Beston Global Food Co. has signed a supply agreement with Thailand’s KCG Corp. in exchange for a minority stake in the Australian meat dairy group.
Sydney-listed Beston (BFC), which posted a loss in the 2021 financial year, said KCG would become a “strategic investor” in the business after the deal. The transaction is subject to “mutual due diligence investigations” over the next two months.
The “long-term” supply deal will see BFC ship its dairy, meat and plant proteins to KCG, which will acquire a 12% stake in the business. He will buy more than 100,000 shares for an amount of 10 million AUD (6.8 million USD).
In the financial year ended June 30, 2021, BFC generated revenue of AUD 112.4 million, down 9.1% from the previous 12 months. Operating losses widened to AUD 24 million from AUD 14 million. BFC’s net loss also widened from AUD 12.1 million to AUD 21.8 million.
The Australian company already sells in Southeast Asia, notably in Thailand, as well as in the Philippines, Vietnam and Malaysia, and further afield in China. And it has also just landed new contracts in Japan.
“Following the work done to establish the Beston brands in Thailand by BFC in its early years, KCG and BFC have reached an agreement for KCG to assume responsibility for the importation and distribution of Beston products in Thailand,” said BFC in a stock market filing today. (June 23).
BFC is a key supplier of mozzarella and also produces cream, butter, whey powder and lactoferrin protein. Its cheese brands include Mable’s and Edwards Crossing.
The company sells meat through its subsidiary Provincial Food Group, which in 2019 entered into a manufacturing agreement with Victoria-based Soulfresh for meat substitute brands Eaty and Wildly Good.
The company added, “BFC and KCG have also collaborated to develop a mozzarella product specifically for the Thai market and several other ASEAN countries. Under these agreements, KCG will become the official representative and exclusive distributor of Beston products in Thailand and will enable BFC to increase its penetration into ASEAN markets with its products.
Bangkok-based KCG was originally established in Thailand in 1958 as Kim Chua Trading. The company runs its own manufacturing of dairy products, biscuits, biscuits and bakery ingredients, and has recently expanded into meat, seafood and canned foods.
KCG’s own brands include Allowrie and Imperial, the company serving retailers in Thailand such as Tesco and Makro, as well as convenience store chains like 7-Eleven.
BFC said KCG “has been one of the pioneers in bringing globally produced dairy products to Thailand, with a focus on cheddar cheese, mozzarella, butter, whey and ingredients” .
Meanwhile, BFC has landed new business in Japan in the form of export contracts, “accounting for about 20% of its total annual mozzarella production.”
Sales of dairy products in fiscal year 2021 amounted to AUD 102.2 million out of a total of AUD 112.4 million. Most of it was generated in Australia – AUD 81.5 million – including AUD 17.1 million from Asia. BFC did not give a breakdown of mozzarella sales in its annual report, although it said today that annual volumes had fallen from 4,400 tonnes in 2019 to 15,000 tonnes in its last financial year.
CEO Fabrizio Jorge said, “Producing and delivering premium products to premium markets is a long journey and our goal has always been to establish long-term sustainable returns for our shareholders through markets and channels that recognize the quality of South Australian products. ”