April 2007 Presentations

April 4, 2007
SoundingBoard

Moondance Heavenly Desserts:
gourmet desserts for the wheat-free/gluten-free market

Moondance is a specialty bakery producing wheat-free/gluten-free (WF/GF) gourmet baked goods. The company is wholly owned by Shelley Ritchie, who has currently funded all operations. First-year revenue in 2006 was $10,000 through distribution in 17 specialty retailers and restaurants. Moondance is seeking $250,000 to allow Ritchie to work full-time on expanding products, marketing and distribution, increasing production capacity, and creating an Internet presence.

The WF/GF market is the fastest-growing sector of the specialty foods market. Currently, over 3 million people have been diagnosed with Celiac, the most predominant genetic condition in the US that causes a malabsorption of vital nutrients due to gluten. Because of prior under and misdiagnosis, Celiac is a “growth disease.” In addition to Celiac, many more people are wheat intolerant for other reasons.

The only “treatment” for Celiac and others who are wheat/gluten intolerant is to remove wheat and gluten from the diet completely. Gluten is the foundation of baked goods – without it, most taste like cardboard. The WF/GF market is growing from $270 million in 2004 to an expected $1.7 billion by 2010.

Most WF/GF baked goods are sold as cake, bread and pancake mixes to be prepared at home. Whole Foods, a large holistic grocery chain, prepares in-house WF/GF bread and muffins. However, the absence of FDA standards defining WF/GF keeps major food processors out of the market.

Moondance is one of the few prepared WF/GF gourmet dessert products available. It is a unique indulgence for people on a WF/GF diet, which is NOT a fad – it is a growing customer base as diagnosis of Celiac and gluten intolerance continues to grow. Moondance delivers WF/GF baked goods that taste as good as mainstream desserts.

Moondance’s competitive advantages are its gourmet quality products and the proprietary flour mix used in its recipes. This recipe will be kept as a trade secret. Because the proportions are key to the success of the flour, it will be extremely difficult to reverse engineer the mix. The recipe can be made available to other manufacturers on a licensing basis.

Moondance maintains approximately 50% gross margins based on sales to “medical buyers,” those who have no alternative due to health reasons. A medical buyer will pay a higher amount for WF/GF products; in addition, the gourmet quality of the products commands higher prices. The company utilizes three distribution channels: gourmet grocers, specialty retailers (health food stores) and restaurants, all of which can be reached on a super-regional and national basis. Currently, Moondance works with Maggiano’s Little Italy and is negotiating a distribution agreement with Wild Oats and Whole Foods, the largest specialty grocer in the country. Internet sales will be added as the company expands.

Since the FDA has not yet issued regulations defining WF/GF, major food processors have not entered the market. Moondance products have been certified WF/GF by an independent testing laboratory.

Financial projections are $2 million in revenue without the Whole Foods account, $4 million with it, by 2009. Net income is $620,000 and $1.32 million, respectively. Exit strategy is sale to a major food processor or major specialty retailer as the market develops.

Contact:
Shelley Ritchie
513-351-9559
www.moondancedesserts.com

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