Next Investors logo grey

FRUGL set to commercialise analytics solution


Published 04-FEB-2021 12:21 P.M.


8 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

The COVID-19 pandemic triggered retail market changes never seen before, particularly with increases in non-traditional online purchases in the fast moving consumer goods sector (FMCG) with grocery items being at the forefront of the transition to online shopping.

As 2021 unfolds, we are beginning to see that the long term consumer behaviour changes that prevailed over the last 12 months are still being embraced.

FRUGL Group (ASX:FGL) is a company that stands to benefit from this trend.

The company’s information and data platform is proving to be well sought after by businesses that are focused on tracking consumer behaviour in order to advertise and promote their products accordingly.

FRUGL is a price comparison platform that in part allows families to compare the cost of goods between different supermarket retailers in their local areas, whilst analysing shopper behaviours in real time against the changing landscape of product merchandising and pricing changes across over 40,000 different products from major supermarket chains – Coles and Woolworths.

Frugl's information and data platform is proving to be well sought after by businesses.
Frugl's information and data platform is proving to be well sought after by businesses.

Formally Family Insights Group Limited (ASX: FAM), the company commenced the acquisition of the grocery comparison and data analytics platform Frugl in October 2018, which was then settled three months later.

Whilst the company’s fiscal 2020 outlook outlined the technical development and launch of FGL alongside the re-launch of its existing child protection application and content hub, the group had to adjust its plans following the onset of COVID-19.

FGL encountered a number of challenges from the resultant poor prevailing economic conditions across the retail sector, leading management to announce austerity measures along with a company restructure on 2 April 2020.

Measures that reduced monthly costs by circa $90,000 included reducing the permanent headcount by 57% and a move to on-demand delivery of product and software development, technology support and marketing service.

In order to accelerate future company revenue growth, the child protection application and content hub were afforded minimal development focus to allow a major uptick in activities and resources related to the development of FRUGL.

These changes culminated in the company’s name change from Family Insights Group Limited to FRUGL on 2 July 2020.

While this has been a challenging period for the company, adversity often breeds opportunity and as 2021 kicks into gear FRUGL is ideally positioned from a number of perspectives to benefit from the new landscape.

The Frugl Group Ecosystem

FGL has developed technologies that incorporate real-time data capture, cloud-based storage and advanced cloud-based data analytics.

Specifically, the group offers a retail intelligence ecosystem that acquires publicly available grocery data, organises it, enriches it, and utilises it to power two independent retail platforms: Frugl Groceries, a free grocery comparison and wellness mobile app for shoppers (B2C), and InFocus Analytics, an advanced retail analytics platform for retailers, suppliers and analysts (B2B).

With management drawn from major Australian and international retail organisations, FGL combines extensive retail experience, proven expertise in data analytics and strategy, and enterprise-scale retail data sets that are ready for immediate commercialisation.

The dot-com boom/bust era cast significant scepticism around the tech sector, and rightly so.

Over the last couple of decades plenty of companies have tested the patience of investors, with one common attribute being heaps of hype about the technology, but no visible means of monetising their tech/service offering.

This is where FGL sets itself apart, and as recently as last week management provided a comprehensive outline of the company’s revenue model as shown below.

Last week Frugl provided a comprehensive outline of the company’s revenue model.
Last week Frugl provided a comprehensive outline of the company’s revenue model.

Catalysts Ahead

Given the company’s transformational year and the numerous share price catalysts on the horizon, FGL appears to have what it takes to garner even more investor attention in 2021.

Last week’s quarterly report informed of an 11% increase in the number of users of the Grocery App following the release of Version 2.0.

A major release is expected within the March quarter (Version 3.0) and this will include performance enhancements, as well as the addition of filtering and dietary features.

This is likely to be seen as an attraction that will foster further subscriber growth, making it a potential share price catalyst.

Additionally, commercial contracts for ongoing data services will begin in the first half of 2021, with the second half expected to see the expansion of commercial data and intelligence services that will include shopper behavioural data.

