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Innovative Food Holdings, Inc. (IVFH-OTC:BB) |
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July 2, 2010 Issue |
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The Most Powerful Name In Corporate News and Information |
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CURRENT ISSUE | COVER ARCHIVES | INDEX | CONTACT | FINANCIALS | SERVICES | HOME PAGE |
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A Technology Driven Gourmet Food Platform With Multiple Sales Channels, A Partnership With One Of The Leading Foodservice Providers In The USA And Potential Web 2.0 Initiatives Is Giving Innovative Food Holdings, Inc. Multiple Opportunities To Grow Value For Shareholders |
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Innovative Food Holdings, Inc., leveraging it’s technology driven gourmet food platform and the web, is in the business of marketing and selling the highest quality gourmet food through its wholly owned subsidiaries
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Interview conducted by: Lynn Fosse, Senior Editor, CEOCFOinterviews.com, Published – July 2, 2010
Mr. Klepfish: Innovative Food Holdings was formed on the premise that chefs want the highest quality food at a competitive price, as direct as possible from various food sources across the world. We started by selling items directly to chefs and then continued to expand our reach to retail and now we sell to over 12,000 different high-end locations across the United States. These locations include some of the finest restaurants, hotels, country clubs, and other premium hospitality establishments. We sell anything from fresh fish and game to high-end specialty items and other perishables across the US. In the last year and we have expanded our line into the retail space. We launched on Amazon, and we also recently launched our own website and continue to look for innovative ways to expand our reach within the gourmet market. Our company is divided into food service and retail. On the food service side, we have a partnership with one of the largest food service providers in the United States, pursuant to which their sales force introduces our products all across the United States. On the retail side, most of our sales now are through Amazon, but we continue to have discussions with other potential partners in terms of expanding our reach on the retail side and, of course, we sell through our subsidiary’s web site, www.forthegourmet.com.
CEOCFO: Why order from Innovative Food Holdings? Mr. Klepfish: The best way to answer that question is through a story that we like to tell. One of the chefs to whom we sent fish, called up and said, “Hey, what is wrong with this fish, it doesn’t smell like fish”? We responded, “wait a couple of days and it will smell like fish.” The point of the story is that it highlights the freshness and the quality of our products. When we started, we were one of the few companies that were doing this. There were certainly other competitors, but in terms of the over 3,000 products that we sell, we are probably the only one-stop-shop where chefs know that they are going to get the products they want at the highest quality. To answer your question; it is the quality of our products and our large and expanding selection of products. Our customers know they can order anything from us, because even if we don’t carry it, if it is available somewhere, we can locate it for them. There is also a second reason and that is our customer service. This is something that is very important and separates us from the rest; our customer service is handled by chefs. We have on our team people that have been chefs at some of the finest dining establishments in the United States. We also have a Level II Sommelier on our team and a variety of other talented team members, all of whom are very highly educated in the culinary world. Our customer service team interacts with the chefs on a regular basis, so there is a high level of both customer service and quality and the Chefs we sell to have a high level of confidence that they are going to get what they need.
CEOCFO: Is there a greater need for your products in smaller markets or in the big cities? Mr. Klepfish: I would say that the big cities are less of a market for us, because generally things are more readily available there. However, as we continue to strengthen and expand our offerings, sales in the bigger cities have continued to rise. I believe this is because we offer conveniences which includes both our premium chef driven customer service and the fact that our customers know that they are going to get the best quality, because we stand by every single one of our products. As a result, our customers, new and old, look to us for the quality, the latest products and product trends and the customer service and selection they crave. It is very simple. Consumers can go to five, six, seven or ten different suppliers in a big city market to try and satisfy all of their needs, or, alternatively, they can come just to us to get everything they need and know that they are going to get the freshest products of the highest quality supported by premium customer service. In the long-run it makes sense both economically and professionally with respect to what they offer their customers.
CEOCFO: Give me an idea of one of the most popular products and some of the most innovative products that you sell? Mr. Klepfish: A very popular line is our cheese line of over 200 freshly cut and whole wheel cheeses delivered fresh. Also, one of the latest trends is molecular gastronomy and we have a full line of products in that area. In addition, our product lines include a full line of game, meats, and other more exotic meats such as Boa and Alligator. Our fresh lobsters, delivered live, are also popular as well as our full line of unique specialty products many of which cannot be found elsewhere. Another example of one of our unique products is our 100-year old aged vinegar - which is not something that you are going to go buy in a grocery store. We sell over 3,000 products on the food service side. On the retail side, it is a bit less than that because not all products have yet been what we call “retailized.” One important thing about the retail line is that the product you receive is the exact product we sell to many of the finest chefs in the world on a regular basis - so you know that you are getting real chef tested and chef approved products of the highest quality.
