Organto Foods Inc. (OGO) Earnings Call Transcript & Summary

Good afternoon. Karen, do we have everyone -- we let everyone in?

Everyone that has joined has been let in.

Well -- there might be some late stragglers, but go ahead Steve, if they come in, just let them in.

Yes. And Karen, can you put everybody back on mute, please? That's great. So thanks very much, everyone, and I appreciate you joining our call today. It's a pleasure to speak to everyone today. First, I want to wish everyone a Happy New Year. And we look forward to providing an update.

We have lost the audio, Steve.

Yes, I can't hear you, Steve.

Steve, you're on mute.

I guess, Karen did a really good job and muted everybody. Can you hear me now?

Yes, loud and clear.

Perfect. So I want to welcome everyone to the call today. As I indicated earlier, I want to wish everyone a Happy New Year. I appreciate it -- I appreciate your continued interest in the company, and we're excited to provide an update today on what we have going on in the company and the exciting guidance that we provided earlier today. First off, I'm Steve Bromley. I'm the Chair and Co-CEO of the company. I'm joined on the call today by Rients van der Wal, who's in Holland, and really involved in the day-to-day business. And so Rients is up late and drinking coffee to stay awake, but joined by Rients and also by John Rathwell, Rients is our Co-CEO and then joined by John Rathwell, who is our VP of Investor Relations and Corporate Development. So real quick. The plan for today is to give you some prepared remarks for around 20 minutes. At the end of the 20 minutes or so, we'll open the call up to questions. The best way to get your questions into the queue is to use the chat room. We'll go through the questions that are in the chat room first. And then we'll flip it over to any questions that people want to ask directly. We'll try and keep the call to about 45 minutes. And in doing so, get everybody off the call by about 5 Eastern Time. So real quick for people who are joining the call for the first time, just to give you a highlight of Organto, we're in the fast-growing healthy foods business. Our focus is on value-added fruit and vegetable products. So we're serving a global demand for healthy foods that continues to grow. We have an asset-light business model. So we don't own farms and we don't own manufacturing assets, but we own everything in between. We really add value between the grower and the consumer. We serve about 170 customers across 21 countries in Europe. We have a very flexible product offering, which we're very thankful for given what's going on in the economy today. We'll talk more about that. We have a branded product offering. We have 2 brands, our flagship I AM Organic brand, which uses our digital passport technology and our recently launched Awesome Fruits brand, which we'll talk more about today. We source products from partners on 5 continents around the globe. We have boots on the ground, personnel on the ground in 4 of those continents. So we're a very global company. And we have a very experienced team in place to drive this business. So when we talk about our business model and we talk about the value add, as I mentioned, we're not the growers, and we're not the retailers, but we're everything in between. And we add value. We are not a broker just collecting commissions in the middle. We are involved in supply chain logistics. We work with our growers on certification and their growing practices. We add value through packaging and the different formats. And then we brand the product, market it and get it into market. So very much supply chain oriented with value-added packaging, processing and marketing and distribution. We take ownership of inventory. So we're not just a guy in the middle collecting commissions. We add value. And we think that we're really well positioned in the categories that we're in today. The demand for healthy eating continues to grow around the world. And today, consumers want to know where their product came from, how it got to them. They want to make sure that it's sustainable. And so we're really well positioned in that category. We have a global operating platform. We serve customers in over 20 European countries. We have boots on the ground around the globe, sourcing locally wherever we can. So very much a well-built-out global operating platform asset-light, which allows us to generate higher returns on investment. We don't have to invest in firms and in manufacturing facilities. We partner with others who have that. And we have a diversified and value-added product offering that continues to grow. Today -- and Rients will take you through a little bit. We have over 20 product categories that we're active in. And we have diverse formats, which we'll talk about. So we do organic, which is our focus, but we also will do non-GMO. And we do that in bulk, private label, and organic, bulk, private label and branded. So we can really cover the demand base and hit the price target that consumers are looking for, and we'll talk a little bit more about that. We've really evolved. 