Maui Nui Venison
A deep dive on differentiation and pricing models
Hi Modern Acre community!
Welcome to our first newsletter. I’m Jack Richardson.
The Modern Acre podcast sheds light on the inner workings of innovative food and agriculture businesses. The framework of this newsletter is to pair these insights with my own analysis and suggestions on how these businesses can expand. I’ll support this with secondary research of similar public and later-stage private companies.
A quick intro on me. After starting my career in venture banking, I have spent the last five years in AgTech, first at a food waste startup and now in precision technology at an Ag OEM. I've spent most of my career in strategy roles where I've explored ways to make business models work. Outside of my specific roles, I've written about the space more broadly – you may have come across my prior writing on LinkedIn.
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Our first newsletter features Maui Nui Venison.
Tim and Ty interviewed Jacob Muise, Founder and CEO of Maui Nui Venison, on Episode 280 last year. Maui Nui humanely sources invasive axis deer on the island of Maui,1 in turn alleviating the impact deer have on the ecosystem while unlocking delicious, high-quality food.
Maui Nui has multiple great resources to learn about their stress-free harvesting methods. I won't restate those learnings here and will instead encourage readers to browse their website and listen to Jacob's interviews on The Modern Acre, The Tim Ferriss Show, and The Drive.
This newsletter will instead focus on the following:
Using Predators to Restore Ecosystems
Listening to Jacob on The Modern Acre reminded me of the YouTube video How Wolves Change Rivers.
In the beginning of the twentieth century, all wolves found in Yellowstone National Park were killed as part of a policy to eliminate predators. In the decades that followed, the growing populations of deer and elk perpetually overgrazed the Yellowstone valleys, leading to compromised soil health and the collapse of river banks.
Wolves were reintroduced in 1995 as a result of these unforeseen circumstances. The dozen wolves killed some deer and elk for food, but more importantly, the wolves changed the prey’s migratory patterns. Instead of overgrazing the valleys, prey moved to the forests for protection.
This allowed the valley to recover, with some trees quintupling in as few as six years. Taller trees have bigger, longer roots, leading to better soil health and the stabilization of rivers, hence wolves, a natural predator, change rivers.
In the absence of natural predators, humans can play this role to restore ecosystems. Cue Maui Nui Venison.
Eight axis deer were brought to Maui a century ago as a gift to the king of the Hawaiian Islands. But without natural predators, the population exploded. It is estimated there are over 50,000 axis deer on the island. Given Maui's rough, mountainous terrain, it is challenging enough to simply locate the deer. But their impact does not go unseen.
Similar to the deer in Yellowstone overgrazing the valley, the axis deer overgraze section by section of Maui, leading to topsoil runoff that can end up all the way in the ocean, compromising coral reefs, and impacting Maui's watershed.
Watershed is the culmination of streams and rivers that flow into a lake, which becomes a local water source. As a result of the deer overgrazing, vegetation – trees, shrubs, grasses – are unable to absorb nearly as much rainfall as they otherwise would. It is estimated that Maui's watershed is operating at 50% of its capacity.
Maui Nui’s mission is to “help balance axis deer populations for the good of our environment, communities, and food systems.” They do this by harvesting a select number of the deer, in turn restoring Maui’s watershed, and selling “the healthiest red meat on the planet.” This includes ground venison, select cuts like tenderloin and steak strips, sausage and bone broth.
Maui Nui Differentiation
Key metrics for D2C brands are customer acquisition cost (“CAC”) and lifetime value (“LTV”).
My bet is Maui Nui has a lower CAC and higher LTV than their peers and competitors based on strong organic media and higher prices, respectively.
A lower CAC is achieved through exceptional storytelling of their unique and commendable mission on their website and via podcasts. This can be chalked up as organic media, which while is not technically free – Maui Nui needs to pay for website design and Jake’s time doing podcasts – it should be less expensive than social media ads and other paid media.
A higher LTV is achieved, first, on the basis of higher prices.
The best comparable to Maui Nui may be Force of Nature, another admirable brand that sells regeneratively raised meats direct to consumers. Force of Nature sells venison so we can compare prices between the two brands.2
I’ve normalized prices per pound and rounded to the nearest dollar. Force of Nature prices also include the 5% subscriber discount.
Imagine if a customer only purchases each of the four above cuts (normalized per pound) from both brands once. Maui Nui’s LTV is $162, a 67% premium to Force of Nature’s $97.
Subscription box
Beyond price, the other leg of the LTV equation is Customer Lifespan: the duration a customer remains a customer.
Here again, Maui Nui is differentiated. Beyond selling individual items, Maui Nui also offers the 'Ohana Box, a $379 subscription box for 4-lbs of ground venison and four 1-lb servings of specialty items every four, six, or eight weeks. Eight pounds equates to an average of twenty-two servings at roughly $17 per serving.
Based on my pricing analysis, the 'Ohana Box doesn't entail any discounts, unless at least three of the four specialty items are higher priced items, so the value from subscribing instead comes from dependable supply of their limited venison and access to exclusive products that you can not buy a la carte.
