Pure Foods Tasmania has announced it is acquiring Daly Potato Company to help the company’s expansion into the ready meals market.
Daly Potato Company produces premium potato products sold through major supermarket chains. Sales have grown from $211,000 in 2017 to $2 million.
PFT will take on ~$300,000 debt, mainly relating to plant and equipment. Shares worth $1.4 million will be escrowed in three equal tranches and $100,000 cash on settlement.
For PFT, the acquisition meets some key metrics and merges two businesses that are operationally aligned and service the same core retail customers.
PFT managing director Michael Cooper said it was a great opportunity for shareholders as well as cementing the company’s strategy of moving into new categories.
In an investor update on 31 August, Cooper announced PFT was launching a new Tasmanian plant-based dairy brand called New Pastures, with five core products to be sold in national and independent supermarkets, direct-to-consumer and export retail channels.
Cooper said: “The global plant-based cheese market is forecast to reach $3.9 billion by 2024. It is likely to grow at a compound annual growth in revenue (CAGR) of more than 15 per cent from 2018-2024. Plant-based cheese segment accounts for around six per cent of the global non-dairy milk market.”
The five products are: Original Oat Melt, Smoked Oat Cheese, Aged Cashew Cheese, Almond Greek Feta and Cultured Oat Butter.
PFT is also investigating opportunities to move into beverages in both alcoholic and non-alcoholic categories. “Non-alcoholic beverage market contributes $7 billion to the national economy,” he said.
The company has also launched an ecommerce channel: shop.purefoodstas.com and secured an export license for its Mornington production facility, which will include pate, plant-based food and meal solutions.
Daly Potato recorded $2 million in sales revenue in FY20 and its acquisition will give PFT a larger national footprint.
Cooper said: “Meal solutions is a $1 billion market in Australia alone and we also see a large opportunity to support our Asian customers with unique 100 per cent Tasmanian-based meal solutions and Daly current products.
“This acquisition also brings many synergies, including customers, administration and supply chain benefits, along with adding Daly’s products to our new online store for our loyal consumers to enjoy.”
DPC was founded in 2016 by potato farmers Gerard and Susie Daly, who were looking for ways to value add to the business while using potatoes not suitable for sale to consumers. They were named 2019 Australian Farmers of the Year.
Its CAGR was 33 per cent over the last two years to 30 June 2020. It expected revenue growth to continue into FY21 with the launch of a number of new products.
PFT was formed in 2015. It has since acquired Tas Pate and Woodbridge Smokehouse. It listed on the ASX in April 2020.