With changing trends in the way we prepare meals where convenience is in demand, Pure Foods Tasmania (ASX: PFT) is set to significantly expand its meal solutions range with the acquisition of Daly Potato Company and its potato-based meals, farm and food products.
The acquisition will increase the production and export capabilities of Pure Foods which has an export licence, making the sale by Daly even more attractive by being able to access lucrative Asian markets that place premium value on Australian-made foods.
“As stated in previous updates, meal solutions is a $1Billion market in Australia alone and we also see a large opportunity to support our Asian customers with unique 100% Tasmanian-based meal solutions,” said Pure Foods Tasmania Managing Director, Michael Cooper.
“This acquisition also brings many synergies including customers, administration and supply chain benefits as well a range of new products that will be added to our new online store for our loyal consumers to enjoy “.
Total consideration for the acquisition equaled $1.8m with $1.4m in PFT shares to be issued to the Daly family which will be transitionally released from escrow, and the full balance released after 3 years in line with employment terms for Susie Daly.
Since 2017 when Daly Potato Company was generating $211k in annual revenues, the Daly family have established the business as one of Australia’s top potato farms which supplies a variety of potato salads to Coles and Woolworths to now be generating $2 million annually.
Alongside the range of potato products, Pure Foods is also keen to expand the farm’s mayonnaise manufacturing capacity and launch a new range of premium mayonnaise-based products. The farm also produces a brand of vodka, distilled by daughter Ruby Daly under the brand Hellfire Bluff.
For FY20, Pure Foods Tasmania reported revenues of $4.27m an increase of 13% on the corresponding year. Since listing on the ASX in April 2020, Pure Foods has been building its premium product range which include pates sold under the Tasmania Pates banner as well as smoked salmon and trout under the Woodbridge Smokehouse brand.
Beyond its national distribution to major supermarkets, Pure Foods also recently launched an online store offering its own brands as well as premium products from Tasmanian producers.
Alfred Chan is an Analyst at Emerald Financial, specialising in ASX-listed small cap companies.
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