Longtable investors are obviously feeling a bit flat after the recent report. There was a lot of speculation and anticipation about what was going to be released. People seem to forget that the BD Paris-Farm acquisition only took place a couple of months ago. It would be unreasonable to expect anything major at this stage. From what I can see they are forming the foundations for strong future developments in products, marketing, brand recognition, increasing farm capacity and the all important China factor. The reasons I am staying with LON are fourfold.
1. Laura McBain: From everything I have read, Laura joined Bellamy's around 2007. Bellamy's had originally started with organic baby food products and sometime around Laura starting, moved into baby formula. I can't seem to find any figures from that time but we do know from the annual reports on the ASX that their revenue was $28 million in 2013 and just 3 years later she had built that to around $235 million. At this point in time revenue appears to even out as they realised the change in their strategy for getting in to China hadn't worked. The interesting thing to me is that if you look at the annual reports, leading up to this time there had been changes in the board structure. Also according to an article in The Australian last year, millions of dollars had been spent on Consultants in the 2016 financial year, which is apparently when their strategy changed. According to the article the Bain Group were a main part of these fees. The question is, who was responsible for the changes that took place.? Andrew Cohen who is now the CEO of Bellamy's came from the Bain Group. From what I have read and from the revenue figures themselves you can see that Laura did an amazing job of increasing revenue from $28 mil to $235 mill in 3 years. Given a fair chance, what can she do here? LON also keep mentioning they are looking at further acquisitions. Again, it will be interesting to see what these are and what synergies form with the existing investments.
2. The main investors: There are some very prominent and influential people with deep pockets sitting in the background supporting Laura. As has been widely reported, some of these people have followed her from Bellamys. These are smart people who I am sure are careful where they invest, and who they support. They must expect positive things to happen here.
3. Dairy products in China: At the moment dairy is only a small industry in China. Have Laura and the board potentially recognised an opportunity ahead of the herd? In a few years maybe everything won't be about baby formula anymore but more about dairy in general. Looking at the statistics, it seems to be a relatively unexplored market in China at this point in time and B.D. Paris-Farms do have their CNCA registration in place ready to go.
4. My children and healthy eating: So, I have 2 teenage children. The other day I bought some salted caramel coated popcorn. It was heavenly and so I offered them some when they came home from school. The both looked at me in horror .. "Mum, do you know that is coated in sugar?", my response "I guess so, but it tastes amazing, try some", my son's response "Mum, you can even see by looking at it how bad it is", my daughter did try some and said to my son "yep, it just tastes like sugar .. mum, you should throw it out". I didn't, I put it in the cupboard to eat later when they weren't around to judge me. Anyway, my kids have been brought up eating lots of different foods .. I am not an organic health nut, my weakness is potato chips and lollies and over the years my kids have had their fair share too, what did surprise me though was their reaction. They told me they have been studying nutrition at school and the effect that the food you eat has on your body. Also my daughter had seen something posted on social media about the effects of sugar on your body and how bad it was. My kids who are in their middle teens are aware of the consequences of what they eat, certainly not through any education that I have given them. Going forward, I think this current generation of kids are going to look to buy organic, or biodynamic as awareness of the term and its meaning increases. The various cooking shows on TV are now showcasing fantastic Australian produce and what mums and dads can do at home. Social media along with TV are pushing this healthier eating platform. The difference in taste is obvious. Ten years ago, you would struggle to find organic produce anywhere, whereas now it is easy to locate. Will the same be said for biodynamic in 10 years time?
Just my thoughts and sorry to be so involved, but long term, I think this thing has legs. As always, it's up to everyone to do their own research and make up their own minds. Now off to have my coffee and a biscuit.
LON Price at posting:
3.6¢ Sentiment: Buy Disclosure: Held
Anyway, my kids have been brought up eating lots of different foods .. I am not an organic health nut, my weakness is potato chips and lollies and over the years my kids have had their fair share too, what did surprise me though was their reaction. They told me they have been studying nutrition at school and the effect that the food you eat has on your body. Also my daughter had seen something posted on social media about the effects of sugar on your body and how bad it was. My kids who are in their middle teens are aware of the consequences of what they eat, certainly not through any education that I have given them. Going forward, I think this current generation of kids are going to look to buy organic, or biodynamic as awareness of the term and its meaning increases. The various cooking shows on TV are now showcasing fantastic Australian produce and what mums and dads can do at home. Social media along with TV are pushing this healthier eating platform. The difference in taste is obvious. Ten years ago, you would struggle to find organic produce anywhere, whereas now it is easy to locate. Will the same be said for biodynamic in 10 years time?
