Nightfood is pioneering a potentially multi-billion dollar snack category that could put them in the elite class of being a “category of one.” Establishing yourself as a category of one is the holy grail of marketing. In Nightfood’s case, the “holy grail” can be worth billions in market capitalization. And for a company trading at microcap levels, that may present an investment opportunity worthy of immediate consideration.
High risk and high reward? Absolutely…and the excitement is justified. Remember, brands that become a “category of one,” like Nightfood, get there because they create their own category, not by entering somebody else’s. In Nightfood’s case, they sell products that consumers are biologically driven to consume every day. In other words, NGTF solves a major consumer problem…and that’s the most critical aspect of turning ambitions into dollars.
Nightfood’s path to category control comes from having the insight, vision, and entrepreneurial spirit to create a nighttime snack arsenal that is set to force a tipping point in the hospitality sector. Nightfood is forcing every single hotel in the United States to make a decision. Are they on #TeamJunk or #TeamSleep?
If Nightfood can continue to grow hotel distribution by providing sleep-friendly snacks for hotel guests, the company will most definitely continue to receive interest from the global food giants who know how valuable the nighttime snack category can be.
NGTF is putting itself in position to own this space.
Creating A Category of One
Don’t rule out that possibility. Consumers and investors likely shrugged at other “category of one” brands. And many, especially the investors who missed out on huge returns, are sorry they did. “Category of One” all-stars include AirBmB (NASDAQ: ABNB), Cirque de Soleil, CarMax, Uber Technologies (NYSE: UBER), Netflix (NASDAQ: NFLX), and Medifast (NYSE: MED). You can probably think of others…maybe even some you considered early on but decided not to invest?
One-time long-shots can become billion-dollar enterprises.
Nightfood indeed has that potential. Their innovation has led to a “proof-of-concept” test with global food powerhouse Nestlé (OTC Pink: NSRGY) that could lead to international expansion.
Unlike other healthy options that can be chalky and tasteless, Nightfood snacks taste great. They average over 4.3 stars across over 10,000 online reviews.
But Nightfood delivers so much more than just great taste. Nightfood snacks are formulated by sleep and nutrition experts to be a better choice for anybody snacking before bed (hint, hint: most of us!) In fact, Nightfood is so good that their ice cream pints often outsell Ben & Jerry’s and Haagen Dazs in hotel lobby stores. Sometimes, it’s not even close.
So, don’t be misled by a $0.05 share price. Nightfood is doing the right things with the right products at the right time to drive potentially exponential growth in the back half of 2023 and beyond. Having first-to-market and first-mover advantage can accelerate their leadership position, validating the market and, perhaps more importantly, creating high entry barriers for subsequent competitors.
Yes, other players may want to enter the market, and some already are.
That’s not a surprise considering the size of the prize is well over $50 billion in the United States, and multiples higher globally.
In 2019, Nestlé launched a candy-type sleep aid called GoodNight. In 2020, Pepsi announced the launch of a “relaxation” drink called Driftwell. Both products are no longer on the market. In January 2023, Post Holdings introduced a cereal called Sweet Dreams which includes a “nighttime herbal blend.” Will Sweet Dreams last longer than the others? Nobody knows. What is clear, however, is that these global companies, with their massive and multi-million dollar research departments, identified the need for better options for nighttime snackers. And they aren’t the only ones.
Executives from global snack giants Mondelez (Oreo, Ritz), Kellogg’s, Pepsi (NYSE: PEP), and Unilever (NYSE: UL) have commented either on nighttime snack habits or the link between nutrition and sleep. There definitely seems to be a multi-billion-dollar niche category there, and many believe Nightfood has already cracked the code. The results are just starting to show, but only if you look closely.
Sleep-Friendly Snack Options Earning Attention
Look beyond the revenue to all the signs that Nightfood is a powerhouse in the making. Have you ever seen such a small company with such powerful partnerships and distribution?