Maui Nui's 'Ohana subscription is unique relative to all other D2C meat brands as there is limited availability of 8,000 subscriptions. If you are interested in being subscriber 8,001, you're out of luck on the 'Ohana box.
8,000 subscriptions is Maui Nui's estimate for how much meat can be harvested every year to keep the deer population at around 40,000 and reduce their detrimental environmental impact. The deer population grows 30% annually according to the Honolulu Civil Beat so keeping the population in balance equates to culling 12,000-15,000 deer every year.
Maui Nui could have kept this number – 8,000 subscriptions – internal, but I believe they promote it on their website to create scarcity. NYU Professor Scott Galloway speaks to how luxury brands (i.e., LVMH, Hermes, top universities) receive “irrational prices” by artificially constraining supply.
While Maui Nui’s supply constraints are real versus artificial, by simply introducing scarcity, it allows them to charge à la carte prices for a subscription box. Compare this to D2C meat competitors, and frankly any other D2C brand, that offer 5-20% discounts for subscriptions3.
Beyond protecting margin, promoting 8,000 subscriptions is a retention play. A canceled subscription may mean you lose your chance at resubscribing if all 8,000 are accounted for. Compare this to other D2C brands that make it all too easy to cancel and resubscribe.
Annual Subscriber Discount
Here is an idea that Maui Nui can implement to further increase retention: an annual subscription for a 7% discount. Customers pay for their year’s worth of venison in January4.
This idea is fairly commonplace in subscriptions like software and streaming services. I personally have not seen it with food. As such, the following digs into the idea. It may work specifically for Maui Nui as they have established market demand for a subscription without the incentive of discounts. So while Maui Nui has margin to play with, other meat D2C brands may not.
Below are the assumptions and the math:
All 8,000 subscriptions are in use. Maui Nui reached this goal in early 2024.
Average subscriber purchases once every 6 weeks (9 orders / year)
25% of subscribers sign up for the annual subscription
A fully-subscribed ‘Ohana Box is estimated to deliver ARR of $27,288K at today’s prices and assumptions. Revenue drops to $26,810K if 25% of subscribers pay for a year’s worth of product upfront in exchange for a 7% discount.
So while Maui Nui sacrifices $478K in topline ($27,288K - $26,810K), they receive an incremental $5,776K upfront in January ($8,050K - $2,274K).
Maui Nui could then use this additional $5,776K to fund CAPEX, reducing Maui Nui’s need to raise additional capital from investors and debt lenders, assuming they aren't yet funding operations through existing cash flows.
If Maui Nui instead funded the $5,776K with debt at an assumed 8% interest rate,5 their annual interest payment would be $462K. So while Maui Nui sacrifices $478K in topline for this initiative, the net impact is $16K.
The next question becomes how does the value of reduced customer churn – lower marketing and advertising spend – compare to $16K?
For illustrative purposes, I assume:
25% annual customer churn
50% reduction in churn for subscribers who pay upfront. This is the key hypothesis: customers who pay in January are less likely to cancel their subscription
These assumptions result in an additional 250 customers staying with ‘Ohana (2,000 - 1,750).
250 additional customers at a cost of $16K. So if Maui Nui instead lost these customers, how much would they have to spend to get 250 new customers? We can calculate the breakeven point as $16K / 250 customers = $64 CAC.
If Maui Nui’s CAC is greater than $64, then this idea is worth exploring6.
Please let me know what you thought of this newsletter in the comments below!
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All views expressed and any errors in this newsletter are my own and not that of my employer.
My thoughts go out to those impacted by the recent Maui fires. Maui Nui has made a strong commitment by donating venison to folks impacted. You can learn more about their charitable efforts here.
I’m equating Maui Nui’s Rib Chop and Leg Medallions to Force of Nature’s Tomahawk Steak and Steak Medallions, respectively; Maui Nui recently increased the price of their ground venison from $21 to $25. This allows them to donate one pound of ground venison to support the Maui fire response efforts for every pound purchased; Sausages are not a 1:1 comparison as Force of Nature’s venison sausage also contains regenerative beef.
Maui Nui offers a 5% and 10% subscription discount on their venison sticks and bone broth, respectively, but not for the products that are part of the ‘Ohana Box like ground venison and the loin chop.
I established earlier that Maui Nui's customers are less price sensitive than customers of other D2C meat brands. I believe this because Maui Nui has paying subscribers at non-discounted prices. Their customers are more price inelastic. As such, even a 7% discount (if paid for a year's worth of 'Ohana boxes upfront) may not speak to higher earning individuals who care less about saving a few hundred dollars. This could be vetted by individually contacting 'Ohana subscribers to gauge their interest.
Steward - the regenerative agriculture crowdsourced debt lender - has recent loans for between 7% - 8.5% annual interest rates.
I assume a customer who would have churned but does not because they’re paying for a year upfront has the same LTV as a newly acquired customer. If the former proves to be more valuable (higher LTV), then the idea has more staying power.
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