CEOCFO: How do you manage the logistics of supplying such a diversified line of products? Mr. Klepfish: We run a sophisticated technology driven logistics operation and the customer, does not see any of that, which is what we want. They just get the product. There is a lot of work behind the scenes that is put in by our logistics team and the logistics infrastructure behind the team. If necessary, depending on the situation, we will go to amazing lengths to make sure the chef gets the product he needs including, driving several hundred miles to hand deliver products to the chef himself.
CEOCFO: How do you ensure the quality and freshness? Mr. Klepfish: The suppliers that we work with are very thoroughly vetted. We get hundreds of products to review on a monthly basis and we have a standardized tasting process with specific criteria, which includes extensive tasting and evaluation by our in house team. Historically, we will only end up adding to our line approximately 10 percent of the products we review. Since we stand behind every product, if there ever is an issue, we quickly investigate exactly happened. So it is a question of being proactive, making sure the quality is there initially and then pro actively acting to make sure that if there is an issue that it gets addressed immediately. Of course, if the issue happens too many times and we don’t feel that the supplier is maintaining our high standards, that supplier will be dropped. We clearly have been very successful in maintaining the quality of our products as evidenced by our return rate being an extremely low rate of approximately only 1.5%.
CEOCFO: How is business today? Mr. Klepfish: In the first quarter of this year, sales were up over 40% over last year and we executed very well and business continues to be good as we approach the end of the second quarter.
CEOCFO: What affect has the overall economic climate had for your customers and your company? Mr. Klepfish: Actually, as strange as it may sound, in some ways it benefits us on the retail side. I think what is happening is that people still want quality food, but some people are unwilling or unable to pay the cost of going out to a restaurant, so they are buying restaurant quality products from us and then cooking it themselves. We have had unbelievable success in being able to really perform well through this economy. Last year’s sales were up by about 10%, this year’s first quarter we were up approximately 40%, and that was in a really tough economic environment. One of the ways we were able to accomplish that growth was by working hard to increase our customer base which we did, by approximately 19%, to over 12,000 end user customers. In general, our entire team has done a great job. Our team of culinary-trained chefs have done a great job of communicating our message and our partners have done a great job of getting the word out about us. That being said, we continue to strive to do even better. We have only reached a small amount, percentage-wise, of what is out there, and we think we can go ahead and grab parts of those additional markets as well, while continuing to increase our market share in our existing markets. On the retail side, from an economic environment perspective, it is interesting in the sense that people continue to look for the highest quality products from a source they can trust. Furthermore, from an economic perspective, a lot of the various products that in the past might have been carried in larger items or maybe introduced to the supermarkets or other retail locations, are not getting there because it is not cost effective for supermarkets to carry only small inventories of these types of products, whereas that is not an issue for us. Accordingly, we benefit because we do not have the same challenges that the supermarkets face in that regard.
CEOCFO: How do people learn about Innovative Food Holdings? Mr. Klepfish: There are some web-related ways of getting the word out. Certainly, on Amazon we have had success and anyone can see our domain name on Amazon, which is forthegourmet.com. In terms of future activities and getting the word out, we feel we have some very innovative ways of getting the word out and leveraging our position in the marketplace to really do some interesting things that have not been done in this market. We believe this will potentially allow us to generate sales of products that are under the For The Gourmet line. In terms of whether or not our website, forthegourmet.com, is going to be found, to us the most important thing is that we generate revenue on the retail side. So if it is through forthegourmet.com or through Amazon, or through our other partners, the key is generation of revenue. We feel that in the long run our strategy will result in revenue generation from both our retail partners and from the direct sales on our website. In terms of getting the word out about Innovative Food Holdings as a company, we feel that the best way to get the word out is to be successful in our business and we believe that success, especially on the retail side, when combined with the right PR and right message will enable more people to learn about us as a company. In the long run we believe this strategy will result in a focused approach to building value for our shareholders. We feel that we are beginning to see some traction in that regard including some interest and communications from various media outlets that have begun to take notice of us as a result of our retail line.
CEOCFO: Are there products you are looking to source or any type of ancillary products that you might consider adding? Mr. Klepfish: The products that we know about that we want to have a source for, we generally already have a source for. We are always looking for additional sources and always looking to improve our product line by looking for better products at a better price. But certainly in an existing product that we are sourcing already we are very loyal to our suppliers and as long as it continues to make sense from a business prospective we will continue to use our existing suppliers. Typically speaking, if we have a source for a product and we are comfortable with the quality and the price, we generally stick with that supplier as long as that supplier maintains its standards. In terms of adding products, we have a dedicated procurement department that is constantly looking for new products and we are very active in that regard and most of our products are sourced in that manner. Another interesting way that we find new products is through our Chef customers. Because the chefs know that we only provide the highest quality products and that we really know our products, they will tell us, “Hey you know, you guys should check this out.” So sometimes, our products are by way of referral by our chef customers and then we start carrying that product. So we truly are on the cutting edge in terms of what is out there with respect to the latest products. Finally, we encourage any small or medium sized artisan type of supplier with any innovative type of product that we could add to our product line to contact us about their products. So essentially, we are always interested in looking at additional products.
