Boosh Plant-Based Brands Inc. (CSE: VEGI) (OTCQB: VGGIF) (FSE: 77I) is an emerging plant-based company that has been executing on a multi-faceted growth strategy and we believe the opportunity has attractive leverage to a rapidly growing vertical.
2021 has been a banner year for Boosh and we believe the business is well positioned for growth in 2022 and beyond. Through a series of strategic alliances and acquisitions, we believe the company’s growth profile has significantly improved and will monitor how the story continues to advance.
From sourcing to distributing, Boosh is well positioned to capitalize on the plant-based market, and we are favorable on the structure of the business. Consumers can find the company’s products at more than 400 stores in Canada, and we are favorable on the grocers that carry the product line. Boosh has formed relationships with leading grocery chains like Safeway and Whole Foods and we consider this to be an important aspect of the story.
A Execution Story to be Aware of
At current levels, we believe that Boosh has a favorable risk-reward profile and visible growth catalysts. So far this year, the company has reported a series of important milestones and we want to highlight some of the most significant developments:
- In 2020, Boosh formed a strategic partnership with Beyond Meat (Nasdaq: BYND) to start using its plant-based inputs in Boosh branded products
- Last year, United National Foods, Inc. (UNFI) started to distribute Boosh branded products across Canada
- In a six month period, the number of stores that sell Boosh products increased to 400 stores
- Earlier this year, Whole Foods Canada made an initial order of Boosh Products
- In February, Boosh completed the acquisition of Vegan Canteen, a plant-based powdered cheese company
- Raised $2.875 million and completed a go-public transaction on the Canadian Stock Exchange
- During the summer, Boosh announced plan to expand in the US and this is a market that we are bullish on
- A few months ago, Boosh reported to have completed the acquisition of Salt Spring Harvest.
- Earlier this month, Boosh executed a share purchase agreement to acquire 100% of Pulse Kitchen Specialty Foods
Enhances Growth Prospects Through a Series of Acquisitions
Earlier this month, Boosh reported to have executed a share purchase agreement to acquire 100% of Pulse Kitchen Specialty Foods Ltd. The transaction represents an important milestone and is Boosh’s third acquisition in less than nine months. We are favorable on how the management team is executing on an organic and inorganic growth strategy and believe the sum of the parts of the acquisitions is more valuable than each standalone business.
Pulse Kitchen produces 100% plant-based gluten free cheese that is made from nuts, seeds, pulses and other high-quality ingredients. Currently, the product line is sold in approximately 250 grocery stores in Canada including Whole Foods, Healthy Planet, Nature’s Fare, IGA, Fresh St Market, Choices, Urban Fare, and Nesters.
In 2016, Pulse Kitchen opened a production facility in British Columbia (BC) and we are favorable on how the business has advanced since then. We expect Boosh to recognize substantial synergies from the acquisition and will monitor how the businesses are able to integrate in a way that creates more value for the entire business.
The terms of the acquisitions of Pulse Kitchen and the aggregate purchase price was $300,000 in cash and the issuance of 50,000 common shares. The cash portion of the transaction will be paid over a twelve-month period from the closing of the transaction, and we are favorable on the payout structure.
Boosh represents a differentiated play on the plant-based sector, and we believe that our readers should be aware of the opportunity. The management team believes that Pulse Kitchen’s product lines match up well with the product line that is associated with Boosh’s acquisition of Salt Spring Harvest.
In early 2021, Boosh acquired plant-based shelf stable vegan cheese assets from Vegan Canteen (VC). On top of the assets that were included in the transaction, the company made changes to the products to enhance overall flavor and we are favorable on how the management team has approached the deal.
In addition to the cheese products that VC has brought to market, the plant-based brand also developed a vegan gluten-free pepperoni that is expected to launch the first quarter of 2022. We are favorable on how the transaction expands the types of products that fall under the Boosh brand umbrella and expect the launch of vegan gluten-free pepperoni to sever as a catalyst for growth.