4 years ago now, we transitioned to the asset-light business model, which is working really, really well for us. We've had 14 consecutive quarters of record sales growth. '22 will be the largest year we've had in the history of the company. We have the I AM Organic brand in the market. It's been launched. The Awesome Fruits brand is a mid-tier brand. It's now in the market. We launched it less than a month ago. So lots of learning going on there, but we have our brands in the market. We have a proactive acquisition strategy that has now delivered 4 acquisitions. We'll talk a little bit about those. And specifically, we'll talk about the acquisition of the new fruit group which is by far our largest acquisition so far and interesting as to how we roll that out and the impact that it will have on our business. And as I mentioned, we have an experienced leadership team of the senior leaders in the organization, most have been involved in the natural organic foods business for years. So we're really pleased with the talent that we have as we build out the business. Quickly on '22, most people will agree '22 as one of those crazy years and it was a difficult year. We had a lot of macroeconomic challenges that we needed to navigate. I'm very proud of the team as to how we did navigate it. Clearly, inflation has impacted all businesses. And we certainly had to deal with inflation. Costs have gone up all through our supply chains. And obviously, we've had to pass that along to our end customers. It's been a difficult process like most food businesses. We've made progress and continue to make progress, but certainly an interesting time. Global supply chain challenges, we almost forget that COVID-19 was a real issue, and it really impacted the supply chains. And it's taken a while for those to come back to more consistent and manageable perspective. That is taking place. So we're really pleased with that. But clearly, supply chain challenges came and went throughout the year. And lastly, with the Russia-Ukraine war, a real impact on us given that we're going to market today in Europe. We have Russian customers, which had to go away. And so we lost about 15% of our sales with the Russia-Ukraine war. So we've had to rapidly pursue alternative markets, which we've been successful in. We've entered the Serbian market and the Czechoslovakian market and other markets. But clearly, a very challenging year that we're all happy to see kind of behind us, and we feel much more positive as we look into 2023. Quickly on our business model and really what's happening out there in the market. Demand for healthy foods continues to grow, but the reality is that inflation is eroding consumer purchasing power today. And while consumers want to eat healthy, the reality is that they may not always be able to afford higher premium type products like organic and so we've seen that in the market. Demand for private label continues to grow lower-cost product offerings. Consumers are still demanding and wanting more and more convenience offerings and so there's been a number of really interesting trends in the market. And the point that I want to make to you is that while we would like to see organic be prime focus and everybody being able to eat organic because we think it's a great consumption option. The reality is not everybody can. And we feel really well positioned for a couple of reasons. Our products as I mentioned earlier, cover a wide range of cost brackets. So we have the premium branded. That's the highest cost. You get the best value, but it's the highest cost. Then we have the mid-tiered in the private label, which is more improved or lower cost, and then we have bulk distributed. So if you think about an avocado, we'll serve it to the retailer in a box and they can serve it bulk. We'll present it to them in private label in a packaging format that is less cost than premium branded or we'll give them the premium branded product and with premium branded product comes all of this marketing support and the marketing expertise and the digital passports and all that sort of stuff. So we can go from the lowest cost to the highest cost and we can do it in organic, and we can also do it non-GMO. So it allows us to really position ourselves as we're going into 2023. And that's one of the reasons why you saw us launch the Awesome brand because we had some retailers that came to us and said, "We want the I AM Organic brand, but consumers are gravitating and what can we do to be there." So I think we're really well positioned there. And then we're also really well positioned in multiple formats and multiple channels. So a lot of consumers today don't want to go to traditional bricks and mortar. That's fine. We serve online retail. A lot of consumers want convenience. So we're serving a number of [ to go ] convenience formats, and then we have service providers and distributors. So while 2022 was a difficult year. In 2023, we're now into it, and we're seeing the impact of some of those challenges, we do feel really well positioned. Our long-term growth strategy is to build a differentiated ethics-driven one-stop shop in value-added organic and specialty fruit and vegetable products. So a lot of our competitors, sorry, have 1 product, maybe 2 products, we have 20 products. We have a basket of goods, and we have a very diverse basket of goods. And we feel that, that positions us quite uniquely versus other competitors that we're dealing with. We have 3 core operational strategies that you'll hear us talk about today and Rients will touch on. Build supply in our product offering so if you followed the company for a while, you have seen that we bring new products to market on a regular basis after we've built the supply chains. Our second core strategy is to build brands which you've seen us do with I AM Organic and with Awesome and then also build infrastructure. One of the tricks in building a fast-growing company is to make sure you have the right people in the right chairs at the right time, and we're working very hard on that. And those core strategies are then supported by our one-stop shop acquisition strategy, which we've been executing on and we'll talk about. So with that, let me throw it over to Rients for a few comments.

