Laird Superfood, Inc. (NYSE:LSF) Q2 2022 Earnings Conference Call August 10, 2022 5:00 PM ET
Company Participants
Reed Anderson – Managing Director, ICR
Jason Vieth – President and Chief Executive Officer
Andrew Judd – Chief Commercial Officer
Anya Hamil – Interim Chief Financial Officer
Conference Call Participants
Alex Fuhrman – Craig-Hallum Capital Group LLC
Bobby Burleson – Canaccord Genuity Group Inc.
George Kelly – Roth Capital Partners, LLC
Operator
Thank you for standing by, and welcome to the Second Quarter 2022 Earnings Conference Call and Webcast for Laird Superfood, Inc.
I would now like to turn the call over to Mr. Reed Anderson of ICR to begin. Mr. Anderson, please proceed.
Reed Anderson
Thank you. Good afternoon and welcome to Laird Superfood’s second quarter 2022 earnings conference call and webcast. On today’s call are Jason Vieth, Chief Executive Officer; Anya Hamil, Interim Chief Financial Officer; and Andy Judd, Chief Commercial Officer.
By now, everyone should have access to the company’s second quarter earnings press release filed today after market close. This is available on the Investor Relations section of Laird Superfood’s website at www.lairdsuperfood.com.
Before we begin, please note that all the financial information presented on today’s call is unaudited and during the course of this call, management may make forward-looking statements within the meaning of the federal securities laws. These statements are based on management’s current expectations and beliefs and involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements.
Please refer to today’s press release and other filings with the SEC for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today.
And now, I’d like to turn the call over to Jason Vieth, Chief Executive Officer of Laird Superfood.
Jason Vieth
Thanks, Reed. Welcome, everyone, and thank you for joining us today. I’m going to begin today’s meeting by providing a high level overview of our second quarter results and an update on our key strategic initiatives. I’ll then turn it over to Andy for a deeper dive into sales, channels and products, followed by Anya, who will cover the financials in detail. We’ll then open up the call to your questions.
But before I jump into our quarterly results, I want to take a moment to recognize and thank the Laird Superfood leadership team, most of whom are still within the first few months of their new roles. This team has taken the reins during a challenging time for both Laird Superfood and the broader economy end market and are doing a phenomenal job of reorienting the business and company to our biggest opportunities across both the commercial and operational aspects of the business.
In just a few short months, we’ve been able to completely overhaul our sales and marketing organizations and agency ecosystems, and to streamline our operations to deliver meaningful costs and cash savings. The foods of much of this labor are yet to be realized. And I’m excited as ever for the prospects of expanding the reach of our Laird Superfood daily ritual, and doing so with a much better cost structure than in the past.
Our second quarter results reflect some early progress on cost savings initiatives and efforts to drive wholesale channel growth against the backdrop of what has become a challenging operating environment. We continue to face headwinds to our online business due to the ongoing impacts from changes in Apple’s security features. The result being that we’re seeing less consumer engagement on our site, especially at the lower order values. We also encourage greater promotional expenses and forecasts in support of our DTC business.
On the positive side, we continue to see customer metrics improved, and made further inroads to expanding our presence on Amazon.com, which is a significant piece of our long-term growth strategy. Our NPS score in Q2 was an 82 and both our customer lifetime value and average order value continued to rise.
I’m also pleased to share that we were able to deliver growth in the wholesale channel and we made solid progress activating new retail customers, which Andy will cover in more detail in a few minutes. Because many of our products are self manufactured in our Oregon facility, a slowdown in our sales creates pressure on our gross margin. We experienced that in the second quarter a slowing DTC sales lead to more than 2 points of deleverage our fixed costs in our facility versus Q2 2021. This deleveraging would have been significantly more severe had we not already moved to reorganize our operations team earlier in the year.
On the distribution side, we were able to offset an increase in our shipping rates through increased internal efficiency in our warehouse and shipping operation. For a company of our size in the current market situation, there is no doubt that protecting cash is the paramount strategic initiative. As I shared on the first quarter call, we’re taking aggressive steps to moderate our own cash burn, including cost improvement initiatives and balance sheet management activities.
To this end, I’m pleased to share that we were able to improve our Q2 free cash flow burn by 38% versus both prior period and prior year to just $2.7 million for the quarter, leaving our cash balance at $24.5 million as we began Q3. As I mentioned earlier, our new leadership team is making significant progress and executing our strategic plan.
