Consumer Staples
Is Food Revolution Group the Turnaround Story of the Year?
Food Revolution Group (ASX: FOD) could be the turnaround ASX story of last 12 months.
Turnarounds usually occur when a new management team takes over an underperforming business and “turns it around” to become hugely successful for themselves and, within the investment community, shareholders.
FOD was an established business, with a valuable asset which previous management failed to maximise.
As such, its share price languished.
Problematically, while you would recognise FOD’s key brand if you passed it in the supermarket, you’d be hard pressed to find anyone who could tell you that FOD is behind the brand.
FOD had an identity crisis and it needed a fresh approach to operations to pull it out of the sour patch it was in.
The FOD turnaround
The Food Revolution Group is a food and beverage manufacturing company, specialising in the development of innovative health-focused products including beverages, functional foods, nutraceuticals, and wellness supplements.
The wellness category in Australia is worth $500 million and FOD already has a substantial stake in this market through its flagship brand of juices.
That brand consists of the Original Juice Black Label (OBL) products.
While these products sell steadily through major and second tier supermarkets, FOD was experiencing several problems including bushfires and drought temporarily increasing fruit prices and supply, financial losses despite strong revenues and corporate issues with an investment tranche causing uncertainty.
These legacy issues pushed FOD shares to as low as 2.6c last week.
However in recent days, the market seems to have picked up the story.
This is in part due to CEO Tony Rowlinson, who was brought in last year to revive the ailing company.
Rowlinson has a history in successful business resurrections.
He joined FOD in April 2020, bringing his experience in fast moving consumer goods (FMCG) to the company. Rowlinson held roles with Simplot Australia, International Paper, the Coca Cola company and Bristol Myers Squibb.
He was brought on board to revive the brand and launch new juice and wellness products into different markets.
In his first 12 months at the helm, Rowlinson has achieved the following:
- Negotiations with large retailers – increased prices of flagship juice brand
- Reduced costs – negotiated fruit supply agreements
- Built a new leadership team
- Launched new brands, and;
- Launched new strategy.
According to Rowlinson, FOD’s goal is now “To be a leading provider of beverages, nutraceuticals, functional foods and wellness supplements, that improve the quality of consumers lives, by the use of all natural ingredients ”.
To prove this point, FOD recently launched its range of “Juice Lab Super Shots” – the first three variants are now selling in Coles.
The initial range includes:
- Juice Lab “Focus” which contains Ginseng, guarana, calamansi & ginger
- Juice Lab “Immunity” which contains Ginseng, turmeric & ginger
- Juice Lab “Digest” containing apple cider, acacia & wheatgrass
Just this week, the company announced sales of the Juice Lab Wellness shots are exceeding expectations and forecasts have had to be increased. The expected run rate when Coles launched the range was that the range would sell two units per store per week.
Following three weeks of the shots being available in over 160 Coles stores, the range of three variants are selling six to seven units per store per week. This is 200% higher than expectations. Forecasts are being reviewed between Coles and FOD management, the forecast cycle is updated monthly. This is part of the Coles integrated business planning process.
Rowlinson is excited by the rollout saying, “Being first to market with ‘all natural plant based’ product in the Wellness beverage category is a massive achievement.
“The US who lead the world regarding ‘better for you’ beverages has seen a dramatic growth of ‘all natural, pick- me up shots & tonics’ due to COVID -19 impact.
“Preventative Foods & Beverages is the fastest growing sector within the $4.8BN US market.”
The numbers stack up
FOD’s roll out of products, including its Eridani Premium Marine Collagen and the roll out a range of wellness shots, beverages and plant-based wellness powder supplements across its Juice Lab Brand formulated from super foods and plant-based ingredients, has been the catalyst for increased revenue growth.
The company has also established a new state of the art ‘wellness centre’ that has the capability to supply all natural food supplements and will assist the company in accommodating increased volumes.
All of this activity has led to stronger revenues.
FOD has continued to grow market share with a growth of 18% over the period H1 2021 period. OBL continues to outperform the fresh juice market, increasing FOD’s share to 13% of the $560M market.
In the six month period to December 31st 2020, the company’s total sales were up 24% to hit $22.2M, delivering $2.2M EBIDTA versus $0.2m in the previous corresponding period – an improvement of over 1000%.
New products accounted for $1.5M in additional sales. The gross profit reached $5.69 million which equates to 31% of Net Sales.