Thanks a lot, Steve. Hello to everybody. Good afternoon, good evening on my side. As Steve was mentioning, we continue to build our customer and supply base. And we do that with organic fruits. We took -- when we're talking about fruits, we talk about tropical fruits like avocado, banana and mangoes, we talk about hard fruits which we call the apples and the pears. And we talk about soft food and citrus. Organic vegetables that's where we started, and we have significantly progressed in assortment from there. Tastemakers, think about fresh-cut herbs, think about mushrooms, think about those type of products. And we do that by going all over the world, very global, but at the same time, we also go very local. The aim is to be a year-round available and have a diverse product offering. We now do that for 170 customers across 21 countries. And I think what's interesting, if we go a little bit into depth here, because I think here is an interesting element where you see our evolution. It's bricks-and-mortar supermarkets and its mainstream segments, Edeka, for instance, is over 10,000 stores in Germany. A top 3 retailer. Same thing goes, of course, for Lidl. And that's where you can also make the right combinations what Steve was talking about earlier in terms of how do you customize the offerings to consumers and through certain positioning of outlets that we have in retailers. It's also in specialty, organic stores and I think the interesting thing of the evolution is that we're making here is that we're getting very embedded in very strong developed countries for organic fruits and vegetables like Germany. The Scandinavian countries. But we're also active in the countries where growth is also very much happening like Central Europe. We serve food service and all wholesalers. Interesting things to point out here are companies like [indiscernible] in a market in Denmark, where the organic category is already quite advanced versus other countries in Europe. I see that is specialized in serving schools, workplaces with only an organic assortment in organic food and, of course, organic fruits and vegetables as well. We continue to see as well shifts towards online and e-grocers. The Rowley group is interesting. It's a group that's quite active coming from Central Europe into Western Europe. [indiscernible] already quite a long standing customer of ours. So we're quite present in that segment as well, and we're continuing to look for the interesting partners and interesting markets to further develop that. I think another very interesting trends that I think you will see on every large-scale retailer, their global presentation is that they are more and more focused on convenience and to go concepts. And that's all in offering a more healthy solution for consumers on the go. Very interesting segment for us to be present in very interesting segment to show your branding. And I think they're very, very sizable opportunities here as well if you would only look to the points of sale that they're able to go through [indiscernible] controls, you're talking as well about 10,000 of points of sales. What you see here is a little bit more in depth. The branding strategy. Most of you might be already a little bit familiar with I AM Organic. It's the organic brand that we have -- it's digital passports. It's carbon neutral. It's 360 support. It's the best that we have to offer on the side of organics. But at the same time, in trying to come up with responses to another things that are happening specifically in this case with consumer, their capabilities of spending money. I think the very nice addition that we have here is also the brand of Awesome Fruits. So we scale that down a little bit. Bring it more to a mid-tier pricing. And that combined with the I AM Organic flagship store, Awesome Fruits, private label concepts and make it bulk offerings, we believe we can cater to all the needs that are out there. Very exciting as well the acquisition of the New Fruit Group, their culture, their positioning is really aligned with who we are. It's an asset-light business model. It's complementary in its product portfolio, Banana, Avocado and Mango. It's retail and wholesale, again, quite present in Germany, one of the strongest markets in Europe, France, Italy and Denmark as well. It has very strong supplier partnerships and it's a nonbranded product portfolio. I think it's very interesting. When you put the 2 together is where we can really reinforce each other on our side in terms of branding, in terms of bringing an even diverse product offering to the group, it's very complementary what they have in their banana business and what we already had in our banana business in the organic. So it's -- we are very pleased and we're very excited to have them in even though it's only 3.5 weeks in now, it feels in a positive way already like a much longer time. So it's very exciting. And again, to highlight what does NFG brings a very deep global supply relationships, strong retailers, asset-light, very experienced team. We have the infrastructure to execute. That's the word here, execute. We have the back office. We have the ability to create more product offerings, add more value, add branding, add cross-selling, the publicly listed company, the balance sheet, the flexibility and of course, digitization and IT capabilities as well.

