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Australia: Bellamys Has Successful Listing


Australia: PZ Cussons Snaps up Organic Food Brand


Australia: OBE Beef Experiencing Meat Shortages




Australia: Bellamys Has Successful Listing

The organic baby food company Bellamys has had a very successful launch on the ASX, with its shares jumping by 30 percent.

The Tasmanian company, formerly called Tasmanian Pure Foods, has ambitious growth plans to ramp up exports of its certified organic products to an emerging middle class in Asia who are thirsty for dairy products.

Shares surged as much as 34 per cent after listing on Tuesday, closing 30.1 per cent above the Aus $1 (US $0.93) offer price at Aus $1.31 (US $1.22), giving the company a market capitalisation of Aus $124 million (US $116 million). The offer raised Aus $25 million (US $23 million).

"It's a cracking start as a listed company, with institutional investors really backing our plan for sustained growth in China and other major markets around Asia," Bellamy's managing director Laura McBain said.

"It was a fortunate piece of timing that on the same morning of the float we were able to announce that a key supplier, Tatura Milk Industries, has been accredited to export infant formula to China," she said.

In May, China announced a new accreditation system for all infant formula manufacturing facilities importing into the country. A two-month hiatus on exports from the Bega Cheese-owned Tatura Milk Industries had temporarily halted Bellamy's ability to deliver orders into China.

Lead brokers Wilson HTM marketed the float as a way to gain exposure to the growing worldwide fashion for certified organic foods and an increased appetite for dairy products in Asia.

The IPO was priced at 19 times pro forma estimated earnings for the current financial year. Tuesday's closing price values the shares at 24.7 times forecast earnings. Annual revenue growth has averaged 55 per cent since 2010.

In Australian supermarkets, its products are marketed under the Bellamy's Organic banner. Local stockists of the range, which is expanding into products for infants and school-aged kids, include Woolworths and Coles. Offices in Singapore and Shanghai manage distribution into China, Singapore, Hong Kong, Malaysia and Vietnam. It is estimated that 15 per cent of revenue for the year ended June 30 came from offshore.

Related Report: #5002-40 The Asian Market for Organic Food & Drink

Source: Australian Financial Review



Australia: PZ Cussons Snaps up Organic Food Brand

PZ Cussons Plc, a leading UK-based international consumer products group, has announced its acquisition of Australian food brand Five:am. The entire issued share capital of Five AM Life Pty Ltd ("Five:am") is being acquired for GBP 44m (US $73m) in cash with completion expected to follow within a very short period. Additional consideration of a maximum of GBP 7.7m (US $12.8m) is payable subject to the performance of the business in the year ending 30 June 2015.

Five:am is a leading Australian organic yoghurt brand. The business has strong retail partnerships across the country and the potential for significant growth, both within Australia and other markets. Products are manufactured at its Melbourne facility. Revenue and EBITDA for the year ended 30 June 2014 were GBP 19.6m (US $32.7m) and GBP 3.4m (US $5.7m) respectively.

The business is being acquired on a cash and debt free basis using existing facilities and is expected to be earnings enhancing in the current financial year.

Alex Kanellis, Chief Executive of PZ Cussons Plc, said: "We are delighted to have acquired such an exciting brand which is an excellent fit with PZ Cussons' existing presence in the fast growing core food and nutrition category. Since its launch in 2011, Five:am has become a market leader in the Australian organic food category. A combination of industry leading innovation, a compelling brand proposition and a high quality product range has driven the business' growth to date and leaves it uniquely placed to take advantage of the market trends of increasing yoghurt consumption and demand for organic and nutritious products."

David Prior, founder and former owner of Five:am commented: "I am delighted that Five:am has chosen a great home for the future. The cultural fit with PZ Cussons was apparent immediately and I am sure that the business will flourish under its ownership. I am very pleased to be maintaining an involvement in Five:am for a period post-completion and am looking forward to working with Alex and his team over the coming months."

Related Report:
#4101-60 The Australian Market for Natural & Organic PC Products

Source: News Bites



Australia: OBE Beef Experiencing Meat Shortages

After 20 years in business, OBE Organic Beef is grappling with constraints on supply for its growing markets in Asia and the Middle East.

It's a challenge that says things are trending in the right direction for OBE, but it remains a challenge all the same. In response, OBE is holding a free Innovation Forum in Longreach to introduce cattle producers to the concept of 'going organic', and ideas and technologies that can support beef production organic or not.

Organic beef is delivering the goods for certified producers. OBE's general manager Dalene Wray says liveweight prices are running at AUS $3.30 to AUS $4.80/kg and higher. Prime 500kg to 600kg steers sold for a top of AUS $1.43 at Roma on July 10.

There is not always such an extreme difference between organic and conventional beef prices. However, when it happens, the margin rewards the perseverance of those who have 'gone organic'.

Consistently strong prices haven't been enough to bring on board the extra producers that OBE needs to address:
- Its steadily growing Asian market
- The 'exponential' growth in its small but burgeoning Middle East market
- The consistently strong US demand for Australian grass-fed organic mince

OBE is now processing nearly 12,000 head a year, but trends in Asia and the Middle East suggest that figure could be stretched quite a bit yet.

In Australia, 'organic' is regarded as something of an indulgence for the well-off, Mrs Wray said. In Asia and the Middle East, buying organic is seen as insurance particularly by mothers against regular food-substitution scams, use of off-label chemicals in agriculture, and generally poor hygiene and handling.

The latest food scandal broke this week, when OSI, a major supplier of product to fast-food chains such as McDonald's in China, was claimed to be reprocessing old meat and selling it at up to a year old. Opportunity knocks but opportunity needs supply, Mrs Wray says.

"There are a lot of producers going into organic, but it's not enough to counter the attrition at the other end."

Some organic producers are retiring, and some have had to resort to non-certified feed supplements to get through the drought.

OM Comment
OBE Beef is in a strong position to expand in export markets. Apart from Australasia, organic beef production is concentrated in Europe and North America. Supply-demand imbalances in these regions prevent most producers to reach out to Asia and the Middle-East. If OBE Beef can raise supply, it could significantly strengthen its position in export markets.

Source: Queensland Country Life / OM














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