BCHI which is an acronym for Buying Collective Holdings Inc., is a disruptor to the $596 billion US grocery industry. The company which delivers organic and non-GMO foods directly to the consumer at wholesale prices has zero marketing, advertising and customer acquisition costs due to its developing and now operating its proprietary Health Merchant Network.
BCHI is poised to attain a billion dollar valuation by end of 2018 and a valuation in excess of ten billion by 2020 for two reasons:
- US consumers are not aware of the serious dangers from ingesting foods that contain GMOs (genetically modified organisms). BCHI is uniquely positioned to educate the consumer.
- The demand by individuals to start digital businesses so that they can participate in the transformation of the economy from industrial to digital is accelerating at warp speed. BCHI is uniquely positioned to fill the demand since its online health merchant stores are affordable to thousands of health care professionals and entrepreneurs.
As of 2015, 75% of all foods on US grocery store shelves, equivalent to $450 billion annually, contained GMO ingredients. This is indicative that the vast majority of consumers have not been adequately educated about the dangers of GMO laden foods. See Politfact “Sen. Donna Nesselbush: three quarters of processed foods have genetically modified organisms”, March 6, 2015. The company success is imperative for the well-being of the US population since the US is by far the world’s largest grower of genetically engineered crops and producer and consumer of GMO (genetically modified organisms) foods.
Since 1996, the percentage of the genetically engineered corn, cotton and soy crops has increased from less than 20% to over 80%. See chart below.
Since the introduction of genetically engineered crops in the US in 1996, the disease rates in the US have sky rocketed. See “Study Links GMOs To Over 22 Different Diseases”, Natural Society. The impact of GMO foods on human reproduction has been frightening. The following have all risen sharply:
- Spontaneous abortions
- Infant mortality
- Premature deliveries
- Testicle damage
- Low birth weight
The rate of growth of the incidences of liver and kidney cancers almost tripled between 1996 and 2012. See Kidney and Liver charts below:
There is an obvious high correlation between the acceleration of genetically modified crops and the ingestion of GMO foods by consumers with its corollary health concerns. For this reason, the US population is, or should be, dependent on BCHI and the others to make non-GMO foods affordable and accessible. The US consumer can and will get behind BCHI.
Due to GMO foods accounting for $450 billion of the $596 billion that US consumers spend the US grocery industry, the industry is ripe for disruption. Pardon the pun. As health concerns escalate, the trend has been more and more of the less affluent consumers being willing to pay a premium for truly all-natural organic foods. The 5 minute video “Digital disruptor companies have the potential to get $10 billion valuations quickly” which explains how UBER disrupted another of the world’s largest industries is highly recommended.
The chart below depicts that non-GMO foods are growing faster than organic foods. It also underscores the massive opportunity for both of the fastest growing grocery categories. In 2015, non-GMO and organic foods together accounted for less than $25 billion, equivalent to less than 3% of all groceries sold in the US that year.
The company has developed an online ordering and delivery system that supports 1800 SKUs which became operational in November 2017. BCHI has sold more than 200 health merchant stores and is building a network of physicians and other health professionals who purchase an online store for $8,000 from BCHI and enter into a three year contract. The company fulfills the orders and ships them under the labels of the health merchants. BCHI has the technology infrastructure in place to scale quickly. From the moment that a new health merchant is signed, BCHI can have their new online store up and operational within 48 hours. In December 2017 BCHI entered into an agreement with affiliate marketer JustGetOnline.com to sell and market its health merchant stores.
Because of its direct to consumer model, BCHI competes head to head, offering the lowest prices with its best known competitors including: Amazon, Whole Foods and VC-backed Thrive Market. The huge advantage that BCHI has over all of its competitors is that its health merchants educate consumers about the dangers of GMO foods. There are two primary reasons why GMO foods account for 75% of all groceries that are purchased by consumers in the US annually. BCHI’s highly disruptive digital model addresses both of them:
- Prices for non-GMO foods more expensive than GMO foods.
- Consumers are not yet FULLY educated about the dangers of consuming GMO foods.
Below are the excerpts from reviews for Amazon and Thrive Market by the Organic Daily Post. See “How to Eat Organic Without Starving Your Wallet”.
- “Amazon is often not the best place to buy food (which is perhaps one reason they acquired Whole Foods). They do have good prices on personal products and grooming supplies, but less so on food. Sometimes you can get the best price if you’re willing to buy in bulk, but single item prices are often better elsewhere.”
- “Thrive Market tries to save on shipping both for financial reasons and to be more green by packaging everything into as few boxes as possible. This means there’s more variability to the shipping speed. I’ve gotten orders as fast as 3 days and as slow as 2 weeks.”
Whole Foods, the organic grocery chain which was recently acquired by Amazon, is a viable competitor. However, they only account for 1.1% of all grocery stores in the US and less than 2% of all groceries sold annually. The massive size of the US grocery industry will enable any entity which focuses on non-GMO foods to thrive for the foreseeable future.
What makes BCHI very special is its CEO and Founder, Rod Smith. The company is not Mr. Smith’s first foray into founding and building a successful company. He was the founder and CEO of inContact, Inc., which, up until it was acquired for $900 million in 2016, had traded on NASDAQ under the symbol of SAAS. See SAAS price chart below.
Dynasty Wealth, for which I am the Director Research, has done an extensive analysis of BCHI’s financial and cash flow projections. The projections assume that BCHI is able to raise $11 million of equity funding to cover its negative burn rate until the company becomes cash flow positive and for capital expenditures. Assuming that BCHI meets its 2021 projections it will have $6.9 billion of revenue and $1.3 billion of earnings before income taxes and interest (EBIT). The revenue and EBIT projections in the chart below are for the Calendar years ending 2018, 2019, 2020 and 2021.
The chart below depicts BCHI’s forecasted share prices through 2022 based on its meeting or exceeding its financial projections. The share price forecasts on the chart and in the table below are based on BCHI’s after tax net income and Price to Earnings (PE) multiples of 10, 25 and 40. At a PE multiple of 10, BCHI’s share price could potentially reach $1,286 in 2022. At a multiple of 25 its share price has the potential for a price of $3,215. A multiple of 40 would equate to a share price of $5,145 for BCHI in 2022.
The 7 minute video below entitled “BCHI, a trophy case opportunity due to its having upside potential of more than 100X” is highly recommended.
Michael Markowski, a 40 year veteran of the financial markets is the startups expert for Trophy Investing a member based-investing community which excels in identifying the shares of startups and early stage companies that have the potential to multiply in price within three to five years after investment. Membership to Trophy Investing is free. Additional information about Mr. Markowski is available at http://www.michaelmarkowski.net/.