Great. Thanks, Rients. So just a couple of quick things on our acquisition strategy. Our goal here is to build out a one-stop shop and create a winning formula where we can put 1 plus 1 together and make it equal 3. I think NFG is a prime example of that. We continue to maintain a strong pipeline of opportunities that we're looking at. Obviously, our focus here in the next bit will be on integrating the New Fruit Group, but we continue to look at opportunities to add to our platform. And obviously, when we're doing that, we're looking for new products that we can add new customers, new geographies, branded product extensions, et cetera. To go back, we've acquired 3 companies in addition to the New Fruit Group. We acquired Fresh Organic Choice, which moved us into Fresh Organic Herbs and is one of the highest margin categories that we have in the business today. We acquired Bee Organic, which got us into organic bananas, a little bit of a different focus of bananas in the New Fruit Group, but quite synergistic as well. And then we acquired ZMS, which was an African-based supplier. And so we were able to grow our product -- our portfolio and capabilities in Africa. So we continue to look at our pipeline. There's some good stuff in there. But for now, we're really focused on integrating the New Fruit Group. So as we look to 2023, just tying back into the news release that we issued earlier today, we feel very good about '23, acknowledging that '22 is a tough year from a macroeconomic perspective but we feel that we're really well positioned. NFG adds size, scale and depth. So as we noted, that brings about CAD 20 million in revenues to us. So as we look to our guidance to next year, a significant portion comes from just strong internal growth within our own business, but then also adding NFG is critical. We're expanding our retail listing. So Rients went through in quite some detail. The number of customers that we're dealing with and accounts that we're dealing with. Many of those have been added in the back half of last year and more are coming. And so these retail listings bring strong internal growth to the table. Our I AM Organic brand is gaining traction. So that brings an exciting progress to the table. We introduced the Awesome Fruits brand, which creates new opportunities for us that we're quite excited about. We've expanded supply and we continue to add critical volumes. Existing suppliers continue to grow. We bring new suppliers to the table. The team will be at a trade show in Berlin next week and Rients, how many new potential suppliers would you have coming to our booth over the course of the week?

Yes. I'd say it's going to be, again, a very, very busy trade show. It's very interesting. Of course, with the lockdowns, it had some stopes, but we were there. Last year already -- it was already -- it was the first one, but it was [ down-down ] a little bit. I'm expecting a very, very, very busy trade show. And it's very exciting to meet each other to present yourself and to revisit the existing relationships as well.

And I think it's important. We're being approached by growers around the world on a regular basis as we establish our profile and our reputation. They're reaching out to us now to be a value-added partner for them. So I think it's very encouraging. And we have an experienced team in place. It's a team that we feel can grow this business to $100 million in revenue plus. One of the things when you're growing a business is you have to invest in people well before you get the economic return. And so we've -- over the course of '23, we've added critical resources to the team and of course, we expect those resources to generate a positive return as we go into next year. And then obviously, we have a strong acquisition pipeline that we hope to execute on as we go forward. So the targets that we put in place really reflect the exciting progress and the positioning that we've done. And so earlier today, we announced our 2023 targets and provide an overview of 2022. So we completed 2022 in the range of $22 million, by the way, which is quite linear, I guess, or whatever you call that. So $22 million, we're projecting sales to increase 135% next year to north of $50 million. Part of that is through New Fruit Group. And then, of course, we have our strong internal growth. Gross profit is expected to increase around 200%, so at $50-plus million, you can put the gross margins up about 200% versus the prior year. So strong gross margin improvement really coming from 3 or 4 key areas. One is the work that was done in 2022 to address supply chain challenges, inflationary challenges. It's product mix, it's new customers, it's retail customers. It's a different customer mix. So with that comes different margins, et cetera. So very, very exciting progress and we do target to be EBITDA positive during the back half of 2023. So very, very exciting. And I think 2023 sets up to be a transformative year where revenues get to the point where we're no longer, my choice of words here, we're no longer a small bit player trying to find their way. We're now getting size and scale into the business and have a really relevant product offering, scaling non-GMO through organic through bulk, through premium branded, supporting it with digital technologies that are really important. So we're really excited as we look into to 2023. And as we say, in 2023, we need to deliver more than organic growth. So with that, I'll pause. And Karen, if you could I guess, open up the phone lines, and what we're going to do is start with questions that are in the chat. Karen, I don't know if there are any in the chat, but I'll turn it over to you, and then we'll open it up to questions verbally.

Steve, we've got some that were e-mailed in. So the first one is. Where are you in the overall global build-out to allow Organto to source key crops in a timely and cost-effective basis all year round.

Rients, do you want to take that?