Recall that at the time of the first quarter call, we have just completed a review of our new 3-year strategic plan, which created a strong alignment between our goals, tactics and strategies for reaccelerating growth, and right sizing our cost structure. While it’s still very early, we have a solid start on this plan.
And over the near-term, we will remain focused on the following key areas: one, reaccelerating growth by targeting and retaining online customers, while expanding retail customers to drive our wholesale channel expansion; and two, improving our gross margin through strict cost reductions in our product and processes; three, enhancing core capabilities within our commercial and operation teams; and four, reducing cash burn by optimizing working capital accounts and implementing operational efficiencies.
We made significant headway against these strategic imperatives in Q2, including the elimination of free shipping on orders below $40. The implementation of a list price increase that just recently went into effect, the addition of more than 1,600 doors of new distribution in wholesale, a launch of 4 new items and the overhaul of our entire wholesale brokerage team across every channel of trade, just to name a few activities. As we go forward, we will continue to take the steps necessary to improve the business and lay the track for further improvement across our P&L and balance sheet.
In summary, despite a challenging environment, we are executing our plan, and I am pleased by the early progress that this team is making to structure our business for restored sales growth and improved profitability. But we are still only at the beginning of this journey. In future quarters, I expect to be able to discuss our continued build out of a true omni-channel business with a more balanced revenue mix, emphasizing the daily ritual.
I’m excited about the foundational marketing insights in branding and packaging work that is underway. And we expect that this will help us to better target, engage and convert consumers into Laird Superfood customers, as we go forward in the second half of 2022. And, as I mentioned previously, we will continue to attack costs and simplify all aspects of our business to improve our competitiveness and our profitability and a slower cash burn rate.
We remain confident in our direction and growth outlook, and continue to believe that we are poised to capture significant market share and achieve our long-term vision to become one of the leading players in the natural food and beverage space.
With that, I will hand it over to our Chief Commercial Officer, Andy Judd.
Andrew Judd
Thanks, Jason. Despite marketplace and consumer volatility, we remain optimistic that our mission to help consumers take the next step in their health and wellness journey by providing functional plant-based foods and beverages is powerful and scalable. We are making progress towards building a sustainable long-term and profitable growth agenda across all channels. Our Online business was challenged in Q2, down 16%. We significantly reduced insufficient spending with direct media down 48% for DTC business versus year ago, in order to reset to a more sustainable and profitable marketing mix across all digital channels.
We instead made investments to create new content and supportive an alternative media approach and began the process of redesigning our packaging and brand to be more relevant and create a compelling design that speaks to the benefits of our value proposition at the first moment of truth. Online sales were also impacted by consumer spending pressure due to inflation. This was primarily reflected in declines a new customer orders less than $40. While we didn’t maintain plus 25% growth in AOV or average order value versus year ago, and plus 14% versus prior quarter. This was a result of the broader marketplace inflation consumers are experiencing, and structural changes impacting digital advertising models industry-wide. As shown in a plus 78% increase in CAC or consumer acquisition cost year-over-year.
Despite these factors, we did see momentum driven by changes we are making with regard to our approach on Amazon. On Amazon, we saw it plus 25% increase in new consumers versus the same perod a year ago and we are seeing a much lower CAC compared to our DTC business.
From a retail perspective, we have several new activations that should drive momentum in Q3, Q4, and beyond. We have been working diligently to enhance our selling network, including new sales brokers across every class of trading. We sold nearly 5,000 new points of distribution across several channels, including natural, conventional, drug and club outlets. We are excited to see the engagement we’re having with retailers as we talk about the consumer momentum behind functional plant-based food and beverage and the Laird Superfood brand.
As most of you are aware, garnering additional retail shelf space takes time due to the cadence of customer product reviews and resets to being able to show meaningful progress with key retailers underscores the strength of our brand and product lineup. Overall, our retail sales in Q2 had mixed results. We are seeing positive trends in our core categories of creamers and coffee, as consumers appear to be migrating to in-home consumption and away from coffee houses. Both creamer and coffee category growth in a 12-week ending 6/12/2022 outpaced growth in prior periods.
