Foods for Better Sleep Surging into Mainstream, Five Stocks to Watch Right Now

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Sep 29, 2020, 08:45 ET

PALM BEACH, Fla., Sept. 29, 2020 /PRNewswire/ -- September 29, 2020 - Over 85% of American adults snack between dinner and bed. They combine to consume over $50 billion annually in nighttime snacks. The most popular nighttime snacks are all loaded with excess calories from fat or sugar (or both). Companies to watch in this space include PepsiCo, Inc. (NASDAQ: PEP), Nestlé S.A. (OTCPK: NSRGY), Mondelez International, Inc. (NASDAQ: MDLZ), Kellogg Company (NYSE: K) and NightFood Holdings, Inc. (OTCQB: NGTF).

Americans are sleeping worse in 2020 than ever before, and reports indicate they're snacking more than ever as well. Stress from COVID-19 is being blamed as a contributing factor. This could be the catalyst that ignites a consumer category which has been growing roots for a couple of years, and now seems ready to burst through into the mainstream.

Experts have been warning for years that eating the wrong things before bed can directly impair and disrupt sleep, contributing meaningfully to what has been declared by the CDC to be a "public health epidemic". Many observers believe snacks formulated for better sleep could be the next billion-dollar consumer category.

With almost half of all snacking taking place in the hours before bed, the impending battle for nighttime snack supremacy could have a major impact on the global snacking landscape. Several of the largest food and beverage companies in the world have openly declared interest in addressing this consumer problem, and one young company already has products in mass retail distribution.

Consumer brands that pioneer a category are often impossible to catch, no matter how much spend the bigger guys throw at the category later. Understanding what's at stake in this potential game-changing category, here are some of the major players in the space that may be positioning to capture their share of a coming nighttime snack boom.

PepsiCo (NASDAQ: PEP) - With revenue of $67 Billion annually, Pepsi is the #2 food and beverage company in the world. Pepsi is much more than just a soda company. Food and snack brands owned by Pepsi include Doritos, Lay's Potato Chips, Cheetos, Ruffles, Tostitos, Fritos, Rold-Gold Pretzels, and Quaker. Pepsi/Frito-Lay knows a thing or two about snacking and about consumer behavior. That is why the industry was rocked earlier this month when Pepsi announced the launch of Driftwell, a new before-bed beverage touted to help with relaxation and sleep. In an article published by Fast Company, Emily Silver, VP of innovation at PepsiCo stated, "The concentration around sleep wellness or sleep hygiene has massively increased in the last few years." Referencing COVID-19, she added, "I think we're launching this at a time when there's more consumer interest than there previously was, given everything that's going on from a macro perspective."

While there can be much debate about Driftwell's packaging execution, their choice of format (a drink rather than a snack food), and the go-to market strategy for the brand, there seems to be some consensus on one thing: Increasing consumer desire for better sleep and relaxation presents a tremendous opportunity in the food and beverage space.

Nightfood (OTCQB: NGTF) - The only early-stage company on this list, Nightfood is an emerging brand that is currently the clear leader in the relaxation and nighttime snacking space with their award-winning ice cream, formulated for relaxation and better sleep.

The global giants are all talking about consumer demand for healthier and sleep-friendly snacks at night while waiting for the market to develop. In the meantime, Nightfood's award-winning ice cream is already available in major divisions of supermarket giants Kroger, Albertsons, and H-E-B. Management recently alluded to additional distribution announcements coming soon.

Nightfood's Scientific Advisory Board boasts notable sleep and nutrition experts Dr. Michael Breus, Dr. Lauren Broch, Dr. Michael Grandner, and celebrity chef Chris Santos. They formulated Nightfood ice cream to be a better choice before bed, supporting relaxation and better sleep quality. That means less sugar, fat, and calories and more protein and fiber along with added calcium, magnesium, zinc, and glycine.

The brand won the 2019 Product of the Year award, and the 2019 World Dairy Innovation Awards for Best New Ice Cream and Best Dairy Desert.

