American Food Holdings, Inc (OTCBB: AFHD)
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American Food Co., Inc manufactures and markets beef jerky and other snack foods under the "Reinhold & Timko Beef Snacks" brand name. The Company's jerky product line includes items made from premium cuts of beef, chicken and turkey. American Food supplies products to more than 300 distributors across the US.
The Company's meat products are USDA inspected and seasoned with a blend of high quality natural spices and seasonings. These products are high in protein, and low in fat, sugar and carbohydrate. American Food's meats don't contain Monosodium Glutamate (MSG), an ingredient harmful to some consumers.
The US beef snack market is large and growing. As per Economic Research Service, industry sales grew from $ 1.3 billion in 1999 to $ 2.4 billion in 2003 and rose to $ 3.2 billion in 2006. Going forward, we anticipate continued growth fueled by the shift in consumer preferences from junk foods to organic and high protein foods.
The jerky meats offered today are healthier alternatives, offering high proteins, low-fat and low-carbohydrates, compared to traditional jerky.
The Company is planning to expand its largely regional base of operations through the introduction of an outlet marketing division - Beef Jerky Outlet Corp (BJO). BJO will play a pivotal role in its expansion plans by authorizing new franchisees and distributors.
The Company aims to position its jerky products at the high end of the market and as a traditional American food product. Its products are differentiated from those of
competitors who typically position their jerky as a junk food, by superior quality meats and seasonings and the absence of potentially harmful MSG.
The Company has an existing production capacity equivalent to approximately $15 million in annualized sales. American Food's current annual sales are approximately $1.1 million. The packaging issues encountered in the late 1990s that constrained sales volume have been resolved and the Company has sufficient existing capacity to handle a significant increase in sales volume without encountering capacity limitations.
" The meat snacks industry is poised for good growth over the next five years. Industry sales grew from $ 1.3 billion in 1999 to $ 2.4 billion in 2003 and reached $
3.2 billion in 2006, a 13.7% growth rate. Despite this growth, market penetration is low; only 39% of US household buy meat snacks. This suggests favorable opportunities for additional sales, which are forecast to rise to $ 4.2 billion in 2009, 31% higher than 2006 sales. Consumer interest in a low carbohydrates diet is supporting industry growth as is increased interest in consuming beef products.
The Company plans to launch an advertising campaign that will position the Reinhold & Timko brand as a premium meat snack food. An advertising campaign featuring radio and television spots will be leveraged to create a brand awareness and product differentiation.
American Food has two Company-owned stores in Michigan that are operating roughly at break levels on a standalone basis. An independent franchise purchased in Fort Myers, Florida is generating profits. The Company plans to duplicate the success
of the Florida store by using it as a template for future outlets. The outlet features a rustic, early American look with bulky jerky stored in large wooden barrels.
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