Our retail dollar velocities and refrigerated creamers continues to increase plus 35% and plus 17%, in Natural and Nuwell [ph], respectively, for the 12 weeks ending 6/12/2022. This is consistent with recent research is showing our dollar sales are over 85% incremental to the category, including bringing 35% of dollars from new consumers to the creamer category. An indicator that consumers are willing to trade up for added functional benefits in a cream ingredient statement.
In the natural channel, we saw a significant opportunity to match the distribution level of our plant-based peers as we have 44% ACV versus 70% for the top 5 plant-based in non-dairy share leaders. We have even a greater gap in Nuwell. However, this success in refrigerated creamers was offset by a drop in sales in our shelf stable creamer business. While we experienced some distribution losses as a result of retailer in-store assortment changes, out of stock issues and gaps between an authorized items and shipments. Consistent with our build out of our sales team and brokers, we have initiated retail operations coverage to gain back these crucial points of distribution.
For our shelf stable creamers, we also have slowing velocities on our premium value proposition and a largely value oriented set. As consumers shift in home consumption for coffee to save money, we are providing a more functional option to make every cup even better to help fuel their day. We did see solid growth in our coffee businesses in the natural channel, up 45% in a 12-week period ending 6/12/2022. And we were the fastest growing brands and a top 25 brands for the category in the same period.
Despite the headwinds in the quarter, our consumer loyalty metrics reach an all time high with our NPS, or Net Promoter Score, reaching 82 in Q2. And our consumer satisfaction was 4.92 of a 5-point scale. Consumers believe in the daily ritual, and our bundles have grown over 97% year-over-year, as consumers see the benefit from sunrise to sunset, a range of products we offer. When combined with the new innovation on the horizon for the second half of the year, including our recently launched plant-based protein bars and upcoming new creamer offerings, the return of pumpkin spice and new single serve instant fuel and instant coffee sachets. We remain excited about our leadership in plant-based function on beverages and foods.
Now, let me turn the call over to on Anya Hamil, our CFO, to further discuss second quarter results.
Anya Hamil
Thanks, Andy. Net sales decreased 6% to $8.7 million in the second quarter of 2022 compared to $9.2 million in the second quarter of 2021, primarily due to lower sales in our direct-to-consumer business. Year-over-year sales decline in the food [ph] business appears to be driven by an overall pullback in consumer spending due to inflationary concerns, combined with online traffic, shifting back to stores with the end of COVID. As well as these key factors, I’ll reduce marketing spend as we optimize marketing mix between all digital channels towards more profitable programs, elevated promotional spend and changes in our free shipping offerings to improve our gross margins.
Despite the challenging economic environment, we saw year-over-year growth in our wholesale channel which grew 4%, driven by distribution gains in Grocery and Club. Amazon business grew 13%, reflecting the focus that we have placed in this channel, due to its relative profitability and ability to reach a large installed consumer base.
Gross margins declined 560 basis points to 18.2% versus the same period last year. Margin compression was driven primarily by inflation in raw materials, packaging and inbound freight, driven by increased costs of ocean freight to bring raw materials to all production facilities. Outbound freight was nearly flat year-over-year as our teams were able to offset higher freight rates through efficiency improvements in DTC parcel shipments. Other drivers included fixed costs to leverage in our internal manufacturing facilities due to low production volume and elevated promotional activity, partially offset by lower labor costs due to gain efficiency and organizational rightsizing earlier in the second quarter.
Moving down to the P&L to OpEx. Operating expenses totaled $6.5 million, an improvement of $2 million compared to $8.5 million in the year ago period. The biggest driver was the reduction of $1.5 million in general and administrative expenses to $2.6 million reflecting the gain on sale of land in the reversal of stock-based compensation driven by the 4 features of equity awards by former executive officers.
Research and development expenses declined $260,000 to $116,000 due to new products introduction costs incurred last year that were not repeated this year. Sales and marketing expenses also decreased approximately $170,000 to $3.8 million due to lower advertising expenses and marketing fees.
Net loss as reported was $4.9 million, an improvement of 22.2% versus the same period a year ago. On an adjusted basis, net loss was $6.3 million, a detailed reconciliation of non-GAAP adjusted net loss is included in our earnings release.