Commercial contracts for the InFocus Analytics SaaS product are commencing, followed by the inclusion of customer behaviour data into InFocus analytics for new and existing customers.

The Frugl Grocery mobile application is a supermarket comparison engine

During fiscal 2020, management focused activities on the development of its mobile application FRUGL Grocery.

As well as being a grocery comparison application that allowed families and other shoppers to find the best prices across major supermarket retailers, FRUGL Grocery introduced tools to help shoppers optimise their product purchases for health and wellness, incorporating information on allergens, ingredients and nutritional value into profile based alerts and warnings.

The app allows shoppers to compare products across leading players such as Woolworths and Coles supermarkets, as well as providing the facility to create brand-specific shopping lists that can be ordered by criteria such as prices.

However, FGL’s reach stretches beyond the majors as it is linked to more than 2000 grocery suppliers that distribute a wide range of products including liquor, pet supplies and pharmaceutical products.

A report by Gartner estimates that the data analytics market in Australia is valued at $1 billion, and IAB Australia estimates the digital advertising spend in Australia is nearly $9 billion.

Part of the group’s revenue model incorporates the e-commerce sector, and estimates that the food and personal care segments of this market are valued at more than $8 billion.

In addition, the company is overlaying wellness tools for shoppers to enable them to compare products and optimise shopping lists by nutritional value, ingredient listings, allergen inclusions, health ratings and product sustainability.

FGL’s reach stretches beyond the majors as it is linked to more than 2000 grocery suppliers.
FGL’s reach stretches beyond the majors as it is linked to more than 2000 grocery suppliers.

Company resources were focused on customer research and design of FRUGL, with core functional specifications developed alongside shopper insight collation and data intelligence developed via ongoing grocery data collation.

Development of the beta release of the app for both iOS and Android users has been in the works since 2019, with Version 1.0 of Frugal Groceries launching to the public on 11 February 2020.

Version 2.0 was released during the September Quarter and saw an 11% increase in the number of users of the App.

Management is focused on maintaining the rate of growth of the app and has embarked on the development of another major app update, including performance enhancements and the addition of filtering and dietary features, with an anticipated major release expected in the March quarter.

InFocus possesses invaluable data insights for retailers

The company’s Grocery Pricing & Promotions Analytics platform, Infocus Analytics (IA) is a business to business (B2B) retail intelligence platform that uses an SaaS model alongside custom solution development.

IA helps businesses understand their customers and their competitive environments by developing data driven solutions matching their needs, and applying analytical techniques to create relevant and actionable insights.

With a goal to create close, collaborative working relationships with its clients and to build innovative and intelligent data solutions that use data to unlock real business value, FGL utilises data acquisition capabilities with full product, pricing, promotional, nutritional and catalogue data from supermarket competitors being collated on an ongoing basis.

Users of the Frugl Grocery app generate user behaviour and segment data that is collated and this further enables it to be used by the InFocus Analytics platform for deeper consumer retail analytics.

Users of the Frugl Grocery app generate user behaviour and segment data.
Users of the Frugl Grocery app generate user behaviour and segment data.

Market Performance

FGL made a 12 month high last week, and it is worth noting that the group’s shares have roughly doubled in the last three months, including a 50% spike towards the end of January.

It could be argued that this is recognition of a number of near and medium-term share price catalysts on the horizon.

During this time, management have increased their stake, positively indicating their strong alignment with the success of the company and that of its shareholders.

Lastly, it is important to reiterate FGL’s invaluable asset of data, which prevails through its ecosystem of platforms to create an engine of interconnecting and ever-growing data.

As such, the company’s data capabilities are essential to their revenue model.

However, as one can see below, almost all facets of the business have billion market potentials in the Australian market alone, shining positively on Frugl’s growth in Australia.

From a broader perspective this is a scalable business that can grow from a relatively fixed cost basis once the investment in technology hardware and data collection systems are in place.

Consequently, as revenues grow margins increase as much of the income drops straight to the bottom line.

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.