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
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
Asian Market for Organic Food &
Australian Financial Review
Australia: PZ Cussons Snaps up Organic
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
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
Australian Market for Natural & Organic
Source: News Bites
Australia: OBE Beef Experiencing
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
- 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.
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.
Queensland Country Life / OM