Turning to our balance sheet and cash flow highlight. We ended the quarter with approximately $24.5 million of cash and investment and note that we have taken a number of steps to reduce cash consumption to position the company for sustainable growth. We saw results of this action in the second quarter as total cash burn was $2.7 million or 38% improvement versus a year ago, reflecting benefit from the sale of real estate assets.
Cash used in operating activities also improved 33% to $3.9 million versus $5.8 million in the year ago period, primarily driven by improvement in working capital, specifically decreasing inventory balances. We expect to continue to reduce our inventory balances by the end of the year, although it will be lumpy quarter-by-quarter through improving inventory turns, while balancing the level of our investment to support growth and mitigate supply chain disruptions.
Next, I will provide some commentary about our 2022 outlook. We are operating in an unusually uncertain economic environment with the highest inflation rates in decades, particularly food and fuel, which negatively impacts consumer buying power and creates more pressure on margin mix and operating costs than we had anticipated in the beginning of the year. We expect this macroeconomic environment to continue in the second half of the year, and are accordingly updating our guidance for the full year 2022. We estimate net sales will be in the range of $36 million to $38 million and gross margin for the full year 2022 is forecasted to be approximately 20%. Note, that our gross margin estimate of 20%, includes Outbound Distribution expenses of approximately 13 points.
We remain confident in the strength of our brand and the effectiveness of the strategies that Jason and Andy talked about to deliver our growth agenda. We are focused on improving gross margins, and reducing cash consumption to position the company for sustainable growth. It will require time to ramp up this initiative, leading to more visible progress in late 2022 and building on in early 2023.
With that, I’ll turn the call back to Jason for any closing remarks. Thank you.
Jason Vieth
Thanks, Anya. With the attention grabbing headlines of inflation and recession, there’s no doubt that we are now operating in a less certain moment for consumers and it has clearly become more challenging to gain their attention and consideration for premium health and wellness products. In our Q2 results demonstrate that Laird Superfood has strong staying power amongst its followers, and in fact continues to grow across many key metrics with our consumers.
Our continued growth in average order value, lifetime sales value, and Net Promoter Score demonstrate that despite the headwinds facing today’s consumer, they continue to value the Laird Superfood proposition and lift to us as a high quality food source for their health and wellness journey.
Our dedicated team remains committed to our brand positioning and core strategies, and we are as excited as ever for the potential for Laird Superfood to become a leading name in healthy functional foods.
This concludes our prepared remarks. Operator, we are now ready to open the call to questions.
Question-and-Answer Session
Operator
Yes, thank you. [Operator Instructions] Our first question comes from Alex Fuhrman with Craig-Hallum. Alex, your line is now open.
Alex Fuhrman
Great, thanks, everyone for taking my question. I wanted to ask about the shortfall in your guidance. You mentioned a number of different headwinds that I think a lot of other e-commerce companies are seeing as well. And in particular, some of the marketing challenges related to the iOS changes. Curious is that mostly impacting your ability to get new customers to come into the brand as inflation has been weighing on consumers? Have you seen your long-term core customers start to behave any differently as well? Or is it really more about marketing challenges in reaching new customers?
Jason Vieth
Hey, Alex, this is Jason. I’m going to give you a couple of thoughts. And then I’ll hand it over to Andy to give a little bit more detail. It’s a really great question. And obviously to your point is, it isn’t just a Laird issue, it is a industry issue right now, especially amongst the DTC focus companies like ours. So we started to see this about a year ago, you’ll remember we talked about a couple of quarters, but we’ve taken some of that into – through our own action as well. As we talked about, as we took price increase, we also pulled back on the free shipping that we were offering. And so for any orders under $40 now other than new orders, we’ve pulled back on the free shipping aspect.
And as a result of that you’re seeing a change of activity. You’re seeing our longest standing consumers largely migrate to larger orders, and very little drop off, if any in that space, and I’ll let Andy speak to that in a moment. But what you are seeing is some attrition that took place, especially right after that change with new consumers. And we have modified that action, just really in the last few days we put free shipping back on for new orders for new consumers that are coming in, so to entice them to make that first order. What we found is that we weren’t getting the same conversion that we expected. And so the drop off has really been amongst consumers that would come into Laird as opposed to our current subscriptions and subscribers what we’ve seen really positive staying powers, as I referred to in my earlier discussion.
But Andy, why don’t you if you want to put a little bit more of a wrapper around that. That’d be great.