Yes, absolutely. I think it depends very much on which category you're talking about. If we are talking about bananas, I think we have a very broad offering. We started, of course, with organic. Now with the addition of the assortment and the supply depth of energy, it's very mature. It's very capable of growth. It's very developed. If I then go to the other side of the equation, there are some new categories that we are still developing in that you still need to move to a proper year-round offering. But I would say the key categories where we have reached that maturity phase already. It's bananas, it's avocado, it's Mango, it's the tastemakers under the which I group, the fresh-cut herbs, ginger, turmeric, it's those categories where we have the scale, we have the year-round offering in order to do it well. So it's -- but you've got to take in account that its debts on how you bring it to market, but also your distribution towards our market need some time to mature. So for instance, if you take a product that you have brought into the Netherlands and you've added your value by repacking it. If you then take it into Central Europe, again, logistics come into play. So you need the right type of mix in terms of products to also make that economical working.

The follow-up to that is how do you think your demand from supermarkets will change once you are able to provide that consistent year-round product?

I think what we're trying to build is to become that one-stop shop. It's to really become the specialist and to broaden the offering. It's -- you can see that in the branding strategy, you can see that in the strategies around the product categories that we're trying to build up. So I think the better you are able to really listen and to work together with the retailer to provide the right type of offerings. The more you can move up in the relevance and in the importantness of a retailer. And of course, I think it's always good to think a little bit in the evolution of the company. We started with fine vegetables, niche fine organic vegetables, niche in the niche. So that will always remain a relatively small product with the retailer. If you're now in with Bananas and tropical fruits you're in 52 weeks a year. 52 weeks a year, you have a relationship of significance. You're going to be the go-to partner. That's the idea.

All right. Next question is, obviously, 2022 was an outlier with the swoon in gross margins throughout the entire food industry. Is there a chance to grow the gross margin percentage to new highs in fiscal 2023?

I'll take the first stab at that one. Yes, look at -- if you take a look at the history of the company ever since we converted to an asset-light business model, we saw gross margin growth and that continued into 2022, where the culmination of inflation, pricing, wars, pandemics, supply chains really impacted us as we look into 2023, and it stuck with it. We did see things start to improve later in the year. And as we look into 2023, there's a number of factors that help drive margins and certainly should take us to the highest margins we've had, and we see lots of opportunity. Clearly, brands carry higher margins. They take a while to sell. Second is retail -- established retail accounts where you're not selling and I don't want to get into some of the details, but the sales are booked and they're established in your margins, you're known. That helps us. So as we build out the retail platform, we've taken some of our core supply chains and really worked on the costs in those supply chains. A good example is Asparagus -- organic Asparagus, which traditionally have quite an extensive supply chain that we've now worked on see freight options versus air options, et cetera, in order to take a lot of cost out of the system. So we're working on costs in all of our supply chains, which I think are really important. And frankly, look, as we're growing, we're coming to realize that the margin vulnerability in some product categories is more than we want to take. And so we're shifting our product mix to focus on areas where we add value, where we deserve to win where we make a difference and where we can earn higher margins. And so margins are a huge internal focus for the organization, laying on top of all of that live data that allow us to manage the margins. As we look back at [ 2022 ], costs were moving so quickly that many team members on our team who are very, very skilled and experienced just weren't used to some costs changing twice a week, let alone twice a year. And so that's taken some internal effort as well in order to address. So yes, look, we do feel that we have earned the right to earn good margins, and we'll see margin improvement as we move into 2023.

Next question is, when do you expect to actually start making money as a company?

Yes. So look, in our journey, the first step is EBITDA positive and EBITDA positive we said is in the back half of 2023. That's not earnings because there's still a bunch of noncash costs. And -- but our first step in that journey is EBITDA positive. That's in the back half during the back half of next year, and then we'll continue to evaluate going forward. But I do feel we're on a good trajectory, and it's about growing the top line growing margins, keeping the cost base in check here as we go forward. I mentioned we have a team in place, we believe we have the bulk of the infrastructure in place to do $100 million without shifting that cost base. And so quickly, you can see how profitability comes to the business. So it comes with scale size and execution.

Okay. We have 1 that's a 2-part question. How is the big stock overhang from Mexico been traded? And then, okay, go ahead, with that.

Yes.

Okay. And then the stock was $0.30, 2 years ago when you were going from $10 million to $20 million in revenues, now it looks like you are on your way to $50 million revenues and the stock is $0.12. What's your view?

