News

Non-alcoholic spirits maker Lyre’s has completed its latest “strategic” funding round, raising nearly $34.5 million led by investors DSquared and Morgan Creek Consumer Fund and its existing shareholders.

Founded in 2019, Lyre’s Non-Alcoholic Spirits is a range of 18 alcohol-free classic spirits, eight ready-to-drink cocktails and non-alcoholic sparkling wine.

Experiencing “extraordinary” year-on-year growth, Lyre’s said the investment would help expand its global supply footprint and “drive momentum” in key markets such as Australia, Europe, North America and the Middle East.

The company claims to sell one bottle every 30 seconds in more than 60 countries across different channels.

Kristy Bloomfield, senior VP at Lyre’s, said the company is delivering programs and tactics to introduce the non-alcoholic category to a wider audience. 

“It is an exciting time for the brand as more and more people choose Lyre’s, as reflected in our exceptional growth,” said Bloomfield. 

“Consumers across ANZ can now enjoy a Lyre’s in 5000+ venues including Qantas Lounges, Accor Hotels, all major retailers, and the leading restaurants across ANZ.”

Following the seed funding round, Lyre’s appointed former chief marketing officer Paul Gloster as its new CEO, taking over from founder Mark Livings.  

“Our new expanded leadership structure ensures accountability across all our strategic priorities and business functions,” said Gloster. 

“I am excited to work with such a capable and passionate team that is energised and ready to lead the business into our next exciting stage.”

Gloster joined Lyre’s since its establishment in 2019, overseeing growth for the company in the US. The company said he was key to delivering the company’s “outstanding growth”, brand health, and equity position.

He also previously worked for Coca-Cola Amatil in Australia and Pacific Beverages.

The proportion of Australians who consume alcohol has increased since the pre-pandemic period, says market research company Roy Morgan.

In the year to March, 13,709,000 Australians – or 67.6 per cent of people aged 18 years and over – consumed alcohol in an average four-week period when compared to 66.3 per cent in the year to March 2020.

The increase is driven by the ready-to-drink (RTDs) category which registered an increase in consumption from 10.8 per cent pre-pandemic to 20.8 per cent now.

Consumption of wine, the most popular alcohol during the pandemic, has increased from 41 per cent pre-pandemic to 43.9 per cent in the year to March.

Meanwhile, beer has lost the momentum it had gained during the early stages of the pandemic. Now, fewer than a third of Australians – or 32.2 per cent – consume beer, down from 37.6 per cent pre-pandemic.

Spirits consumption has also recorded a meagre decline of 27.5 per cent from 28.7 per cent pre-pandemic.

Roy Morgan CEO, Michele Levine, said alcohol consumption amongst the Australian population is now “reasserting itself”.

“The standout performer of the last few years has been RTDs which have kept increasing despite the ending of lockdowns and all pandemic-related restrictions,” said Levine.

“The emerging trends suggest consumption of wine and spirits looks set to return to pre-pandemic levels while RTDs such as vodka, gin, bourbon and rum have been on a sharp rise in recent years and that trend could well continue at the expense of beer consumption which has continued its long-term decline.”

Australian confectioner Ernest Hillier Chocolates has appointed voluntary administrators to sell off its business and related entities.

Established in 1914, the company is Australia’s oldest chocolate brand and operates a manufacturing facility in Coburg, Victoria. Its Ernest Hillier and Newman’s brands have been stocked across supermarkets for many years.

Administrators Alan Walker and Glenn Livingstone from WLP Restructuring Partners are seeking urgent expressions of interest from interested parties who could recapitalise or acquire the business’ assets.

Partner Alan Walker, said it is “unfortunate” that such a “storied” chocolate brand has encountered distress amid rising operating costs.

“We are working closely with all affected parties as we move with urgency to understand the business’s affairs and find a suitable buyer or investor.

“While this process is underway, we have had to make the unfortunate decision to cease manufacturing activity and stand down employees at this stage.”