Andrew Judd
Of course. Thanks, Alex, for the question. Yes, Jason is right. The largest portion of consumer kind of mix that we’re seeing is definitely impacting new consumer orders. And in particular, new consumer orders at the lower value rings, where we’re seeing definitely compression through your – I would say, a less efficient media mix, primarily anchored in our social media tactics where, as noted in prepared remarks, our CAC is still over 70% higher than it was a year ago. While we are also seeing some consumer behavior trends in kind of a post-COVID reality that we’re seeing migration back to retail, where we are seeing significant velocity increases in our food and creamer business as well.
So, I think, that the combination of the inefficiency in the marketing tools as well as some behavioral changes and a consumer inflation dynamics that are happening, are really putting a pressure on that particular set, where we see favorability in some of our larger loyal returning attrition levels, where we’re seeing increases in NAV or LTV is up and continuing to rise both sequentially and year-over-year, and orders in the $75 range plus have actually moderately increased in the quarter.
Alex Fuhrman
Okay. That’s really helpful. Thanks. And then if you could talk about the cash burn for a minute, it was pretty significantly improved here in the second quarter relative to the rate that you’d been burning cash last year, you guys give a lot of great detail on your expenses in the press release. So it looks like maybe there were some non-sustainable offsets to G&A this quarter like the gain on the sale and the reversal of some stock-based comp. But, if you kind of strip out some of those non-sustainable items, can you give us kind of a sense of what we should expect to see in terms of cash burn or EBITDA or even just G&A or sales and marketing expenses for the rest of the year, assuming results for the rest of the year come within your updated guidance.
Anya Hamil
Hi, Alex, this is Anya Hamil. Thanks for the question. So, yes, you’re correct. Cash burn was $2.7 million total, and just under $4 million from operating activity. So they both improved relative to prior year, and in line with the strategies that we’ve been focusing on to improve the cash burn, and to get the company to sustainable growth. So, as you mentioned, there was a one-time benefit in Q2 that we realized that was part of our plan to improve our balance sheet was sold some real estate assets, OEM, specifically. And so that generated $1.5 million improvements to our cash flow.
But overall, outside of that, we were able to achieve an improved cash flow primarily through working capital management, specifically around inventory balances. So our team is focused on driving the inventory down to sustainable and optimized levels that don’t jeopardize supply chain interactions, but ensure that we have no optimal level of inventory versus the cash that’s tied up in that asset. So that is in the midst of it’s going to continue, and I expect to see further reduction by the end of the year.
As I mentioned in the earnings release, it will change a little bit quarter by quarter, because we still have obligations to our suppliers that we are fulfilling. But we are on track to get to the inventory position that we are targeting by the end of the year, which will free up additional cash. And then took the lot – the third thing is overall operating expenses management, we’ve been doing a lot of work outside of headcount, non-headcount related, G&A expenses, and really focusing on optimizing fees, professional fees and consultant fees, to help us reduce that cash flow. And we’re going to continue making progress towards the end of the year in that area.
Alex Fuhrman
Okay, that’s really helpful. Thanks, Anya, and thanks, Jason.
Operator
Thank you. Our next question comes from Bobby Burleson with Canaccord. Bobby, your line is now open.
Bobby Burleson
Great, thanks for taking my questions. I’m curious about the distribution losses that you mentioned, understand you’re working to gain those back, any sense on timing?
Andrew Judd
This is Andy. I can give you some perspective on – go ahead, Jason.
Jason Vieth
That’s alright, Andy. You go ahead.
Andrew Judd
Yeah, so we’ve seen a few order declines, it’s really that are affecting our shelf stable creamer business in the natural channel. That distribution loss is only resulting in about a 5% loss in distribution, so pretty moderate, largely due to a couple of things. One is we have seen some kind of store-by-store optimization that’s take in place, 1Q [ph] we’ve got some out of stock issues that are definitely causing troubles like many partners and other brands are seeing where we’ve got staffing issues at retail. And then the third one is we’ve got some authorization to shipment challenges. We have recently brought in a new partner to give us some retail coverage. They’re actively already in stores starting this month. And we hope to see that stuff rectified over the balance of the second half of the year as we go forward.
Bobby Burleson
Okay, great.
