Veg of Lund AB: Interim Report, January - June 2021

Great interest in the launch of DUG^®

April–June 2021

• Net sales in the second quarter amounted to TSEK 574 (242).
• Operating profit before depreciation and amortization (EBITDA) amounted to TSEK -5,415 (-3,381), and EBIT amounted to TSEK -5,533 (-3,496).
• Net profit amounted to TSEK -5,588 (-3,809).

January–June 2021

• Net sales amounted to TSEK 659 (280).
• Operating profit before depreciation and amortization (EBITDA) amounted to TSEK -7,580 (-10,268), and EBIT amounted to TSEK -7,814 (-10,493).
• Net profit amounted to TSEK -7,857 (-10,860).

Significant events April–June 2021

• The company conducted a directed issue of 357,162 shares following a request for conversion from lenders in the bridge facility.
• Veg of Lund launched its plant-based beverage DUG^®. The first store to offer it was ICA Kvantum Liljeholmen in Stockholm. It has since been introduced in the region of Skåne and in 17 ICA Maxi stores in eastern Sweden.
• Sales launch for Veg of Lund’s plant-based beverage DUG in the United Kingdom, through Amazon UK and coffee shops in the Oxford area.
• As one of 13 selected brands, DUG participated in China’s most important trade fair for novel foods, the Food & Beverage Innovation Forum in Hangzhou.
• Veg of Lund launched its plant-based beverage DUG in China through the food chain Ole’.
• Cecilia Lindwall took up position as new CEO on 30 June.

Significant events after the period

• Emma Källqvist took up position as new CFO as of 1 July.
• The company conducted a directed issue of 36,822 shares following a request for conversion from lenders in the bridge facility.
• Board member Thomas Olander, left his role as a board member.

Summary of the Group’s indicators

    
A word from the CEO

Patents and products that are good for the planet
The second quarter of 2021 was one of the most important quarters, both for Veg of Lund and for me, personally. Veg of Lund started the launch of its potato-based beverage DUG^®, with a focus on Sweden, the United Kingdom and China, and I took office as the CEO of Veg of Lund on 30 June. After a few weeks in my new role, I note that the former CEO Thomas Olander and the sales team have done – and continue to do – a magnificent job. To launch a new product in several markets as intended, in the midst of a pandemic, is a unique challenge.

After only a few weeks on the market, DUG has been very favourably received by consumers and retailers, which brings us great joy and energy in our efforts to reach out wider in the places and countries where sales have commenced. We are only at the beginning of our growth, and we are looking forward to all that lies ahead. The launch of DUG will, of course, be our focus in the forthcoming quarters, where we will see a significant increase in sales. In addition, we see good opportunities to increase the number of geographic markets and retailers over time in cooperation with partners.

ICA Kvantum Liljeholmen in Stockholm was the first store to offer DUG to its customers. It was followed by ICA Malmborgs in Skåne and several ICA Maxi stores in the region of Stockholm and Uppsala. More stores have been added in recent weeks. An updated list of the stores where DUG is available can be found on our website, dugdrinks.com. DUG is also offered in stores in China and on e-commerce platforms in the United Kingdom.

After an encouraging start of the launch, we have received requests from more food chains in Sweden as well as in other countries inquiring as to their opportunities to sell DUG. The DUG launch and the growing interest in plant-based food has also aroused media attention in various countries. International industry media, including The Guardian and the BBC in the United Kingdom, have featured articles and segments about our new potato-based beverage, and similar reports have also featured in media in our potential future markets.

The rapid and positive response gives us a good opportunity to take the step across the Atlantic and continue the launch in the United States, where we begin in places with a large population and interest in new food innovations.

Patents and product
It has been just over a month since I began my new assignment as CEO of Veg of Lund. One of the main reasons behind my choice is that the company represents much of what I find important, sustainable food production and consumption. Veg of Lund is a company based on patents and products that benefit the planet.

Professor Eva Tornberg’s patents for a stable plant-based emulsion and a method of manufacturing said emulsion was the foundation on which Veg of Lund was established in 2016 – and those patents remain important to us. Based on the company’s international patents, we applied for patent protection for DUG in a number of important markets in addition to Sweden during the second quarter of 2021. These include the United States, Canada, China, Hong Kong, Japan, South Korea, Australia and India.

DUG is an important launch that is currently under way, but it is only the beginning of the construction of the present and future Veg of Lund. Everything is based on the potato and the endless possibilities it offers. Patents and products based on potatoes lay the foundations for the company’s strategy, which involves the following:
1. Transfer patented technology to product development in the most interesting segments.
2. Develop concepts and brand to become established and grow in these segments on the market.
3. Cultivate markets and explore value chains within each segment.

More about DUG
The launch of DUG commenced two months ago. We are humbled by the fact that we operate alongside a number of other talented companies in the plant-based beverage segment, but we are very confident that DUG is a competitive product, with the most sustainable, climate-smart, and healthy profile that meets customer demand.

We are proud that DUG has a taste that is perceived to be neutral, that is, does not overpower other flavours when used in combination with other products, such as in the coffee. A large part of the development work involved finding a balance, where DUG could offer a distinct flavour and consistency and add something that consumers appreciate. Taste is individual, as we know, and we are delighted that our taste panels arrived at a taste that most consumers can share. The fact that DUG also is free from allergens and gives a perfect foam certainly contributed to their choice.

On our website, dugdrinks.com, we have gathered all the information about the different versions, the climate footprint, the contents, and the genius of the choice of potatoes. The site even conveys the taste of DUG.

Sales
During the quarter, Veg of Lund’s net sales increased to TSEK 574 (242). The sales of DUG in Sweden, the United Kingdom and China accounts for the great majority of the total.

The market
The interest in plant-based food is a growing global trend. As more and more consumers become aware of the exploitation of the planet’s resources, demand is growing for sustainable food production.

The analysis company Grand Market Research has assessed that the market for plant-based dairy products will reach USD 41 billion by 2025, an increase of 116 percent compared to the end of 2020. The long-term growth in demand for plant-based foodstuffs and focus on climate-smart products, high ethical standards, and health imply a continued strong market potential for Veg of Lund and our plant-based dairy products.

The COVID-19 crisis continues, and we note that restrictions are being partially lifted in our markets. Veg of Lund still considers it essential to have a high degree of flexibility, for example with regard to changing circumstances as a result of new variants of the virus or planned vaccination efforts.
 

Cecilia Lindwall,
CEO

For more information, please contact:

Cecilia Lindwall, CEO
Tel: +46 765 014 809
E-mail: cecilia.lindwall@vegoflund.se 

Malmö, 11 August 2021
Veg of Lund AB
The Board of Directors
 

This information is such that Veg of Lund AB (publ) is obligated to disclose pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 8:00 a.m. CEST on 11 August 2021.


About Veg of Lund
Veg of Lund develops unique plant-based foods meeting consumers’ demands for taste and sustainability. The company has roots in research at Lund University and owns patented methods for developing new food categories in the fast-growing market for plant-based foods. Veg of Lund’s climate-smart and tasty products are sold in Europe and Asia under the DUG^® and MyFoodie^® brands. The company’s shares were listed on the Nasdaq First North Growth Market under ticker VOLAB. Read more at ir.vegoflund.se. Eminova Fondkommission AB is the company’s Certified Adviser and can be contacted via telephone: +46 8 684 211 10 or e-mail: adviser@eminova.se.

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