He added the brand’s existing relationships with large multi-national food and beverage providers alongside its supply agreements may “appeal to potential suitors”.

The first statutory meeting of creditors will be held on June 30.

Metcash boss Doug Jones says IGA stores are taking the fight to Coles and Woolworths, offering Australian households a “real value” alternative to the two supermarket giants.

Jones said successive interest rate rises and increasing grocery prices had started to affect shopper behaviour, with IGA well-placed to capitalise on customers looking for better deals and a wider range of products.

“We think our network offers real value when it comes to products, [as well as] well-staffed and very enticing deli areas – we think that stands us in very good stead,” he said.

“The customer value proposition in an IGA is fundamentally different. The community-based store resonates with Australians. Because the managers or the owners are from and of the community, they often source products that are particularly relevant to their local communities.”

Shares in the ASX-listed grocery wholesaler shot up as much as 8 per cent on Monday after it beat market expectations with a 7.6 per cent jump in profits to $259 million in the 12 months to April 30.

Metcash’s full-year revenues increased by 6.2 per cent to $15.8 billion, with the company reporting it had managed to hold on to most of the shoppers who relied on local IGA supermarkets during the COVID lockdowns.

“As they’ve rediscovered their community stores, they have really liked what they’ve seen,” Jones said.

As the battle for consumer wallets intensifies, he said Metcash wanted to remind shoppers that there was choice in the grocery sector beyond the major supermarkets.

The company’s management says IGA has made significant progress narrowing the product price gap between itself and its competitors over the past two years, and has expanded its price match program to put hundreds of products in line with Coles and Woolworths shelf pricing each week.

Metcash is also competing against retail giants in the hardware and liquor spaces, through its operation of brands such as Total Tools, Mitre 10, Cellarbrations and The Bottle-O.

The company’s hardware sales jumped by 10.6 per cent to $3.4 billion for the year, and are now the biggest contributor to overall earnings before tax, making up 42 per cent.

Jones said that while home building trends were starting to normalise, growing demand for smaller renovation programs benefited the business given its focus on serving small and medium building customers.

Metcash’s DIY business, which accounts for about one-third of its hardware segment, was also staying competitive on product pricing.

“We want to remind shoppers that there’s a choice – and we recognise that like in food and liquor, they have a choice as to how they manage their budgets. We want to be part of their choice set.”

MST Marquee analyst Craig Woolford said the latest numbers represented a resilient performance from the company.

“Metcash has delivered a solid FY23 result and demonstrated it has retained the majority of its customer wins during COVID,” he said in a note to clients.

IGA owner Metcash says sales across all retail pillars remain “strong” and the business is actively managing increased cost pressures.

For the year to April 30, group revenue rose 6.2 per cent to $15.8 billion while underlying tax-paid profit was up 4.6 per cent to $307.5 million.

Group CEO, Doug Jones, said both sales and earnings were at “record levels” as the business continued to face additional challenges associated with rate increases and cost of living.

“Our focus on further improving the competitiveness of our independent retail networks, as well as the success of our strategic acquisitions, particularly Total Tools, have been key factors in the strong performance.”

Total food sales grew 2.8 per cent to $9.6 billion on a normalised basis while supermarket sales rose 2.1 per cent and convenience store sales were up 9.7 per cent.

Liquor sales grew 8.3 per cent to $5.1 billion driven by strong demand “buoyed” by improved competitiveness, a preference for local shopping and at-home consumption trends.

The business opened 39 new IGA stores during the year and says it is “well positioned” to deliver growth and superior returns to shareholders.

For the first seven weeks of FY24, group sales have improved by 2.3 per cent, however, ongoing interest rate hikes have impacted consumer confidence across its retail networks.

Nespresso has named Stefan Vermeulen as its new MD for Oceania, effective next month. Vermeulen will succeed Jean-Mark Dragoli, who will move forward as the global head of Nespresso Authorised Brands in Switzerland.