Jason Vieth
Hey, Bob, the one thing I would add. That’s super helpful by Andy. Let me add – I just want to add for you just give them more context. So I mentioned this earlier, but we’ve changed over our broker coverage across every class of trade. And really, I think we’ve gotten to the premier broker in each one of those classes. And then in this case, as you go through a transition, there’s naturally going to be some attrition, you just – as you go from one team to the next, you can lose sight of some of those activities that need to be executed.
And so, we’re working really diligently right now with our new broker to get everything restored, as Andy mentioned, through those – really those three – those three factors or those three actions that we’re undergoing right now. So we should see that we get the growth engine running again, as we go into the back half of the year. Yeah.
Bobby Burleson
Okay, great. Thanks for that additional color. In terms of cost savings, one of the things you mentioned, Jason, in your opening comments was you’re still kind of early in those – in benefiting from some of those actions you’ve taken. So just kind of curious what in your mind, in terms of order of magnitude, I think, capturing those savings? And also, once again, the timing of how long it’s going to take?
Jason Vieth
Yeah, it’s good, Bobby. Good question. Thanks for that. The reality for us as we continue to understand the business better, as obviously, as we dig through and get to a little bit further down through some of the challenges we’ve been having. As we’ve seen volume pull back a bit, it’s really helped us to understand where we’re getting leverage where we’re not to our facility, and how we streamline and improve those processes. And so we made some of those moves early on, as we had mentioned, where we reorganize to be able to, to really be able to attack those costs.
As we go forward, we have opportunities across our ingredients, and how we think about what ingredients we’re putting into what packages and how much of each one we’re putting into the package, we have opportunities in our procurement and the buying that we’re doing to restructure some of those agreements as well. And then, two, we have opportunities in our operations and really thinking about how we are most efficiently producing and distributing our goods today. And that’s not only in house, but with our co-packers as well.
So we are reorganizing our co-pack network as we go through this, in addition to the work that we’re doing internally. In terms of the ending, I’d say it’s – maybe we’re in the third inning, if you a baseball analogy, we’ve made some of those changes, but it’s really going to play out over the course of the next few quarters. Some of the initiatives such as the list price increase that we took really just went into effect. And so we haven’t seen the benefits of that flow through the P&L yet. Similarly, we have a number of cost reductions that are in a similar state will continue to ramp up as we get through the second half of the year.
Bobby Burleson
Okay, great. And if I can just sneak one more in just looking through your PowerPoint, where you have almost perfect to offset in terms of hydration and beverage enhancing supplements0 decline of the increase from harvest snacks and other food items. Now, I’m wondering in the hydration category, whether or not there’s anything that you can call out there in terms of what’s driving that decline and what your expectations are for that product segment going forward?
Andrew Judd
Sure. This is Andy, again. I’ll give some context that we had seen definitely an incremental level of competitiveness in that space. There’s been a good amount of activity that took place in 2021, that’s led to some competitors really getting active, it particularly in paid media, that’s risen the overall cost there. So as we talked earlier about some of the costs rising in the platform levels, we are seeing some incremental scale of that at a category level as well. It’s kind of creating some, I’ll say, aggregate steepness in that curve. And as we’ve been working against trying to offset those efficiencies, we’ve really focused on some of our core categories coffees and creamers.
And then, most recently, when we’ve made some investments on the Picky brand, which will be involved in that snack portfolio piece. So there’s kind of a couple of components, one of some headwinds additively. And that we’re working to make sure that we’re supporting our core categories as best we can. And then the second one is, kind of a reinvigoration behind our Picky brands and spending back on that piece of the portfolio as well.
Bobby Burleson
Thank you, Andy. Thank you for taking my questions.
Operator
Thank you. Our next question comes from George Kelly with Roth. George, your line is now open.
George Kelly
Hey, everybody, thanks for taking my question. So just a few for you. The first on pricing, curious, how much pricing did you take? And was it the first time that you took significant pricing this year?
Jason Vieth
Yeah, George, hey, this is Jason. Nice to hear from you again. We took pricing on to the tune of about 10% not on every product, but on a large portion of the portfolio. And we did it somewhat strategically in that regard, there are a couple of categories, such as liquid creamers, where we felt that there wasn’t a market opportunity. So we put that through in our DTC channel first, and I’ve seen early results that seemed to confirm that the elasticity impact isn’t going to be as great as what you can hear. And that’s just going to ripple through begin to ripple through the retail channel here as it works its way through the various retailers that we – all of which that we passed it along to.