CEOCFO: What is the financial picture like for Innovative Food Holdings today? Mr. Klepfish: Revenue-wise we had record revenues for 2009 of $7.6 million. Also, 2009 was a watershed year for us as, for the first time, we had close to $200,000 of positive income from operations versus a loss of about $500,000 the previous year. So we had a positive turnaround of over $700,000 in income from operations. We are very pleased with the Company’s 2009 performance in terms of revenues and operating profitability. We are also pleased with the beginning of 2010 with respect to our revenue growth and operating results for the first quarter of 2010 including our record quarterly operating cash flow. For 2010 and beyond we are looking to further improve our revenues and to further improve our profitability. We are also looking to further improve our market cap to allow the company to grow both in terms of inherent shareholder value as reflected in operations and earnings and in terms of core shareholder value as well as with respect to stock price appreciation. Of course, you understand that any discussion about our future and our plans for further growth represent our current projections, which may not necessarily occur, and whose success can be affected by many factors both in and out of our control.
CEOCFO: Why should potential investors pick Innovative Food Holdings out of the crowd? Mr. Klepfish: First, we offer a unique and very interesting play for investors. We are probably the leader in our market place, the high-end gourmet food provider, and being a market leader is a very important criteria for finding hidden value. While we are a small company in terms of revenue, in terms of the type of market we are in, we are in a really good place in that market, so in that high-end gourmet market we are definitely someone who is the leader in that space. As a microcap investor for over 20 years, I know this is a key criteria in choosing a company to invest. Second, we are showing good revenue growth in an industry in which revenues have been declining and has been in an historical slump over the last several years. So we are growing faster than the industry and that is another key investment criteria. Third, as evidenced by the first quarter of the year our growth rate has now accelerated and strong growth rate is another key criteria for selecting a stock or company in which to invest. Fourth, we believe we have a really good management team who have done a great job of turning around the company and making it operationally profitable and we believe we are clearly positioned to take advantage of all the work put in over the last several years to turn IVFH into a lean and efficient company. As a result, we are well positioned with a strong management team, which is another key item when looking to invest in a company. Fifth, we are more then just a seller of gourmet food. We have invested time, capital, and energy into creating a technologically driven gourmet food platform, which we have only now begun to expand and leverage into other areas, and new growth area potential is another key investing criteria. Finally, we are partnered with one of the key leaders in the food service industry, a $20 plus billion dollar company, and we recently extended that contractual relationship for another three years, and having strong business partners and industry relationships is another key investment criteria. On the retail side, we feel that we can take our same platform and further expand our reach into the market thereby growing the reach of For The Gourmet. This, of course, will provide more “eyeballs” in terms of seeing forthegourmet.com and inasmuch as IVFH is the parent company behind forthegourmet.com, we believe this has the potential to allow significant additional exposure to our stock. In addition, on a more speculative note, we continue to have discussions with several potential partners relating to potential food related opportunities in the web 2.0 space, with some of those discussions involve cutting edge Web 2.0 projects which would really be something different then what we have done until now. Although we cannot be certain that anything will result from those discussions, it is something we are very excited about as a potentially new and exciting aspect to the company.
To summarize, I would say that the
reasons we are interesting to investors is (i) we are a company that is
growing revenues, (ii) we are a company that is growing profits, (iii) we
are a leader in the area in which we operate, (iv) we have a strong and
seasoned management team, (v) we have a very unique platform, which we can
expand to include many different new markets, both on the retail side and on
the food service side and (vi) although this is not something we currently
talk about much because discussions are still ongoing, but with respect to
our web 2.0 activities we believe that we have real potential to add
shareholder value through those activities and, as a result, we believe
there is good reason for another different segment of the investor world to
take a good look at our stock as a potential investment as those activities
accelerate. Finally, we feel that the way we are currently structured in
terms of our corporate structure with the various subsidiaries, and with the
various and distinct business operations in each subsidiary, further allows
for a potential variety of exit strategies and potential shareholder
appreciation in a number of different ways. |
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Last year’s sales were up by about 10%, this year’s first quarter we were up approximately 40%, and that was in a really tough economic environment. One of the ways we were able to accomplish that growth was by working hard to increase our customer base which we did, by approximately 19%, to over 12,000 end user customers. In general, our entire team has done a great job. Our team of culinary-trained chefs have done a great job of communicating our message and our partners have done a great job of getting the word out about us. That being said, we continue to strive to do even better. We have only reached a small amount, percentage-wise, of what is out there, and we think we can go ahead and grab parts of those additional markets as well, while continuing to increase our market share in our existing markets. On the retail side, from an economic environment perspective, it is interesting in the sense that people continue to look for the highest quality products from a source they can trust. - Sam Klepfish |
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