I think it's a hell of a buy. Yes, my view. Look, I can tell you that we are a far, far superior company than we were 3 years ago, 2 years ago or 1 year ago. And in my personal opinion, the prospects for this company are very, very strong. We have a good business model. Consumers are eating healthier all the time. Fruits and vegetables aren't going away, value-added fruits and vegetables aren't going away. I think the stock will look after itself. Obviously, we need to get this story out. I think the guidance mean all the estimates that we've provided for this year really tell you that this is not a small bit player trying to figure out what to do. We've made our mistakes along the way, [indiscernible] that. But at the end of the day, we're really comfortable and confident and inspired by what we have. And we'll get out there and tell this story and bring more exposure to the story. But I feel I can't give stock advice in all of that, but I feel that we're undervalued at the moment, but we'll let our performance speak for itself.

All right. One more. Looking at your 2023 guidance is CAD 100 million revenues a possibility in 2024?

Sure hope so.

And I believe so. Without acquisitions, that would be the top end of what we could do, but we do -- I can tell you that we have an internal plan that shows us how we're going to do that. So I think, yes, it is reasonable to see us there. Right Rients?

Absolutely.

That is it for questions.

Karen, can you open up all of the -- open -- just take everybody off mute and then we will...

What I've done is allowed them, they can unmute themselves if they want to speak.

Awesome. Thank you, okay. [ Gus ], I think that was you that was asking.. Anyone else with questions?

No, there is one more in the chat. How focused on food service is the company? And what is the margin profile in that segment?

Rients?

Yes. So I think maybe 2 comments. There's 1 comment if that people can't go unmute, so perhaps well I'll answer, we could address that. Yes. So food service is traditionally a little bit lower in gross margin, but there's also, of course, a broad range of food service. So it depends on where you are a little bit. It also depends again on the offering. So it's a mix of how close you are to that market, what type of products are you bringing? For instance, the food service [indiscernible] that I spoke about earlier has again a little bit of a higher gross margin profile than for instance, certain other food service type of companies. They are more around -- normally around the 10% mark.

And one -- sorry, one.

I think we still have the issue of people not being able to unmute what I see.

No, it's okay. Steve, can I ask a question, it's [ Gus ].

Go ahead, [ Gus ].

Thank you so much for the update, guys. Yes. So a question as we see it from your map, you sell really only in Europe, there was a question before about selling in Canada. I think -- is it safe to say that you're -- there are other parts of the world that I could ask about, for example, let's say, the Middle East or Southeast Asia or these other areas, Australia, are these places you could see your self-servicing or you see organic servicing in the future, either through organic growth or through acquisitions.

So yes, the answer is yes. And [ Gus ], what we need to be is careful on how fast and where we go. You have to take a look at your supply chains and be sure that you understand how your supply chains can serve the particular market that you want to serve. And so we've built the supply chains that we have today really to serve the European market. And a lot of them would be pretty effective at serving the North American market with some tweaking. And so our focus has been on -- if we go back 2 years ago, I think we were in 4 countries in Europe, [ Rients ] and learn about 20-plus now. Hopefully, Russia will open up again legally. I think -- by the way, we do think that, that's coming sooner around than later as it has things drove here. We see our next big opportunity really in North America [ Gus ], but not to say that we can't continue to expand [ Easterly ] as well, Rients, do you want to comment on that? But there's lots of places we can go. It's just -- the -- one trick [ Gus ] is you have to go with enough scale to be cost effective. And so if you get one customer here or one customer there, you can't do it. Like you just -- you can't service it. You blow your brains out, your costs will be way, way too high. So you got to be able to enter markets where you've got some scale that you can bring, which use the trick in moving into a new market. We kind of casually say, "Oh, well, we added another country and we added another country" but I need to tell you, the work that goes in to make it work and make it happen in that jurisdiction, takes a fair amount of time. So long-winded answer, we don't want to be just in 20-odd countries in Europe, and we won't be just in 20-odd countries in Europe. Our first focus is North America because it's English-speaking and there are markets that we know how to operate in, and we have guys that got experience -- guys and gals that have had experience in that market, but not to say that other frontiers are more than an opportunity for us. Because one would say the worlds are always there.

Maybe to add to that, Steve. I think it's very interesting when you start looking at it from a supply point of view, from a consumer point of view and a branding point of view, the North American markets and the European markets are very comparable, but also very complementary. And so the sizing of fruit is normally quite complementary to what the North American market takes and what Europe takes. So it increases your strength at source to really integrate with growing capacities. At the same time, like Steve was mentioning as well, it's not one strategy that automatically fits everywhere. So for instance, the North American market, the entry point is really into find the right platform and the right logistics. And in some European markets, some logistics are much easier to access, but initially, but it's more about the offerings that you have. So -- and I do think, ultimately, it's very interesting to have the combination of the continents like what we already have from a sourcing point of view to also have that from a distribution and a marketing point of view.

