Amplify – which this week announced it is acquiring UK potato chip manufacturer Tyrrells in a $390m deal – has reported a 26.4% year-on-year increase in net sales in the three months to June 30 this year to $59.9m.
Growth was driven by strong sales of the SkinnyPop popcorn brand, which have risen 30.3% year on year in the first half of 2016 according to IRI figures [YTD July 10 2016].
Performance was also boosted by Amplify’s recent acquisition of fellow Texas business Boundless Nutrition, which makes products including Oatmega protein bars, and the further rollout of the Paqui tortilla chip brand launched this January.
“With Oatmega, we have been educating the sales force and have seen solid gains in Target and Walmart among other retailers,” said Amplify CEO Tom Ennis, adding that retailers had been approaching Amplify and asking for the products.
Paqui trials behind expectations
But he admitted Paqui had not attracted the trial Amplify would have expected at this time, despite “impressive” distribution gains and repeat rates.
“We have taken steps to improve brand trial, as once consumers have had the opportunity to taste Paqui they come back to the brand,” he told analysts after announcing the company’s Q2 results.
Amplify Snack Brands Q2 results snapshot
Net sales: $59.9m
Net sales change: +26.4% year-on-year
Gross profit: $32.5m
Adjusted EBITDA: $21.7m
“We are very excited about Paqui and remain very bullish,” he added. “We’ve done a great job getting distribution but didn’t do such a good job at getting trial - we should have done more in-store demonstrations.”
Amplify moved forward in-store demonstrations in the second quarter, and Ennis said the brand had generated good repeat rates and gained distribution as a result.
The business has also developed new packaging for the brand, which will roll out in the fourth quarter and feature food photography.
“We remain highly optimistic but believe it will take time for Paqui to meet its potential,” said Ennis.
New SkinnyPop products
Amplify has also developed new products for SkinnyPop, including a microwave version that is currently being test-marketed and will roll out in January 2017. And a SkinnyPop popcorn cake is to be soft-launched in September this year ahead of a full national roll out in January.
“Initial retail partner and consumer response to these two new products have been very favourable,” said Ennis. “We are excited about future potential.”
Tyrrells acquisition: ‘Brexit got us a bit of a discount’
Announcing the company’s Q2 financial results yesterday (August 8), Amplify Snack Brands CEO Tom Ennis told analysts that UK potato chip firm Tyrrells had been at the top of Amplify’s acquisition wishlist.
Amplify has announced it is acquiring Tyrrells, which operates in countries including France, Australia and Germany in a $390 deal.
“Together, Amplify and Tyrrells will partner to create a truly unique international better-for-you snack food leader that can continue to drive robust future revenue and earnings growth,” said Ennis,
“We plan to capitalize on each company’s market leadership and sales forces to drive higher revenue growth than either company could independently accomplish.”
Ennis added that Amplify saw the UK’s vote to leave the European Union as a unique opportunity to buy, but added that he had been talking to Tyrrells long before the so-called Brexit vote, which brought a drop in the value of sterling.
“When Brexit occurred it surprised us - like it didn’t everyone - but quite frankly we got a bit of a discount on the purchase price so we were pretty happy,” he said. “Now we want the currency to rebound a bit.”
Ennis pointed out that Tyrrells derives 40% of its earnings outside the UK, and has manufacturing facilities abroad, which Amplify believes gives it a “natural hedge against foreign exchange concerns.”
Amplify said the acquisition will give opportunities to take SkinnyPop into markets where Tyrrells operates, including Europe and Australia.