A nutritious morning staple that has been around since the 1900s, orange juice has surely earned its place on breakfast tables almost everywhere around the globe. This has prompted juice manufacturers like The Original Juice Co (ASX: OJC) (formerly the Food Revolution Group) to maximise commercial opportunities on a global scale, particularly Mainland China which accounts for 18% of juice sales in Asia. OJC has now signed a juice supply agreement with Aldi China.
Revenue in the Juices segment in Asia amounts to US$31.61 billion in 2023 and the market is expected to grow annually by 4.20% (CAGR 2023-2027). Meanwhile, Mainland China makes a key market in the region with its orange juice market revenue forecasted to hit $1b by 2026. For this, OJC has agreed to terms to supply Aldi China with three key products including an orange juice variant, apple juice variant and a mixed green juice variant under their private label brand ‘Urban Eaters’. OJC itself had first received its distribution permit in the region back in 2018, and commenced export some time in 2019.
In addition, OJC has also executed Distribution Agreements with Evergrow and Happy Valley to distribute orange and apple juice into the wider Chinese and Malaysian markets. Evergrow will use the ‘Australia’s Garden’ brand range, while Happy Valley will distribute under their renowned ‘Happy Valley’ brand in Malaysia. The trend for common imported juices is growing in Malaysia, particularly among the country’s young consumers and people in larger urban areas generally.
All export juice products will use 100% Australian ingredients, sourced from local farmers and which have been juiced and bottled on-site in Melbourne. The first shipment of five containers is due late May 2023 and will begin the supply agreement with initial forecasts provided for a further two containers a month from June 2023 onwards.
Commenting on the new distribution deals, OJC CEO Steven Cail said, “OJC have worked really hard at growing domestic volumes within the supermarket retailers which will now provide a great launching pad to provide premium Australian juice across various distribution channels both domestically and internationally.”
Cail also mentioned that the export agreements are the beginning of the next growth strategy within the business plan towards profitability, whilst getting as much Australian made beverages into consumers hands worldwide.
OJC is an Australian-based food processing company that manufactures a range of juices, fibres, infused fruits and fruit waters that are sold as branded products or ingredients to customers domestically and to key international markets including China. OJC uses a range of processing technologies, including Counter Current Extraction (CCE) technology which was developed in conjunction with Australia’s CSIRO to extract juice from fruit and vegetables.
In Q3 FY23, OJC reported operating cash inflow of $0.6 million, which is a $0.2m increase over the previous corresponding period (pcp) cash inflow of $0.4m and an improvement of $1.1m over the previous quarter (Q2 FY2023) cash outflow of $0.5mm. OJC ended the quarter with a cash balance of $0.7m.
Aside from financial improvements, OJC also noted several operational updates during the quarter, including its Juice Lab range remaining a market leader with 79% market share, new ‘Purple Veggie’ juice hitting shelves in March, and Aldi private label increased sales in February 2023 due to expanded ranging and additional SKUs. OJC also continues pushing volume in industrial (tanker) sales with an 86% increase year-on-year (YOY).
OJC has recently received approval for a $3.5m additional loan facility with its existing financier, National Australia Bank (NAB). This additional facility is to support further growth of the business via capital investment and increased working capital. As NAB has been the banking partner of OJC for over six years, this additional funding facility will extend the partnership for a further 5 years and will demonstrate continued support of the business long term to cover all banking needs, including funding requirements additional to the previous five year deal signed in July 2021.
The additional facility includes a further $1.1m asset finance agreement in which the rate and term to be determined at drawdown and secured over all of the company’s assets, as well as an additional $2.4m interest only loan drawdown (reviewed annually) at a floating rate of 8.27% and secured over all of the company’s assets. The original NAB loan to OJC of $6.5m is now at a balance of $4.13m and remains fixed at 4.2% interest. The previous $1m invoice finance facility remains in place, and so does the existing $600k Bank Guarantee.
Clara is a Business Reporter for The Sentiment.
Latest posts by Clara Venisha (see all)
- IPO Watch: The Australian Wealth Advisory Group set for ASX entrance - December 15, 2023
- Harris Technology gears up for Christmas as consumer electronics and household tipped to be among most popular purchases - November 27, 2023
- Linius Technologies sprints into the US college sports with automated game highlight technology - November 23, 2023
1 Comment
christineseb
Orange juice is full of sugar so not that healthy, eat a proper orange instead.
Reply