The Hut Group (Owner of MyProtein) is Set to IPO at ~$6B Valuation
As egocentric Americans, we sometimes (…OK maybe often times) overlook successful companies that aren’t based in America. Throw in the chance that said overlooked successful company is based within the country that the United States battled for our independence and you definitely have some long-rooted cognitive biases to combat against.
Fact is, there’s a functional CPG portfolio that now has over $500 million in annual revenue, yet very few industry stakeholders in the U.S. speak about them. I think it’s long overdue for that to change!
The Hut Group
The owner of that wellbeing-focused functional CPG portfolio (and much more) is The Hut Group (THG). Founded by Matthew Moulding in 2004, THG operates more than 160 websites that sell premium beauty and wellbeing products across 140 markets. In FY19, THG had just over $1.4 billion in total global sales, but that is far from the main reason to take notice now.
What makes the organization special is the unique and proprietary end-to-end e-commerce technology and operating ecosystem called THG Ingenuity…
THG Ingenuity
When I first learned about THG Ingenuity, I instantly thought about Amazon. The main reason I connected these two e-commerce companies is because both created proprietary solutions to meet their internal needs, but quickly realized those solutions could also be extremely valuable products within the market. Amazon famously built a $10 billion plus annual business segment with selling Amazon Web Services and also recently started selling its Amazon Go cashierless technology “Just Walk Out” to physical retail competitors. Similarly, THG built Ingenuity, which is deployed by brands like Nestle, Walgreens, and P&G.
So what is THG Ingenuity?
It provides a profitable model for online direct-to-consumer commerce to retail competitors in the industry that are struggling to meet the heightened demands from the market disruption driven by more consumers shopping online. In response, retailers are rushing to establish a strong, online presence and constantly exploring what the best set-up for long-term growth in this channel looks like, which THG Ingenuity believes they are that flexible and highly scalable solution…
- Technology — core commerce platform is an ever-evolving, proprietary solution that is continually optimized for brands
- Operations — designed to ensure products are delivered with speed and effectiveness through an international network of 16 distribution centers
- Brand — managed Trading, merchandising & digital marketing services, designed to leverage exhaustive platform mechanics and base growth strategies
- Data — generating real-time data insights that underpin all operations
THG’s Largest Wellbeing-Focused Brand (MyProtein)
The sports nutrition brand MyProtein founded in 2004 by Oliver Cookson. After bootstrapping the company to a projected $25 million, THG acquired the brand in 2011. MyProtein has seen approx. 19X sales growth since the acquisition and is now considered the largest online wellness brand in the world. The product portfolio is massive, reaching more than 2300 SKUs.
Recently, THG did an exhaustive rebranding project on MyProtein that evolved it from the previous single brand positioning (sports nutrition) into a family of brands targeting adjacent market segments in the wider wellbeing industry. Each of these family brands are supported by individual brand building, product development, digital content, and marketing strategies, thus enabling broad-based growth across all categories of the wellbeing market.
- MyProtein — up 22% YoY
- MyVitamins — up 81% YoY
- MyVegan — up 51% YoY
Localized Brand Building
To take a deeper look at how MyProtein is continuing to gain market share and strengthen its global brand, its important to appreciate their relentless localized approach to brand building. With 54 local websites, only 20% of MyProtein sales come from UK customers.
A great example of Myprotein’s massive global success is within the Asian market. MyProtein has seen explosive growth in the region, with Japan, South Korea and Taiwan all growing in excess of 100% sales CAGR over the last three years. Additionally, Myprotein’s Asian sales increased by 188% YoY on Single’s Day, a major Asian sales holiday.
With sales growing 67% YoY, MyProtein Japan is set to become the brand’s single largest territory in 2020. Within Japan, MyProtein has specially developed products to suit Asian taste palates, executed on a fully localized marketing strategy, and also benefited from THG opening new warehouses in Singapore and India. This enabled THG to service Asian customers with an enhanced delivery service that locally fulfills 70% of Myprotein Asia orders.
- 100K assets made yearly, hundreds of creative staff members, 10K affiliate network, custom CRM system
Extensive Product Development
Complementing existing facilities in the UK and U.S., MyProtein opened a new in-house production and product development facility in Poland in 2019. These facilities provide full control over product quality and new product development, with 80% of products getting made in house. Last year, MyProtein launched 250 new products across its brands.
Alternatively, while new product development is a key continuous driver of MyProtein’s growth, existing products also remain important, with 71% of sales arising from products launched prior to 2017. This is complemented by a highly loyal customer base, with 84% of 2019 revenue from recurring customers.
Biggest British IPO in years
On 8/27/20, THG announced it plans a London initial public offering that would value it at around $6 billion, as it seeks to tap investor appetite for the online sector. This will be the first major London IPO since COVID-19 and is expected to be the biggest IPO of a British company since the government floated the shares of its Royal Mail postal service in 2013.
What do I think about the projected mid-September IPO? I echo Oliver Cookson’s LinkedIn comments…
“This is a major milestone for THG and will surely be a very exciting future ahead for all involved.”
