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Cool Suppliers

All-natural, low-calorie frozen pops made with real fruit

27%

Investors

28

Time to Invest

Security Offered

Convertible Note

Minimum Investment: $100

  • Sorbet-like squeeze pops made with real fruit and no artificial ingredients

  • Sold at convenience store locations across the U.S.

  • As of September 2018, company had generated $636,385 in sales year-to-date, a 55.5% increase from the same period in 2017

  • Generated $88,216 in net income year-to-date as of September 2018, up 160% from annual net income in all of 2017

Terms

Security Type: Crowd Note

Round Size: Min: $25,000 Max: $107,000

Valuation Cap: $3 million

Discount: 20%

Conversion Provisions: In connection with equity financing of at least $1,000,000, the Company has the option to convert the Crowd Note into non-voting preferred units (Conversion Units) at a price based on the lower of (A) a 20% discount to the price per unit paid for Preferred Units by investors in the Qualified Equity Financing or (B) the price per unit based on a $3 million valuation cap. Please refer to the Crowd Note for a complete description of the terms of the Crowd Note, including the conversion provisions.

Overview

Opportunity

Consumer demand for “free-from” products is growing, and companies—including those in the frozen dessert industry—have begun developing products that are free from soy, gluten, artificial colors or flavors, preservatives, and genetically modified ingredients.i Going beyond traditional “healthier” options (i.e. low-calorie or low-sugar alternatives), companies have also begun highlighting their use of real fruit and other all-natural ingredientsii in order to capture a bigger share of the $28 billion frozen dessert industry.iii

This trend towards healthier, all-natural products is particularly relevant for convenience stores (c-stores) looking to boost business by offering healthier snacks and locally-made products.iv In 2017, frozen treats, including ice cream and other frozen novelties, generated $1.3 billion across all U.S. c-stores channels. Ice-pop novelties, which generated $1.1 million in c-stores sales, saw unit volume grow 9.4% year over year. According to U.S. research firm Mintel, offering products with more natural ingredients and simpler formulations may be a key factor to boosting c-stores sales in the ice cream and frozen novelty market.v

In 2014, Cool Suppliers launched as a small scoop and serve stand in Coney Island. After building a grassroots following, the company decided to turn its delicious recipe into a retail product—a squeeze-pop-style, all-natural “icey.” By 2016, Cool Suppliers had expanded nationally, with distribution reaching the West Coast through c-stores in California, Arizona, Colorado, Utah, Oregon, and Nevada.

Product

Cool Suppliers’ all-natural frozen smoothies (a.k.a. “iceys”) are sorbet-like squeeze-pops made with real fruit and have no artificial colors or ingredients. From the water and fruits the company uses, down to the all-natural sugar to lightly sweeten the pops, Cool Suppliers’ frozen treats are made to be a tasty, healthier snack.

All-Natural

Made with natural fruit, little to no added sugar and no artificial coloring

Healthy Frozen Snack

Vegan, gluten-free, peanut-free, and low calorie

Brooklyn Born

Founded in Brooklyn, New York, Cool Suppliers’ frozen smoothies are now available at convenience store locations across the U.S.

Current Flavors

Mango

Blueberry Raspberry

Wild Cherry

Strawberry Lemonade

Pineapple Coconut

New!

 

Primary Distribution Channel: Convenience Stores

Cool Suppliers’ primary go-to-market strategy has been wholesale distribution to local and regional convenience store (c-store) chains. The company plans to expand its market penetration by increasing its attendance at c-store trade shows over the course of each year. Cool Suppliers increased the number of trade shows it attended over the past year which had positive impact on its revenue growth.

Cool Suppliers also plans to expand its chain-focused promotional strategies by adding freezer programs (branded freezer equipment and multi-unit shelf items), purchase incentives, and targeted marketing campaigns.

Vans Warped Tour

Cool Suppliers has been a part of the past three Vans Warped Tours. The Warped Tour, which has occurred annually each summer since 1995, is one of the largest traveling music festivals in the U.S.vi In 2018, Cool Suppliers traveled across the U.S. for the final cross-country version of the festival. Cool Suppliers set up booths at 35 stops of the tour to promote its brand and sell its iceys to festivalgoers.

Cool Suppliers aims to further leverage its connections in the music industry to sell at and sponsor additional festivals and concerts. It also plans to attend additional events held at sports camps, parks, and schools to promote its brand amongst younger demographics.

Use of Proceeds and Product Roadmap

Cool Suppliers intends to use 50% of the proceeds from this raise to help build out its inventory and 50% to help customize its own packaging, including creating custom wholesale boxes and individual unit lids and tubes. This will allow Cool Suppliers to fulfill larger wholesale orders as well as offer different sizes of their individual iceys for retail distribution.