The company said Vermeulen brings a wealth of brand knowledge and local experience, having held leadership positions within Nespresso for more than 12 years, including leading the team in New Zealand as MD and four as head of Nespresso Australia’s professional business. 

During his tenure, Vermeulen helped drive substantial growth in New Zealand by introducing the Vertuo system to the market in 2021, expanding Nespresso’s coffee range, and spearheading local sustainability initiatives.

These efforts included reforestation projects, support for educational programs on the circular economy, and strengthening the local recycling program.

Sharing his vision for the business, Vermeulen said he believes that coffee can be a force of good for people, communities, and the planet. 

“The more we drive sustainable growth, the more we can have a positive impact as a brand and organisation through the entire value chain,” he explained.

“Sustainability will also remain at the core of our strategy as we explore new ways to engage more consumers with our recycling program and introduce initiatives to help us on our journey towards net zero and improve as a B Corp.”  

Meanwhile, under Dragoli’s leadership, the company said it had benefited from product innovations and services that resonated with local consumers – from Aussie-inspired coffee blends to personalisation and expanded delivery services. 

His prioritisation of local sustainability initiatives has also helped the business deliver on its B Corp commitments and the broader purpose of using coffee as a force for good.

Key projects include:

• An innovative kerbside recycling trial.
• A Recycling Rewards pilot.
• The launch of the company’s first Australian StartCup Challenge supporting circular start-ups and SMEs.
• A partnership with Greening Australia to build resilience in local habitats in the face of climate change.  

Welcoming the new MD, Dragoli said Vermeulen deeply understands the local coffee culture, customer preferences and the nuances in each market. 

“Having led and built relationships with our teams on both sides of the Tasman over the last seven years, Stefan has already established a strong foundation for success in the Oceania market,” he concluded.

“I have no doubt he will do great things in this role, leading with our employees, customers and business partners front of mind.” 

Collins Foods, the ASX-listed operator of KFC and Taco Bell chains in Australia, and KFC in Europe – broke the US$1 billion sales threshold in its home market last year.

For the year to April 30, revenue from continuing operations rose by 14.2 per cent to $1.35 billion with growth across all business units.

KFC Australia’s revenue grew 10 per cent to $1.05 billion when compared to the prior corresponding period while same-store sale growth was up 5.8 per cent, driven by significant e-commerce growth.

Delivery, web and app sales contributed nearly a quarter of all sales in the second half in addition to increased accessibility through partnerships with major aggregators, including Uber Eats.

KFC’s Europe division delivered double-digit sales growth of $249.5 million, up 31 per cent while same-store sales were up 13.9 per cent.

Taco Bell’s revenue increased 36.1 per cent to $48.7 million, with the addition of eight new restaurants during the year.

Underlying tax-paid profit from continuing operations fell to $51.9 million while underlying EBITDA fell to $205.1 million.

In a results filing, the company said it expects inflationary pressures to remain for much of the next year, however, plans to maintain its long-term growth strategies.

That strategy includes a trial of click-and-collect at its Queensland and Victorian restaurants and the steady rollout through UberEats which is contributing to increased brand awareness.

Drew O’Malley, MD and CEO of Collins Foods, commended KFC’s strong store sales performance in Australia and Europe in the face of challenging economic conditions.

“Whilst inflationary pressures have played into our profitability in the short-term, our long-term growth plans remain on track, and we will continue to prioritise providing exceptional value across each of our brands as a primary driver of customer retention and engagement.”

Therese Frangie has been named Mad Mex’s CEO as founder and former chief Clovis Young moves on to become MD.

Frangie, the former COO of the business, will now look after the day-to-day operations of the company and focus on growing the brand into more stores.

Of her appointment, Frangie said she will be “laser-focused” on delivering sustainable growth and expansion while not wavering from operational excellence.

