RedIsland should focus on a merger with a debt free olive orchard approx. 400-500 ha (no own olive oil brand) that suffers under the low international EVOO bulk prices: see Report 1. HY 31.12.2011 page 4 section Oil sales ..... the Company is actively purchasing oil from third party producers providing a commercial outlet for Australian growers who do not have established markets of their own.
To avoid any share price dilution the RedIsland management has to come up with an additional asset: see Report 1. HY 31.12.2011 page 4 section Asset and Goodwill valuation .....the accounts of the Company does not include as an asset the value of the RedIsland brand.
The management is already drawing a better picture of RedIsland marketing wise.
We can argue for a while about the value of the Redisland brand. I think the value will be easily > 1 Million AUD.
Please think at an Chinese consumer who wants to buy a bottle or a tin of EVOO just to buy a 'healthy' olive oil. He or she will look at the EVOO labels and will be totally confused. What to take?
If Chinese consumers have the choice between Cobram Estate and RedIsland EVOO I think the majority would go with RedIsland. Why?
The label shows immediately that Redisland is an Australian EVOO. Australia is positively linked to a huge tidy country with friendly openminded western oriented people. A country a middle class Chinese would like to travel to.
Why not buying a brand with an 'Australian label' that creates positive emotions.
The Cobram Estate EVOO label doesn't create such emotions at all to the majority of normal consumers abroad. A lot of money has to be spent for adverts to explain why Cobram Estate EVOO is a real superb Gold medal EVOO.
In terms of international expansion (that's the crucial path for future profitability) the RedIsland brand is much better positioned than the Cobram Estate brand.
RLA Price at posting:
1.2¢ Sentiment: None Disclosure: Held
