Rice, rice, baby: YPB Group signs three-year deal with Addera for rice packaging in Peru

Authentication and consumer engagement solutions creator YPB Group (ASX: YPB) has signed a three-year Master Service Agreement (MSA) with Addera, a Peru-based packaging company with clients in the country’s rice industry.

Rice is a significant industry in Peru, accounting for 12% of agricultural production by value. Come 2026, the South American country is expected to produce around 2.52 million metric tons of rice. This shines a light on how the packaging industry is subsequently set to thrive.

Addera—which produces packaging for various industries, from pet food to eco-wraps—will market YPB’s technology primarily as a value-added consumer engagement solution and has already signed the first adopter. YPB Group expects a minimum revenue of $115,000 from the contract. The agreement grants Addera exclusivity for the rice packaging industry in Peru for the agreement’s term. 

YPB Executive Chairman and Group CEO John Houston said, “I am pleased that our direct marketing efforts initiated during 2023 have realised yet another valuable contract, following USA scratch lotteries and Korean packaging, in an otherwise improbable prospect. Not only have we entered the rice segment of the FMCG market, but we have also entered a large, new territory at minimal incremental cost. The value-creation potential of linking all our solutions via Connect as the hub is hard to overstate. I am optimistic of driving further high-margin revenue opportunities in coming months.”

Launched in 2011, YPB’s mission is to protect brands and help them engage their audiences digitally. Through this contract, YPB is further cementing the validation of its ProtectCode authentication and anti-counterfeit solution, which lets users authenticate products through their smartphones. Its ProtectCode Plus tech makes your business’s QR codes non-replicable.

The Company believes that the connectivity and feature richness added to its Connect division during 2023 can boost revenue generation across YPB’s entire IP portfolio, particularly given the increasing adoption of QR code technology in many fields and the increasing value of direct consumer engagement. 

The Addera agreement also reflects YPB’s strategy of focusing on Digital Transfer Technology, where its ProtectCodes can be sent anywhere in the world without shipping and materials handling. This digital transfer focus is a recent innovation, and its potential is being determined by outbound marketing.

In August, the Company had another American win when it successfully adapted its scanner technology into an OEM (original equipment manufacturer) module for automated pull tab/instant lottery ticket vending/payout machines. The first such modules have now been integrated and tested successfully.

In Q1 FY24, the Company’s cash receipts were up 108% on Q2 to $207k against a cash burn of $440k. As of September 30, 2023, YPB held $711k in cash and cash equivalents. Its Executive Chairman John Houston made an additional $500k loan in the quarter. Although the Company also raised $2 million in standby capital to be used over three years, its quarterly cash burn is $400k and above, which means this funding is unlikely to suffice. 

However, with new contract wins, the Company hopes to edge towards profitability soon.