Sorry, just to add to that, Steve, it's Tom. And Rients, congrats on first of all, closing this amazing acquisition and setting the table for what looks to be a reacceleration of growth in 2023. So that's great. It sounds to me like in the pipeline that there are some opportunities that may present themselves in North America. And just with that, Obviously, we built over time, say some Latin America/South American supply relationships. Do those things lend themselves better into serving the North American market from say margin/logistics profile. How does that set up in terms of -- because obviously, the client base and the economic sensitivities are very like Rients says complementary. So it's good diversification. But how does that logistics setup look?

Yes, I think you have to look at it fruits for fruits a little bit because it's not one answer that really fits everywhere. I mean with some items, the competition of local fruit in the North American market is different, again, opposed to the European market. So again, the windows of supply could offer opportunities to have a more prolonged offering from source into market. Sizing is another way to look at it. So I really think that the combination would be very, very powerful. And then we have not even touched on the fact that there's quite large retailers with footprints that also go across continents, right? So our [indiscernible] is not only active in Europe, they're also active in North America. Costco is also making steps into Europe at the moment, and it's, of course, more present in other areas again. So if you can really -- if you can go to retailers with blueprints of certain continents in the right context and at the right levels within retailers, it will definitely accelerate when you're entering another continent as well. So there's absolutely a lot of value for us to gain over more confidence, yes.

I have a question. Steve, I know in the past, you talked about the single service -- single-item service with the convenience to go. And how does that breakdown compared to the bulk with the supermarkets?

Are you talking about on a revenue basis, like sort of what our splits are?

Well, are you still focusing on the convenience of single item like bananas, like kiosks? Or are you -- have you changed your focus to more to larger retailers?

No, both. But Rients, do you want to dive in because we've made some real good progress on a single services.

Yes. So what you see happening in quite a lot of European regions is that -- and I think SPAR is a very good example. They're really moving in more to go formats next to gas stations, petrol stations or high-traffic travel locations, [indiscernible] to go. It's a very similar setup. I think for us, it's very interesting because it segments in development. It segments where it's time for more competition on healthy eating. And we have some very robust and nice offerings for that. Of course, the fresh-cut herbs won't fly very quickly there. But hand fruit like an Apple or a banana are really good fruit setups for those type of locations. For us, it's not looking at 1 segment to really be hyper-focused on because there's also a risk in that. We like to take a more of a diverse approach to the market in which to go is a very interesting segment for growth for the future, and we have the right offerings to penetrate there, but it will also take its time. And the combination is in to go online food surface and traditional bricks-and-mortar retailers. It's the mix that makes it really, really interesting for us as a company.

Rients. By the way, I sent you a message from one retailer that you might be interested in. That seems to...

I'm very interested. I saw it.

You saw it? Okay. Apparently, they have like 3,000 locations.

We are very, very interested. So if you could make a connection, we would be very pleased to see if we can filter.

I wished I worked for that company, but I don't, but it was an idea.

Okay. Perfect. Perfect. Well, I'll put them on the list.

Any other live questions?

There is one question. Do you sell to Costco?

We are in contact with Costco in the U.K. area, about starting up with some potential items in the near future.

In those discussions, Rients, if I recall, they want branded names.

Yes. Yes. Absolutely.

And we want to sell the branded items.

Yes, we do.

And talking about a retail relationship that we would love to see grow -- go and grow cross continent. Absolutely.

There are no more questions in the chat.

Any other questions live? If you want to ask unmute and we're good to go.

People say they can't unmute but they should be able to.

[ Tom and Gus ], you were able to unmute, was there a secret to it or you just unmute?

We have to -- sorry, maybe this will help. You had to go to the bottom of your screen. You'll see 2 buttons, 1 is the microphone and 1 is for video. You have to click on the microphone.

Okay. Now I'm unmuted, it's okay, I'm unmuted now. Yes. Just, Steve, one quick question related to what I was talking about before regarding international expansion. Like to me, I was thinking, for example, I mentioned the Middle East to me, I'm thinking about Saudi Arabia, for example, big population, wealthy population. They can't grow anything on their own. I mean, obviously, you must know they're there and stuff. Is it -- how challenging is it to break into a place like that?

