, the quality and ingredients of groceries are becoming increasingly important to consumers.
3. Individualism: Just like their clothes, people want their food to be as individual as possible (e.g., vegan, paleo diet, superfood).

By offering additional special-interest boxes, we want to focus on the last of these three trends in particular.

Market (Germany)

With a market volume of more than €165bn in 2015, grocery retail is the largest segment within the German retail industry. At the same time, grocery retail is the last major segment not to have shifted its main focus from offline to online sales. The Samwer brothers are not the only ones who have identified "food & groceries" as a future growth market in e-commerce and who have made high investments in several business models within this market; many other start-up investors have done so as well. In the first three quarters of 2014 alone, a total of almost €1.5bn was invested in food start-ups from Europe and the U.S. Since its launch in 2012, Foodist has been successful within this industry.

According to a BITKOM study, as many as 15 million Germans shopped for groceries online in 2014. This corresponds to 28 percent of Internet users in Germany and to a threefold increase compared to 2011. 

 Foodist Handel Products at "Frischeparadies" in Hamburg

Market (International)

Compared to the markets in France, the UK, and Switzerland, the share of Internet sales in the total market volume of the German grocery retail industry is still very small. Whereas online grocery sales in Germany had a market share of only 0.4 % in 2014, consumers in the UK had already shopped for 5.1 % of all groceries online in 2013 and spent more than £8bn on these groceries.

As we are already purchasing delicacies from all over Europe, our business model may be internationalized very quickly. In fact, we hardly have to expand our product range; we just need to consult with experts for the individual countries.

Consequently, we are already shipping our products to Austria and Switzerland, where there is no language barrier, and want to continue our international expansion in 2016.

Team Overview

Ole Schaumberg (co-founder, CEO) is in charge primarily of operations, which include logistics, warehouse management, purchasing, sourcing, and customer service. In addition, he supervises the area of business intelligence and the Foodist Handel business unit. Prior to founding Foodist, Ole worked for venture capital firm e.ventures and held various positions at OTTO Group.

Alexander Djordjevic (co-founder, CEO) contributes his five years of experience working for coffee and confectionery retailer arko to Foodist. He had already completed a commercial apprenticeship with special focus on marketing and communication at arko before he started a dual degree program at the Hamburg School of Business Administration. The creative mind of Foodist, he is in charge of marketing and corporate communications. Apart from marketing strategy, he supervises the important area of human resources at Foodist.

Christoph Bednarz (CFO) supervises the finance and accounting department, and he contributes his valuable knowledge of internationalization processes in the online grocery industry to Foodist, which he gained in his previous position as the global head of finance at HelloFresh. Because of his other previous position as an investment controller at Rocket Internet, Christoph also possesses an in-depth knowledge of the investors' perspective and an impressive network of investors. A former international controller at Groupon, he was also involved in the NASDAQ IPO of Groupon among other things.

Kathrin Schröder (Head of Marketing) supports Alexander in planning and conducting the marketing activities of Foodist. She has been working in online marketing for more than five years and specializes in performance marketing. While working for her previous employer, MOO, she supervised all performance marketing activities in five international markets and was in charge of all marketing activities in Germany. Prior to that, she worked for Hostelbookers and Viagogo.

Jessica Neumann (Head of Logistics and Warehouse) is responsible for warehouse and logistics management and contributes her eight years of experience in logistics, order fulfillment, and operations to Foodist. Before joining Foodist, she worked as a strategic project manager at Hermes. Prior to her job at Hermes, she was a consultant at Accenture and Acer Computers.

The third co-founder of Foodist, Andreas Brandt (61), has decided to step down from management with effect from 1 July 2015. Still, we are glad that Andreas will keep close ties with Foodist as an active shareholder and advisor and that he will keep contributing his experience and his network.

Use of Capital

General Business Development

Within roughly 2.5 years, we have developed a customer base of 14,000 active subscribers and 50,000 customers, so we are one of the largest subscription-based commerce companies in Europe. During the 2014 Christmas sales period, we even shipped as many as 25,000 orders each month.

In 2015, we also managed to expand our Foodist Handel unit after having focused mostly on retail customers during the preceding Christmas sales period. Indeed, we delivered our products to more than 120 supermarkets and delicatessen stores within one month in 2015. Our next steps will be the production of displays for retail and the expansion of our sales team. We will launch the Foodist Healthy Box in July 2015 and plan to increase its number of subscribers to approx. 2,000 by December. Starting in July 2016, we will expand our business to the Benelux countries.

When our appearance on the German investment show "Die Höhle der Löwen" [Dragons' Den] was broadcast in September 2014, it significantly increased awareness of the Foodist brand and proved that consumers really like our idea of a monthly gourmet surprise box. Now, more than eight months after the broadcast, we have also noticed that customers attracted through our TV appearance are as loyal as the customers we had already attracted before the broadcast.

Human Resources

In the last few months, we recruited some experienced employees for middle management. Consequently, the areas of finance, IT, purchasing, marketing, and logistics are now supervised by experts that have gained between five and ten years of professional experience in their areas. During the remaining months of 2015, we plan to hire between three and eight additional employees with lower starting salaries, depending on the development of our business.

Additional employees in customer service and in our warehouse in particular have led to more reliability, faster order processing, and higher levels of customer satisfaction.

From 2016 onward, we will need to hire new employees primarily for our international expansion. However, we will keep our international teams small at first because we plan to control many areas, such as finance, purchasing, logistics, and IT, from our Hamburg headquarters and hire only marketing and customer service staff for our offices abroad. Moreover, our future personnel costs in our warehouse and in customer service will depend largely on our future growth, for the more customers order our products, the more work there will be in these areas.

Processes

We used the past six months to further automate our internal processes and to prepare Foodist for future expansion. The largest investments we made were for our warehouse because we implemented Pixi, an inventory management system, which cost us a medium five-digit amount. Ever since we implemented this system, we have been able to manage the areas of purchasing, warehouse, sales, and accounting/payment more precisely and more efficiently. 

Contacts with Supermarkets, Delicatessen Stores, Hotels & Restaurants

We are increasingly focusing on selling our selection of international delicacies to supermarkets, delicatessen stores, hotels & restaurants. No matter whether we are talking about chocolate bars, mixed nuts, or crackers, please tell us if you know any shops that may be suitable for selling Foodist gourmet products.

Product Scouting

You certainly know some great gourmet products that you discovered at street markets, in blogs, or at trade shows and that have the high quality Foodist is looking for. We are taking our customers' product suggestions very seriously and are grateful for any suggestions we get.

Spread the Word!

Like, share, comment... We are very active on Facebook and Instagram and are looking forward to your participation on these social media. 

Foodist GmbH

Große Elbstraße 145 a

D-22767 Hamburg

investor-relations@foodist.de

www.foodist.de