In addition to their Nestlé relationship, Nightfood ice cream is already available in select locations of Courtyard by Marriott (NYSE: MAR), Hyatt House (NYSE: H), Holiday Inn Express (NYSE: IHG), Sonesta, and many other global hotel chains. And momentum behind those placements is growing. In March 2023, Nightfood announced it had attained qualified vendor status with Choice Hotels, which recently acquired Radisson. Their 7,500 hotels globally make them one of the largest lodging franchisors in the world, and Nightfood is being promoted to their franchisees as a better option for their guests, both as a product for sale in hotels, and as a give-away amenity.
Not surprisingly, sleep-friendly snacks can thrive in hotel retail. Independent point-of-purchase sales data from industry leader Impulsfy showed that in hotels where Nightfood was head-to-head with Haagen Dazs, and no other pint brands were sold, Nightfood captured an impressive 38% of pint sales against the legendary 60-year old global brand, outselling Haagen Dazs in many of those hotels.
Wait…how is this completely unknown brand almost selling pint-for-pint with Haagen Dazs, with zero advertising, and a higher average retail price??
The explanation is easy: Nightfood sleep-friendly snacks are perfect for consumers in hotels. Guests are in there at night, trying to figure out how to scratch that itch and satisfy those powerful biological cravings. They’re buying snacks for immediate consumption, and they know they’ll be going to sleep very soon.
From the hotel’s perspective, guest comfort is a top priority. That’s why they’ve invested billions to deliver the best quality sleep experience. That includes upgraded beds, mattresses, pillows, linens…blackout curtains, white noise machines, eye masks, and even ear plugs. Rightly so, good sleep is at the core of the hotel experience.
So why would they want to load their valued guests up with unhealthy and sleep-disruptive excess sugar, fat, and calories found in Haagen Dazs, Chips Ahoy, Klondike bars and the like?
It makes no sense for hotels to do that.
And yet they do it every night!
But now that’s changing. Because of the importance of sleep quality, it just makes sense that sleep-friendly snacks will soon becom industry standard across the entire hotel industry/
Nightfood is forcing the hospitality industry to ask themselves why the snack shops and vending machines in the 56,000 hotels across the United States are loaded with sleep-impairing snacks. Guess what? There’s no good answer.
Guest satisfaction ratings are impacted more by the quality of sleep a hotel delivers and less by how many different flavors of Doritos are in the lobby shop. And guests know they are better off without the tons of sugar, fat, and calories often consumed before bedtime.
Knowing that eating junk at night is a key contributor to poor sleep, hotel operators can now address the issue head-on.
HOTELS Magazine, in May 2023, reported on a published survey which showed frequent business travelers are unhappy with the snacks available in most hotel lobby markets. The fix is easy. For hotels, satisfying the 55% of guests dissatisfied with the typical hotel snack selection and the 92% wanting healthier snack options is just a mouse click away. Providing what guests want, more nourishing and satisfying snacks, is vital to maintain a high level of guest satisfaction.
Remember, every guest walking out of that lobby shop dissatisfied does more than lower potential brand loyalty; it has the potential to multiply by word of mouth. That combination, especially with digital content able to go viral in seconds, is a brand’s worst enemy. Thus, being proactive instead of reactive can be a critical competitive advantage. That’s no exaggeration considering the speed of viral messaging.
So, along the same lines, what will happen when more and more hotels step up their lobby markets and add Nightfood sleep-friendly nighttime snacks? You guessed right: other hotel chains will follow. In fact, many hotels are upgrading and expanding their lobby shops today. Of course, that can be excellent news to Nightfood and its investors’ ears and eyes. Why?
Pioneering The Nighttime Snack Category
Nightfood is pioneering what can be a massive category. Hotel distribution has the brand perfectly positioned to earn a significant share of America’s nighttime snack spend.
Obviously, only a small portion of the nighttime snack billions is spent in hotels. But hotels represent a critical strategic piece in the ability to control the category. Leveraging hotel distribution can position Nightfood to dominate the nighttime snack market because of the power of brand awareness and brand credibility. When a consumer sees Nightfood sleep-friendly snacks in all the major hotels when traveling, what will happen when that same consumer sees various nighttime snack options in the supermarket? Of course, Nightfood will have a major competitive advantage. That advantage is already accruing to Nightfood.
And now,
as a result, the largest snack companies in the world are being forced by this tiny company to weigh this strategic market opportunity (and risk). Some estimates show over $50 billion is spent annually on nighttime snacks. Other estimates peg the market at closer to $65 billion.