Well, look, it is challenging. First off, you need to know who to sell it to. Then you need to understand the supply chains and how you get it to Saudi Arabia and what customs clearances you're required, what phytosanitary certificates are required. So it's a whole new -- it's a whole new market. Like selling in different countries are -- there's different rules and regulations. Selling in Europe versus selling in the U.S. versus selling in Canada, frankly means selling in the U.K. versus selling in Mainland Europe, like they are all markets that you need to have market knowledge and expertise. I don't want to make it sound [indiscernible] like it's rocket science, but it's science, and you need to know what you're doing and you need to have people that know those markets. And frankly, today, I don't know if anybody on our team has much experience into Saudi Arabia. And so what would normally happen in our organization is that we would identify that as a market, and then we would go get some personnel that can manage that market. And so that's the way we build the business. It's -- you just can't -- it's different. It's different as you go around the world. There are really big markets out there. That's the great news. And the better we get and the bigger we get and the more adaptable we get, the more that we'll tear it into some of those markets. But we never go to a market without planning it out, understanding all of those factors of the market and then understanding the supply chains to get to those markets. And then when we do figure that out, then we'll test the supply chains with 1 or 2 customers that will work with us and then we'll go from there. So...

Understood. Got it.

It's a big world out there. The good news is that there's a big world out there that we can get to, but we've got to also be careful because you can make a mistake going to a new geography, and it will cost you. And so when you're smaller and growing up like we are, you want to do it cautiously and carefully. And so we're working in geographies where our team are really comfortable. Our team would be comfortable expanding over into North America brings some of the other geographies that we'll see.

Excellent. Thank you, Steve.

We have one more question in the chat. Are we exempt in our branded initiatives of slotting fees?

Look, slotting fees are more of the North America phenomenon than a European phenomenon. And so I don't want to say we're exempt because we'll jinx ourselves. Have we paid any yet? No. Might we have to at some point somewhere. Traditionally or not traditionally sort of the way it works is we're in the perimeter of the store, which is where you want to be because that's where the traffic is today. And there have been very few -- even in North America, there's not a ton of slotting fees in that perimeter of the store or the major slots are all in the [indiscernible] of the store. And they're prolifically expensive. We haven't had any yet. And we're not planning on any, but never say never because as soon as you say, there won't be one, somebody will try it. So not to this point. Rients did I clarify that properly?

100%, Steve. 100%.

Yes. Just a follow-up, that was my question, Steve, and knowing how [indiscernible] is, I'm so happy to hear that. Because in the end and look at all these companies that promoted pie in the sky branded sort of feel good new brands, and they had no idea what they are getting into. And some of these companies publicly traded, have gone right off the map. And so I think it's really an important thing to address that we don't ever get s***** into some of those initiatives. But knowing our pedigree and our experience and our street smarts. I think that we would be wise to all that, and that's great news.

Yes. I mean, look, there may be a place in time where it makes sense, but you and I both know of some really good companies, [ Tom ], who get a promise from a retailer and pay the listing fee, and then the results don't appear, but the listing fee is [indiscernible] up. And so we want to be really careful with that. And that's one of the reasons why we really like the fruit & veggie and the fresh side of it, and even moving into the value-added side where you move into value-added concepts, which is a core strategy that I'm really hopeful you'll see us execute on in 2023. It's in our agenda to do all things being equal. And what I mean by that is that if you're going to sell a fresh fruit, what can you do more to add value to that fruit, put it in some value-added concepts that aren't necessarily fresh. So think about Ginger or think about Ginger Shots, Ginger beverages, ginger -- using the same raw materials that we have anyways and just get a third party to help us. So we've been working on some of that, which I think can help us. But we want to stay in the perimeter where the slotting fees -- well, Europe just doesn't really run on a lot of slotting fees. But in North America, where it does -- if you're in the perimeter, you got a better chance to avoid those, which is pretty nice if you can avoid them because it's pretty steep. No other questions? Last call for any questions from the live phones. They're not phones, I guess, live computers. All right. Well, listen, I know we ran over about 15 minutes. We really appreciate you taking the time today. It's a pleasure to update you on life at Organto. We're jacked up about 2023 and excited by the -- excited by what lies ahead. There's lots of hard work to be done, but we're excited on where we're going, and we look forward to continuing to provide these updates. And in the meantime, if you do want to chat about the company in any way, feel free to reach out to John or Rients or myself. And we'd be happy to chat with you at any time. So thanks very much, and enjoy the rest of your day.

Thanks, everyone.

Thanks, everyone.

Thanks guys.