Aside from this fund raise, the company also plans to secure additional debt financing to purchase equipment that will help it take over inventory production. Currently, the company relies on a co-packer which it believes has hindered its ability to grow and provide customized wholesale offerings. As its production capability ramps up, Cool Suppliers also hopes to open up new distribution relationships with direct-store-delivery (DSD) reps in Miami, Houston, Dallas, Atlanta, Chicago, San Francisco, and Seattle. The company plans to experiment more and introduce new flavors, including limited-edition flavors, seasonal varieties, and interesting collaborations.

Business Model

For wholesale distribution, Cool Suppliers typically charges $17 to $20 per case of 20 iceys, or $0.85 to $1.00 per icey. Depending on the location, c-stores typically charge between $1.99 to $2.49 for an individual icey. Next year, Cool Suppliers plans to increase its c-store offering to include multi-unit packages.

User Traction

Cool Suppliers primarily sells its product via wholesale distributors across the country. Distribution has grown from the company selling store to store in New York City in 2014 to establishing a patchwork of distributors across the U.S. The company has sold its products via the following distributors:

  • H.T. Hackney
  • Shamrock Foods (a.k.a. Dairy Maid)
  • Core-Mark
  • J. Polep
  • Grocery Supply Company (GSC)
  • UNFI
  • Sysco

Los Angeles Unified School District

In 2018, Cool Suppliers was added to the Los Angeles Unified School District (LAUSD) Approved Snack List. LAUSD is the second largest school district in the nation, with more than 640,000 students at over 900 schools and 187 public charter schools.vii Thus far, Cool Suppliers has sold its iceys to 58 schools within LAUSD.


Historical Financials

Year to date as of September 2018, Cool Suppliers has generated $636,385 in sales, a 55.5% increase from the same period in 2017. In 2017, the company generated $598,728 in sales, a 14% year-over-year increase. Sales have been the highest during summer months and have dipped during the winter seasons, which are typically slow for frozen treat sales. Year-over-year winter sales improved from the 2016/17 winter season as the company expanded its distribution and entered the school market.

Year to date as of September 2018, Cool Suppliers’ expenses (including costs of goods sold and operating expenses) had totaled $548,169, a 38% increase from the same period in 2017. Expenses were evenly split between costs of goods sold (COGS) and operating expenses; the largest operating expenses thus far in 2018 have been payroll (~25% of operating costs) and company van expenses (~18%). In 2017, Cool Suppliers’ expenses totaled $564,859, a 9% increase from 2016.

Year to date as of September 2018, Cool Suppliers had generated net income of $88,216, up 160% from annual net income in all of 2017. In 2017, the company’s net income totaled $33,869, and it was profitable in 2016, generating net income of $5,793.

Industry

Ice cream and other frozen novelties are one of the top 10 supermarket food categories in the U.S.viii According to Grand View Research, the U.S. frozen desserts market generated over $25.8 billion in 2016, with ice cream products representing over 60% of the market. The overall market is expected to grow at a compound annual growth rate (CAGR) of 3.7% to reach $35.2 billion in 2025.ix Key factors influencing the market include the demand for “free-from” products, with companies developing frozen treats that are free from soy, gluten, artificial colors or flavors, preservatives, and genetically modified ingredients.x Going beyond traditional “healthier” options (i.e. low-calorie or low-sugar alternatives), companies have also begun highlighting their use of real fruit and other all-natural ingredients.xi

This trend towards healthier, all-natural products is particularly relevant for convenience stores (c-stores) looking to increase frozen treat sales. As of January 2018, there were 154,500 c-stores in the U.S. For these businesses, gasoline drives roughly 60% of sales. Yet the goods purchased inside generate roughly two-thirds of an average c-store’s bottom line. In an effort to shift from their dependency on gasoline and cigarette sales —which face increasing headwinds— c-stores could begin offering more prepared foods as well as healthier snacks and locally-made products.xii In 2017, frozen treats, including ice cream and other frozen novelties, generated $1.3 billion across all U.S. c-stores channels, accounting for 1% of total c-stores sales; frozen-novelties generated $773.2 million (down 2.6% year over year), while ice cream/ sherbet generated $528 million (down 2.7% year over year). Ice-pop novelties, which generated $1.1 million in c-stores sales, saw unit volume grow 9.4% year over year. According to U.S. research firm Mintel, offering products with more natural ingredients and simpler formulations may be a key factor to boosting c-stores sales in the ice cream and frozen novelty market.xiii

Competitors

Popsicle®

Originally created in 1905,xiv the rights to the Popsicle brand were bought by Good Humor in 1989, a subsidiary of Unilever (NYSE: UN).xv Other Popsicle product names include Fudgesicle and Creamsicle along with over 26 different varieties.xvi They also sell healthier alternatives, Simply Popsicle, which is made with cane sugar and is naturally flavored and colored, and Popsicle Fruit Pops, which is made with just five ingredients.xvii As of 2015, Popsicle generated $432 million in global revenue for Unilever.xviii

Ruby Rockets

Founded in 2013, Ruby Rockets sells frozen veggie and fruit bars, pops, and coconut milk yogurt alternatives. Its products have been distributed in over 3,000 stores across the U.S.xix The company currently has three flavors of ice pops and four flavors of its coconut-milk-based bars. A box of four pops or bars retails for $7.99.xx In September 2015, Ruby Rockets raised $1.9 million on CircleUp and was reportedly on pace to generate $2.5 million in revenue for the year.xxi

