Benzinga | Oct 19, 2021 08:13AM EDT

Can This Company Create a New Industry Category by Helping People Snack Better Before Bed?

Research indicates that over 85% of adults snack at night, and the most popular options are cookies, chips, candy, and ice cream. Nightfood (OTC:NGTF), a producer of healthy nighttime snacks formulated by sleep experts, believes it is pioneering a new market category. And it's aiming to be the dominant player in that category.

The Tarrytown, New York-based company is the first to offer snacks to consumers specifically formulated for nighttime snacking and better sleep. The company states over $50 billion is spent annually on evening snacks.

While many snack brands, large and small, provide healthier versions of indulgent treats, none have addressed the way those snacks impact sleep quality, leaving open a potential multi-billion dollar category, Nightfood says.

Nightfood CEO Sean Folkson, wants his company to be mentioned alongside category creators such as Airbnb (NASDAQ:ABNB) and Oatly (NASDAQ:OTLY). By solving a previously unsolved problem, new categories are born. Oftentimes, the brand that pioneers the category can secure dominance in the sector with up to 80% of total category profit and market cap, he says.

Solving Known And Unknown Problems



Most successful entrepreneurial ventures stem from an initial standpoint of an unresolved consumer problem, Folkson stresses. Consumers may not know there is such a problem or nobody has actually solved the recognized problem to date.

When it comes to applying that to the snacking world, the estimated 85% of Americans who snack at night tend to opt for unhealthy choices such as ice cream and candy because humans are hard-wired to consume "survival calories" as it gets later in the day, Folkson says.

Known to be generally unhealthy, those snacks can specifically result in poor sleep patterns due to the excess consumption of fat and sugar before bed, he adds.

Nightfood solves this problem by offering healthier and sleep-friendly snacks for those evening cravings.

The company's ice cream, launched in early 2019, and with names like Cookies N' Dreams and Cold Brew Decaf, has just 10% of the fat of traditional ice cream, contains less sugar, and has no artificial sweeteners. Nightfood also is higher in certain nutrients to help with sleep, like tryptophan, prebiotic fiber, magnesium, and vitamin B6. The brand can be found in over 1,500 supermarkets including regions of Walmart (NYSE:WMT), and divisions of Albertsons (NYSE:ACI).

Hotel Chains Targeted, Speeding up the Category Concept



While Folkson says that creating a category takes time, he believes Nightfood's impending national hotel rollout will greatly accelerate the process.

The company recently completed a successful pilot test via partnership with a global hotel brand. As a result, Nightfood ice cream is expected to be introduced for sale in thousands of hotel lobbies in the next few months. Distribution of Nightfood products in hotel lobbies would equate to an endorsement by the industry and serve to accelerate consumer awareness and acceptance of the category, Folkson believes.

Nightfood has engaged iDEAL Hospitality Partners Group, a North Carolina-based company specializing in business development for the hospitality industry to help boost the hotel footprint.

"Nightfood's vision is to secure placement in all of the estimated 20,000 hotels in the United States which sell snacks in lobby retail shops," said Jill Dean Rigsbee, iDEAL CEO. "Internally, our goal is to have Nightfood's ice cream pints, and other Nightfood snack products, in more than 7,500 hotel locations by July 31, 2022."

The link between nutrition and sleep has recently attracted public interest from food industry leaders such as Unilever (NYSE:UL), Nestle (OTC:NSRGY) and PepsiCo (NASDAQ:PEP). Nightfood may well be pioneering a new industry category and could make itself an attractive takeover target in doing so.