Nightfood CEO Sean Folkson declared in October 2017, "In a few years, I believe consumers will look back at 2017 as the birth of nighttime nutrition in much the same way we look back at the late 1990's as the birth of energy drinks, the early 2000's as the birth of low-carb, and the mid 2000's as the birth of greek yogurt, energy shots, and coconut water. When the timing is right, a category can grow from nothing to seemingly being everywhere overnight."

Folkson went so far at that time as to describe the category as "inevitable" based on existing research around global nighttime snack patterns and the powerful bi-directional relationship between diet and sleep. Folkson sees potential for the Nightfood brand to expand into other popular nighttime snack formats, allowing for the possibility of Nightfood cookies, chips, cereal, and more.

Nightfood recently secured the endorsement as the preferred ice cream for pregnancy cravings by the American Pregnancy Association due to its healthier nutritional profile. This industry upstart could be poised to lead from the front as this promising new category unfolds in the coming years. Read the latest news for NGTF by visiting: https://www.financialnewsmedia.com/news-ngtf/

Nestle (OTCPK: NSRGY) - From Haagen-Dazs, to Toll House Cookies, to Kit-Kat, to Cheerios, to Hot Pockets, it would seem Nestle already has late-night snack cravings covered. The single largest food and beverage company in the world, Nestle knows that nighttime-specific snacking still needs to be addressed and represents a major opportunity...Haagen Dazs and Kit-Kat will not suffice for many modern consumers looking for functional benefits from their daily (and nightly) indulgences. "There's a huge white space", according to Doug Munk, director of new business ventures for Nestle USA, speaking about nighttime-specific snacks. Munk says in an article on FoodBusinessNews.net: "...people are looking to replace some of their junk foods before they go to sleep with something that is a little better." Munk also added, "We all have sleep issues, and we wanted to create a natural product that could really help assist in people's sleep." Considering the dollars spent on nighttime snacks in the US and around the world, Nestle could potentially be one of the early movers in this space.

Mondelez (NASDAQ: MDLZ) - Perhaps a name less familiar to some than Pepsi, Nestle, and Kellogg's, some of Mondelez' most popular brands include: Oreo, Chips Ahoy, Ritz Crackers, Wheat Thins, Triscuit and many more. In 2019, Mondelez revealed an updated consumer research methodology which is driving innovation throughout their snack portfolio. According to FoodBusinessNews.net, Their "snacking database" is based on interviews with 170,000 global consumers and helps Mondelez understand consumer behavior and consumption patterns. These understandings likely influenced the $300 million dollar acquisition by Mondelez of Perfect Bar, a refrigerated energy bar brand, in 2019. Around that time, Mondelez CEO Dirk Van de Put shared with his investors one of the key takeaways from assessing this massive data-set, "So, some of the learnings we have is that the same consumer might eat very healthy in the morning but very indulgent at night depending on how they're feeling...It makes a hell of a difference what time of the day it is." This understanding of consumer night snacking behavior by one of the global snack leaders is what has so many experts pegging nighttime snacking as the next great frontier in the snacking universe.

Kellogg's (NYSE: K) - In 2014, with morning cereal consumption sagging, the cereal giant tested positioning some of their most popular cereal brands as a great snack before bed. Limited edition packaging featuring a moon and stars, and full nighttime vibe was introduced on iconic brands such as Froot Loops, Special K, and Frosted Mini-Wheats. On the back, the words "Good. Night. Snack" to make sure consumers remember that cereal can be an option before bed. In an article published on The Street, Kellogg's CEO Steven Cahillane talking about positioning Kellogg's as a true snack company, while consumer demand and day-parts stated, "Breakfast is a key occasion clearly, but so is late-night snacking, and on-the-go meal replacement, and a snack as a meal accompaniment."

Kellogg's already has offerings in the other segments, and their half-hearted cereal foray into nighttime snacking notwithstanding, this global giant should not be underestimated as the nighttime snack category tips into the mainstream.

Owning brands like Pringles, Cheez-it, and Pop-Tarts, this global food giant knows that over 40% of all snacking takes place shortly before bed, and seems to be trying to figure out how best to capture some of that demand. Bolstered by its 2017 acquisition of startup RX Bar for $600 million and the recent launch of Incogmeato, a plant-based burger, Kellogg's is certainly keen to pursue hot consumer trends, and could wind up chasing the nighttime snack market.

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