Editorial: A Capital Formula

I read in the news this morning that Suncor was to acquire PetroCanada, a takeover made desirable due to the current low price of oil and the ‘desire for shareholders to see the company do something’, according to one report. In this current environment, even when one would expect the ‘no news is good news’ mantra to hold, impatience in the marketplace can create the desire for an organization, or investor for that matter, to move aggressively.

Much is being written about the impact of our current economic crisis on various categories in the marketplace, including ours. As evidenced by Expo West, energy in our industry is high, and while we can perhaps argue that some internal categories have leveled off as a result of the market slump and a decrease in consumer demand, overall, we continue to fare better than much, if not most, of the market.

And that’s one reason that the sector itself remains under close scrutiny by both the financial sector, as well as those investors with available cash. We’re perceived as a sexy industry, many of the products involve positive lifestyle choices, and the history of successful entrepreneurs in this arena has created a pathway to successful liquidity that obviously new entrepreneurs wish to emulate, but also that the investment community has come to recognize as a legitimate path. CPG company growth through new ideas and out of the chute creativity is not all that common, and the CPG category has been looking towards our industry for years - for both ideas and talent.

So what else has changed in the current environment?

It appears as though publicly trade organizations have struggled to hold their own in recent results reporting, but still consistent with other sectors. According to TSG in its Weekly Nutrasciences Market Summary, all indices relating to our market were on the rise last week with nutrition and wellness now off only 4.7% in the past 6 months, the most favorable of the indices the group reports. Even with a 7% rise last week, the group’s Vitamins, Minerals and Supplement index is off almost 35%, while Wellness Retail & MLM, after gaining 7%, is off almost 32%.

Some would say there’s a frustrating market out there. Many who wish they were liquid and in a position to invest, currently do not have the resources to do so. For others, the situation is perhaps so murky that even though they are reasonably liquid, so many companies are leveraged or challenged that they do not represent reasonable risk. At the same time, many organizations are at their lowest valuations and so for those that will weather economic, regulatory and political storms, the future is quite bright. Still in other cases, small, privately held companies may represent the best opportunities, yet are just a bit unsure about how valuable their assets currently are.

Perhaps some clarity is on the horizon at Nutrition Capital Network IV, slated to be held at the Grand Hyatt in New York City, April 20-21. The fourth of its kind, the event intends to put investors and those requiring in direct contact over day long sessions and meetings. I have it on authority from my friends at NCN that investors are awaiting, especially on the ingredient side of the business, and am confident, based on observations at Expo West that huge opportunities exist in our lifestyle market, whether you are the one with cash or the one seeking.

As a perpetual optimist, I would have to say that…Interesting times make for more interesting opportunities

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