GoodPop®

Founded in 2009, GoodPop makes all-natural frozen pops. The company currently sells 12 different varieties of frozen pops and most recently launched its Organic Freezer Pops.xxii In May 2017, GoodPop released its 100% fruit juice, no sugar-added Organic Freezer Pop. The Organic Freezer Pops come in a box of 24, with three flavors (Concord Grape, Fruit Punch, and Strawberry Lemonade) and retail on Amazon for $16.49.xxiii In addition to selling its pops on Amazon, GoodPop’s products can also be purchased online at Thrive Market and Fresh Direct.xxiv

J&J Snack Foods (NASDAQ: JJSF)

Founded in 1971, J&J Snack Foods is a manufacturer of snack foods, baked goods, frozen novelties, and frozen beverages. Frozen novelties include the ICEE® and Slush Puppie frozen beverages, Luigis® Real Italian Ice, Minute Maid frozen juice bars and ices, and whole fruit sorbet and frozen fruit bars.xxv For its 2017 fiscal year, J&J’s frozen juice and ices segment generated $49.469 million and $71.325 million in food service and retail supermarket sales, respectively.xxvi

Yasso®

Launched in 2011, Yasso produces low-calorie and low-fat frozen Greek yogurt bars and pints. It currently carries 17 different flavors of barsxxvii and 9 different pint flavors.xxviii The company distributes its products across the U.S. in more than 15,000 grocery stores, club stores, and retailers like Target and Walmart.xxix Yasso is backed by private equity firm Castanea, which invested in the company in January 2018.xxx

Chloe’s Fruit

Founded in 2010, Chloe’s Fruit produces frozen fruit pops and sells dairy-free fruit treats such as sundaes and smoothies at its brick-and-mortar location in New York City (NYC). The company sells nine different varieties of frozen fruit pops. As of September 2017, its products were sold in over 10,000 grocery stores across the U.S., in addition to its flagship NYC store.xxxi Consumers may also buy the frozen pops online through Amazon, Fresh Direct, Peapod, and Jet.xxxii As of April 2018, the company had raised $3 million in venture capital.xxxiii

Team

Timmy Grins

Founder and Managing Member

Timmy is the backbone and chief storyteller of Cool Suppliers. He founded the company from his kitchen in Sunset Park, Brooklyn. He used to sell scoops down at Coney Island for $1 a scoop. His one-day-at-a-time mentality, unrelenting passion, and positive attitude have carried the company from its humble beginnings to a nationally distributed product. Timmy’s diverse background includes nearly a decade of experience as a financial advisor at Morgan Stanley, headlining rap tours, and various community service initiatives.

Scott Tabor

Operations

Scott has been with Cool Suppliers since 2013. He has 16 years of Fortune 500 sales and management experience. His primary responsibility at the company is overseeing its direct store distribution network in the greater New York City area. Notwithstanding his daily responsibilities in New York, his efforts are felt in almost every facet of the business. He manages the relationships with the company’s manufacturing partners, monitors its warehousing, conducts calls with reps around the U.S. about sales and logistics, works with vendors, assists with backend organization, and manages several of the larger key accounts. Scott holds a B.S. in Engineering Management from Clarkson University.

Matthew Stibbe

Marketing

Matthew works with Cool Suppliers as a marketing consultant. He provides consulting for startups and mid-size companies, advising on direct-to-consumer strategies and integrations as well as user and revenue growth. He is experienced in marketing, entrepreneurial business, and project management for both startups and Fortune 500 companies. He has experience in developing and managing digital strategies, with a focus on web development, integrated online marketing strategies, customer acquisition/conversion, and brand management. He has successfully exited one startup and now focuses his attention on projects that make both a positive economic and societal impact.

Flip McKenzie

Food Service Sales

Flip has been an important part of the Cool Suppliers story since 2015. He started selling Cool Suppliers in New York City, opening up sales in Harlem, the Bronx, and Westchester County, before setting his sights on Southern California. Since arriving in SoCal, he has helped make sales in numerous convenience stores, small format neighborhood groceries, and health food stores. Most recently, Flip was instrumental in gaining approval to bring Cool Suppliers into the Los Angeles Unified School District.

Kevin Stevenson

Convenience Store Sales

A Baltimore native, Kevin has been keeping Las Vegas cool since 2015. Utilizing his 25+ years of food and beverage experience, Kevin has been able to amass a following for Cool Suppliers spanning from Las Vegas to Phoenix and all the way up to Reno and Lake Tahoe. Beyond opening direct store relationships, Kevin has helped build relationships with major food distributors, including Core-Mark and Shamrock Foods. Thanks to Kevin, Cool Suppliers has been sold at c-stores on the Las Vegas strip as well as locations throughout the Southwest U.S.

Discussion

Endnotes

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