George Kelly
Okay. Excellent. And then next question on there were several comments in the prepared remarks just about momentum in the fluid – the refrigerated creamer business. So, curious, I guess 2-part question. What was the contribution from fluid in the quarter? And then secondly, what that – I believe that had been stable for several quarters. So if you’re seeing momentum, just curious, what’s really driving that?
Andrew Judd
Yeah. I can answer the momentum in the marketplace, and then Anya and/or Jason chime in on some of their contribution components. Yeah, as I mentioned in the prepared remarks, we are seeing, I would say, sequential growth overall on coffee and creamers. The hypothesis here is that as consumers are migrating from some coffee house purchases, they are monitoring discretionary income, they’re coming back, we’ve seen that pretty care just really happening across both, coffee, creamers, refrigerated, fluid as well as shelf stable. And we’re seeing some benefits of that, obviously, the refrigerated portion of the category that are 10 times the size of the shelf stable portions on market size perspective.
And we’re seeing some benefits there where we do have some benefits in distribution that are changing year-over-year. And then as I mentioned in the prepared remarks, our velocity levels have grown significantly, specifically on latest 12 weeks year-over-year, we’re up 35% and the natural channel on a dollars per GDP level and 17% in Nuwell, respectively. So we’re seeing that overall that even though consumers are making some tradeoffs in their pocketbooks for where and how they consume their coffee, that they are still looking for value add where they can find it, and we’re seeing those benefits larger refrigerator premium business today.
Jason Vieth
And George, it’s same [ph]. No secret. We talked this before that that we’ve been struggling to really get our economic model set correctly for that liquid creamer product. We have the demand for the product is greater than what we’re willing to supply right now until we can get that fixed. We talked about the challenge we have in front of us and we need to get that fixed this year. We’re still working our way through that and we need to get to a better cost solution for that business. But in terms of the demand for Laird to enter that as a premium functional coffee creamer, we have tremendous opportunity in front of us.
George Kelly
Okay. That’s helpful. And then last question for me. The guidance – the adjusted revenue guidance to take down I think it was roughly $5 million bucks. Is that primarily from the Online it sounds like just in response to some of the earlier questions it sounded like you were saying it’s primarily in the Online business, but just want to confirm that I heard that right? Or is there sort of maybe some of the wholesale ramp, you were optimistic about just taking a little longer to play out, and it’s more of a 2023 story at this point?
Anya Hamil
Hey, George. It’s Anya. Well, it’s primarily Online, you’re correct. As we’ve seen softening demand, and online businesses, and elevated discounts to motivate consumers to do repeat orders and attract new consumers. So that’s the bigger part of the column [ph] down the guidance. But wholesale business is also taken longer to get the new profits distribution than we originally anticipated. And we’re going to see those benefits towards the end of the year, as you mentioned, in early 2023.
George Kelly
Okay. Great. Thank you.
Operator
Thank you. I would now like to pass the conference back over to Jason Vieth, CEO.
Jason Vieth
So thanks, everybody, for joining us again today. I think in terms of this quarter, while it didn’t hit – we didn’t hit everything as well as we expected to. And as we hope to, I think there’s a lot of great momentum on the business right now. And it’s very clear by looking at where the consumers are and how they’re valuing the business that we can continue to build on that as we go forward. There’s a bit of lumpiness in our business given the size of the business both at retail, in Grocery and Costco, and then also on DTC as we run various promotions.
And we’re as excited and committed as ever, as we go forward to being able to deliver against these numbers and to grow the business from here. So I hope you guys are taking away from this all the excitement that we still have and the opportunity that we see. And, what’s the primary focus, as I mentioned on really blocking down and conserving cash, I feel like we’ve really weathered this first quarter, this latest [ph] quarter rather in a much better way, and I know a number of others have has looked and seen what’s going on in both public and private competitors in this space, and especially if companies are size. So we’re excited for where we go from here and look forward to talking with all of you in the future. Thanks a lot.
Operator
Thank you. This concludes today’s second quarter 2022 earnings call and webcast for Laird Superfood, Inc. Thank you for your participation. You may now disconnect your line.
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