Steven Allen, Nutrition Capital Network02.15.12
As I am writing this, news media are all full of the news about Facebook filing for what is expected to be the largest Internet IPO of all time. I thought it was interesting that the most successful IPO of 2011, measured by return from the offering price, was GNC’s. GNC went public in April 2011 and was up 75% by the end of the year. This happened in a year that saw such popular technology companies as LinkedIn, Zynga and Groupon become public.
Overall in 2011, 125 companies went public, down from 153 in 2010 and fewer than half the number of companies that were going public in the boom years before the financial crisis. In addition to being a difficult year for public stock offerings in terms of the number of companies that successfully sold stock to the public, the aggregate financial performance of the 125 companies that went public was also not good. They lost almost 10% in value even though the broader markets managed to gain in value.
The strength of the public capital markets has a strong link to the ability of smaller companies to raise money. When venture capital companies and private equity firms can exit their investments through taking a portfolio company public, they are able to attract new capital as well as reinvest the proceeds of the sale of shares in new companies. So, it is refreshing and good news for our industry to see a well-known retailer having such a successful public offering.
An interesting article in the Wall Street Journal on January 27th looked at the approach of two multinational companies to nutrition. Holman Jenkins, editorial writer for the Journal, contrasted the approach of McDonald’s and PepsiCo. He made the interesting statement that McDonald’s has learned to live in symbiosis with its numerous activist critics who continue to try and lay the blame for the obesity crisis at the door of the eponymous fast-food giant. While McDonald’s has diversified the menu and made great efforts to inform consumers about the nutrient content of its products, the sales of their burgers and fries continue to grow impressively. In 2012 McDonald’s was the best performing stock of the Dow Jones Industrial Average.
Meanwhile, PepsiCo is committed to transforming the portfolio of products so that by 2030 sales of “Good-for-You” products will reach $30 billion, up from $10 billion in 2010. The markets have yet to embrace this strategy and a stagnant stock price has put the company under pressure to refocus on its core.
This presents an interesting opportunity for entrepreneurs with better for you nutraceutical and functional food products. The validation by large companies of the consumer interest in your products will make it easier to get and hold distribution. And, if you really have a big hit on your hands then a company like PepsiCo will be a potential acquirer as it seeks to build up its portfolio of healthy brands.
Steve Allen is with Nutrition Capital Network (www.nutritioncapital.com), a business that brings together entrepreneurs and investors to discuss the financial side of the dietary supplement and functional food business. He can be reached at sallen@nutritioncapital.com.
Overall in 2011, 125 companies went public, down from 153 in 2010 and fewer than half the number of companies that were going public in the boom years before the financial crisis. In addition to being a difficult year for public stock offerings in terms of the number of companies that successfully sold stock to the public, the aggregate financial performance of the 125 companies that went public was also not good. They lost almost 10% in value even though the broader markets managed to gain in value.
The strength of the public capital markets has a strong link to the ability of smaller companies to raise money. When venture capital companies and private equity firms can exit their investments through taking a portfolio company public, they are able to attract new capital as well as reinvest the proceeds of the sale of shares in new companies. So, it is refreshing and good news for our industry to see a well-known retailer having such a successful public offering.
An interesting article in the Wall Street Journal on January 27th looked at the approach of two multinational companies to nutrition. Holman Jenkins, editorial writer for the Journal, contrasted the approach of McDonald’s and PepsiCo. He made the interesting statement that McDonald’s has learned to live in symbiosis with its numerous activist critics who continue to try and lay the blame for the obesity crisis at the door of the eponymous fast-food giant. While McDonald’s has diversified the menu and made great efforts to inform consumers about the nutrient content of its products, the sales of their burgers and fries continue to grow impressively. In 2012 McDonald’s was the best performing stock of the Dow Jones Industrial Average.
Meanwhile, PepsiCo is committed to transforming the portfolio of products so that by 2030 sales of “Good-for-You” products will reach $30 billion, up from $10 billion in 2010. The markets have yet to embrace this strategy and a stagnant stock price has put the company under pressure to refocus on its core.
This presents an interesting opportunity for entrepreneurs with better for you nutraceutical and functional food products. The validation by large companies of the consumer interest in your products will make it easier to get and hold distribution. And, if you really have a big hit on your hands then a company like PepsiCo will be a potential acquirer as it seeks to build up its portfolio of healthy brands.
Steve Allen is with Nutrition Capital Network (www.nutritioncapital.com), a business that brings together entrepreneurs and investors to discuss the financial side of the dietary supplement and functional food business. He can be reached at sallen@nutritioncapital.com.