Forms Strategic Alliance with Beyond Meat
An attractive aspect of the story is related to Boosh’s relationship with Beyond Meat. Last year, the company formed a strategic alliance with Beyond Meat to use its input products in several of the products it sells.
According to the terms of the relationship, Boosh is allowed to use the Beyond Meat brand on the packaging of certain products. We believe Beyond Meat’s track record and the existing demand for its plant-based products will play an important role in how the co-branded products perform and gain traction.
Going forward, we will monitor how the double branded products perform when compared to the products that do not have the Beyond Meat branding. We are of the opinion that Beyond Meat will prove to be an attractive partner and believe our readers should be aware of the structure of the alliance with Boosh.
Secures Strategic Human Capital and Partners to Support Growth
A few weeks ago, Boosh reported to have appointed two people to fill key positions on the management team. The company reported to have hired Lilin Chen as the Quality Assurance and Production Development Manager and Maria Hussaini as Chief Financial Officer (CFO). We believe the focus on improving the human capital that is associated with the operation is an important aspect of the story and are favorable on the strength and diversity of the management team.
Concurrent with the hiring announcement, Boosh issued a corporate update and reported to have onboarded 50 new accounts in 40 days. After these additions, the number of Canadian grocery stores that carry Boosh’s products increased to 445 and we are favorable on how this number has been increasing.
Another important development that was included in the corporate update is related to how Boosh completed the packaging compliance requirements to allow for exporting and selling products in US. Next month, the company will start ship products to its US warehouse and will start to sell products on ShopVejii.com, a digital marketplace for plant-based and sustainable-living products that delivers in both Canada and the US.
Through ShopVejii.com, Boosh is already offering a home delivery option in Canada. In mid-November, the company will launch a home delivery service in US with ShopVejii.com and we expect this to serve as a catalyst for growth. Boosh has already completed all of the documentation that is required for its US food distributors and has sent sample products to Thrive which has started providing to their US clients.
Focus on the US Market is a Core Long-Term Growth Pillar
Boosh’s focus on the US market is a core pillar of the long-term growth strategy and we are favorable on how the management team has approached this opportunity. By retaining Thrive Natural Sales as its US representative, the company will benefit from having the services of a nationally recognized premier food broker.
We consider Thrive to be a strategic partner and are bullish on the growth prospects that are associated with the relationship. On top of providing food brokerage services, Thrive also provides an outsourced solution for national sales and supply chain management. We are favorable on the track record that is associated with Thrive and expect the relationship to play an important role in the growth of the brand.
Boosh’s Canadian food broker, Brandseed Marketing Inc., has played a key role in the growth of the number of stores that carry its product line. Over a six-month period, the food broker brought on 225 additional stores, and we are favorable on the sales momentum that is associated with the relationship.
Brandseed has a long-standing relationship with Thrive and we expect Boosh to find significant synergies between both distributors. The management team believes that Thrive will expedite growth as it should provide the business with the opportunity to introduce Boosh branded products to as many of the 40,000 grocery stores in the US.
Creating Value Through Several Key Growth Initiatives
Boosh is laser focused on executing on an expansion strategy that includes a four-prong revenue stream model, organic growth, mergers and acquisitions (M&A), a US expansion, and e-commerce. Going forward, we expect Boosh to announce additional bolt-on acquisitions that should prove to be accretive.
Currently, the management team is having discussions with other plant-based companies that are considered to be acquisition candidates. These businesses are looking for access to capital as well as a corporate infrastructure structure that is designed for growth. We are favorable on the track record that is associated with the recent acquisitions and believe the management team has taken a strategy approach to growth.
We are favorable on the markets that Boosh is focused on as well as the strategy the management team has to penetrate them. From making accretive acquisitions to forming strategic partnerships, the plant-based brand has an attractive growth profile and is an opportunity to be aware of.
When compared to other plant-based businesses, we believe that Boosh has a compelling valuation and is trading at a discount. Due to the growth of the brand from a distribution standpoint, we expect the company to report strong revenue growth in future quarters and will monitor how the brand continues to grow.
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