FOD’s entry into the beauty market with its Eridani suite of products taps into the collagen market worth in excess of $4.6BN. This is a market set to exceed $10 billion by 2025 based on it being the best source of all-natural protein.
FOD is now on track to achieve or surpass its H1 figures in H2 2021 and is one of the turnaround stories of the year.
Dr Anthony Noble is the CEO of Fiji Kava (ASX:FIJ), a medicinal Noble kava company based in Australia, providing a natural solution to calm and soothe nerves, support muscle relaxation, increase mind relaxation and induce sleep.
What’s your journey in becoming a Chief Executive Officer?
I began my career as a research scientist doing post-doctoral work on skin regeneration. I worked in the UK Government in a GMP inspection role, before coming home to Australia to work with Cryosite Ltd on their cord blood banking business. From there I spent more than a decade with the Soho Flordis International Group, which grew from a fledgling business in 2010, when I joined, to become a global natural medicine brand with around $200m in sales in over 50 countries. I had a few amazing mentors in the SFI business, including the founders Eng-Liang Tan and Nigel Pollard. We grew the business through 8 major acquisitions, led by Wolfgang Kuchen, and by licensing, developing, and launching truly innovative new products. Most recently I returned to my home state of Queensland, as CEO of Australian Biotherapeutics. We designed, commissioned and constructed a world class facility on the Sunshine Coast that manufactures live biotherapeutic products.
Tell us a bit about your business and how you are commercializing?
Fiji Kava is fully integrated natural medicine company, which sources Noble Fijian Kava and processes this into extracts, drinking kava and solid dose form medicinal products. We have just announced a strategic partnership with Chemist Warehouse group, which is a game changer for us in Australia, New Zealand and China. We also sell our products in Coles supermarkets who have been a major supporter of our growth to date. In the USA we operation mainly via Amazon and online channels, at this stage.
How are you managing with the current COVID-19 pandemic on both business and personal front?
Fiji has been impacted terribly by the pandemic and we always have our Fijian brothers and sisters in our thoughts and prayers. Fiji Kava’s operations are on the island of Ovalau, which to date has only had a minor outbreak of the virus. We have managed to ensure that all our staff now fully vaccinated, and implemented Covid-19 protocols and action plans, to mitigate any possible future outbreak in our region.
What’s the most exciting thing about running your business?
The medical benefits and power of kava to help people is exciting. Right now, the world is in the grips of an epidemic of anxiety and other issues that have been exacerbated by the pandemic and the associated lockdowns and disruptions to normal life. It is truly exciting to be brining a natural medicine product to market that can really make a difference for people suffering from those problems. Seeing the availability of the product on the market, particularly via Chemist Warehouse and Coles in Australia makes this even easier for people.
How do you measure success?
For us success is twofold. Firstly, it is our mission to bring the benefits of Noble Fijian Kava to the most possible people around the world. This means making our products available in different channels and continuing to innovate and build new product formats. The other side of success for us is to share the value we are building with the Fijian people who grow our kava and work with us in our facilities. It is a priority for me as I have taken over this mantle from our founder Zane Yoshida.
What do you think is the most important quality of being a CEO of a listed company?
Focus and clarity. In the first few weeks in this role, I have tried to simplify and prepare our business for scaling up. I believe we have a few things that we need to do very well, and they are clear, USA and China market entry and diversifying our product formats to include functional beverages. I believe that giving our team and our investors clarity on the strategy and how we are executing is the most important quality.
What is your favourite book?
Now I am reading a lot of books on parenting. My wife and I have a 4-year-old boy and an 11 month old baby-girl. My wife is also a senior executive in the FMCG industry, so we need to be very organised. I am currently reading “Parent’s Who Lead”, by Stew Friedman. I was lucky enough to take Prof Friedman’s Total Leadership course at the Wharton School during my MBA, and it was genuinely a lifechanging experience. This latest book is very targeted to young families like ours and offers a lot of great specific advice. I recommend it!
What message do you want to send to our readership in Asia & Australia?
Watch this space, when it comes to Noble Fijian Kava, the story is just beginning. All over the world people are beginning to recognise the benefits of this ancient natural medicine, and I think it is going to be an amazing next few years for Fiji Kava.
How can people connect with you?
Follow me on LinkedIn. Email me. I am easy to find, and I answer my emails.
Linkedin: https://www.linkedin.com/in/anthonynoble/
Fiji Kava’s Website: https://fijikava.com/
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