A recent Sleep Foundation study that showed the average American adult snacks before bed 3.9 times per week. Knowing that there are almost 260 million adults in the USA, it’s easy to do the math and see that there are already over one billion snacks consumed before bed every week. And that number keeps growing.
Whichever set of data you believe, there’s no argument that billions in snack revenue are now at stake. More importantly, there’s the opportunity for one brand to own the nighttime snack occasion.
And the big snack companies know it…they’ll all want to be at the top of the category. Like so many consumer goods categories, you can expect that only one brand will dominate while the rest fight for the scraps.
Which global food conglomerate will own that dominant brand and be the category king?
Nightfood Is Getting Baked Into This Opportunity
As a category-of-one, Nightfood is now staking its territory. They recently introduced cookies in addition to their ice cream. The mid-range goal is for hotels to have sleep-friendly versions of all the popular nighttime snack categories: ice cream pints, cookies, chips, candy, single-serve ice cream novelties, snack bars, and more. This would set the company up in a powerful strategic position. Deep and wide hotel distribution can set a powerful foundation for expansion into mainstream retail. Hotel distribution provides the awareness and credibility that serves as a significant competitive and strategic advantage over other brands, even those that might be launched by much larger food companies.
Nightfood announced earlier this year it was entering a proof-of-concept test phase with Nestlé START and CO. Iberia.
The objective of Nestlé START and CO is to “identify and select startups that want to grow by exploiting synergies and thus create new paths and future businesses in partnership with Nestlé.” Remember, Nestlé is the largest food and beverage company in the world. If Nightfood starts to gain traction and has a relationship with Nestlé, things could get very interesting.
But while all the above are reasons to enjoy NGTF products and appreciate the investment opportunity, there’s more to the story, including the potential for a quick and significant increase in high-margin revenue.
Nightfood recently announced that an international hotel chain with hundreds of locations in the United States has begun testing Nightfood cookies as a check-in amenity across the country.
If this pilot test is successful, that chain is expected to launch Nightfood nationally as a check-in giveaway in all their hotel locations.
The best part about amenity revenue like this is that the hotel would be buying in bulk and then giving the product away to guests. That means much faster and more predictable income than securing retail placement in hotel lobby shop stores that might sell a few units per week. If launched, this initiative is expected to generate millions in annual recurring revenue.
But wait, there’s more…
That means that every month, potentially hundreds of thousands of frequent travelers would receive a Nightfood cookie as a gift at check-in. This can have a significant impact on brand awareness, company awareness, and accelerate adoption in lobby shops across the industry.
Oh, and the wrapper on every cookie has a link to Nightfood.com and shows the NGTF ticker symbol for potentially interested investors.
A Tasty Play as a “Category Of One”
Here’s the bottom line: As a “category of one” company, Nightfood presents an extraordinary ground-floor investment opportunity. Certain investors famously laughed off companies like AirBnB, Uber and Netflix. They learned an expensive lesson. Many won’t make a similar mistake given the chance, and with Nightfood, they may be getting another similar opportunity.
This company has significant retail placement in the hospitality sector, is testing with the largest food company in the world, and is pioneering a new category in a market that already generates over $1 billion in consumer spend weekly.
Global food and beverage companies don’t typically launch categories. They prefer to let a category develop a bit, ensure that there’s consumer demand, and then swoop in and enter the category through acquisition.
If Nightfood keeps racking up hotel partnerships and distribution, investors shouldn’t be surprised if companies already exploring the space, such as Nestlé, Mondelez, and Kellogg’s, among others, came knocking on Nightfood’s door for a partnership, minority investment, or outright acquisition offer. It would be the fastest way for any of those companies to put themselves in position to dominate the category.
Most important to Nightfood’s investment thesis is that it’s likely only one brand will dominate the sleep-friendly nighttime snack sector.
The rest will end up fighting for the category scraps.
Considering Nightfood’s position as a category of one right now, the Nightfood brand is in a powerful strategic position. Nightfood may be poised to capitalize on their “category of one” status, like so many other companies that have now become a household name.
Investors in many of those companies are now enjoying their multi-billion dollar valuations. And that history can likely repeat.
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