ASX listed TasFoods says it is selling Shima Wasabi to Hillwood Berries Tas because it couldn’t scale Shima to a level that would justify it being kept as a core brand.
TasFoods acquired Shima Wasabi in 2016 as it was building its product portfolio. Other brands that make up TasFoods are Meander Valley Dairy, Nichols Poultry, Pyengana Dairy, and Betta Milk.
Last year, the company unveiled a new strategic plan to right-size and streamline operations, determine its core competencies, and exit unprofitable businesses.
At the AGM on 30 May, chair John Murphy said the company had made significant progress and would be exiting organic poultry and goats milk operations and will also sell and leaseback of non-core real estate for Betta Milk.
CEO Scott Hadley said, “We made significant changes to all aspects of the business with the board and senior management working together to simplify, streamline, and enhance our operating model to drive superior execution while providing greater speed and responsiveness as market conditions evolve.”
The company had reduced the number of brands and SKUs to focus on profitability, not growth for growth’s sake, he said.
FY22 delivered a group operating EBITDA loss of $7.3 million compared to the $4.7 million loss in FY21 and a net loss after tax of $16.5 million. An impairment charge of $6.8 million was comprised of $2.9 million in the poultry business and $3.9 million in dairy.
Hadley said 2022 presented “extremely challenging” conditions including “unprecedented input cost rises during the year in milk (30 per cent), poultry feed (15 per cent), cream (13 per cent), Covid related labour ($400,000), and distribution (21 per cent), which weighed heavily on 2022 results.
While wasabi is notoriously difficult to grow and harvest, last year TasFoods rebranded and relaunched Shima, and a chef ambassador program.
At the end of Q3FY23, sales revenue across the company was “significantly ahead” on last year. Shima recorded a 17.5 per cent increase in sales, the largest in the company, followed by Nichols Poultry (15 per cent), Pyengana (16 per cent), Meander Valley Dairy (6.5 per cent), and Betta Milk (7 per cent)
Hadley said the sale to Hillwood Berries would give Shima the “best opportunity to reach its full potential”.
The sale price was $700,000, 1.8 times revenue, which Tasfoods said was reasonable considering the current environment.
Meanwhile, the company continues to look at joint ventures, partnerships, M&A, fixed asset utilisation and divestment across all divisions.
Earlier this year, TasFoods announced it had signed a deal to be the exclusive distributor of The Juice Guys products in Tasmania. TasFoods’ distribution and logistics capabilities are anchored by its Betta Milk business. It already partners with Sanitarium’s The Alternative Dairy Co to distribute its range.
In March, it announced an agreement to sell and distribute milk from The Udder Way, a dairy company using an 18-litre reusable keg, designed and manufactured in Tasmania. The keg eliminates the need to manufacture 7000 2 litre single-use plastic bottles in its lifetime.