Meanwhile, Clovis Young who started Mad Mex in 2007 said it was the “right time” for Frangie to “officially step into the CEO role”.

“As the business size and scale increase, Therese has the operational excellence and leadership capabilities to run the day-to-day business.

“She has been a driving force over the past six years and knows the business inside and out. This transition in the role allows me to stay connected to the strategic goals of Mad Mex and better leverages my entrepreneurial strengths,” said Young.

It’s time to take the makeup off at Sydney private equity firm Crescent Capital Partners.

Street Talk can reveal Crescent has mandated Ankura Consulting Australia to find a buyer for its beauty and makeup business, Nude by Nature, after nearly a decade of ownership.

Nude by Nature lays claim to being Australia’s No.1 mineral makeup brand that rings up a sale every 27 seconds from the range. Its product offering covers the whole gamut – foundations, BB cream, mascaras, brushes – and is marketed as 100 per cent clean and natural.

Despite its clean-ingredients push, it’s not a niche player but rubs shoulders with juggernauts like L’Oréal in the makeup aisles of Chemist Warehouse, Priceline, Myer, Target, Big W and 1200 independent pharmacies in Australia and New Zealand.

The homegrown business is the fifth-largest seller at pharmacies – behind multi-nationals Maybelline, Revlon, L’Oréal and Rimmel – where nearly 45 per cent of the population does its cosmetics and beauty shopping.

Its mineral foundation sells for $42.95 a pop, while brushes start at $16.95 on a full-price basis. It claims to be “cleaner” than higher-priced competitors and is ready to be scaled up locally and overseas, according to the sell-side pitch.

Ankura is preparing Nude by Nature for a 100 per cent sale, and would take expressions of interest before commencing the sale process.

Slap on the lipstick, COVID is over

Crescent Capital Partners has pressed play on the sale as discretionary retail straddles a tricky divide – on one side, sales in categories like makeup and movie cinemas are recovering from lockdowns but on the other, rate hikes are being tipped to force shut shoppers’ wallets again. The PE firm has also redrawn it territory to become a leader in healthcare assets. 

The preliminary sales pitch has urged prospective buyers to think of Nude by Nature’s double-digit EBITDA margins (detailed financials were not offered at this stage), track record of growing profitably, large footprint and future growth opportunities.

The latter, it said, would come from pushing further into digital channels and new geographies.

Nude by Nature’s chief executive officer Mark Thompson, who has been in the role since 2014, sees merit in launching again into China and is preparing a US foray in the 2025 financial year. The management has experience in taking its products global, and is already driving revenues from launches in Canada’s Shoppers Mart and Europe’s Nocibé, Douglas and Karstadt.

Lastly, it has a pipeline of products ready to launch, including colour cosmetics, clean baby care and teen-focused products, prospective new owners were told.

As a comparable deal, Melbourne-based high-end skincare brand Aesop fetched a $US2.53 billion ($3.7 billion) enterprise valuation in a sale to L’Oréal in April. Aesop made $US537 million in fiscal 2022 and had its highest-ever profit margin at 25 per cent at the time of the sale.

Infant formula maker A2 Milk has scored a win in on one of its most lucrative markets after the company’s contract supplier, Synlait Milk, was approved by China’s market regulator to continue selling its China label infant milk formula product.

On Tuesday, A2 Milk announced that China’s State Administration for Market Regulation had renewed approval for Synlait to manufacture stages one, two and three infant formula products after its previous registration only got a bridging extension in February pending the regulator’s decision.

It comes after infant formula sold in China underwent a regulatory process to meet the country’s more stringent food safety rules, known as GB standards, with the renewal to be valid until September 2027.

A2 Milk said production was expected to begin later this month at New Zealand-based Synlait’s Dunsandel facility, and that its products would transition to the market in the first half of 2024.

The company’s chief executive David Bortolussi said the approval by China’s market regulator would provide A2 Milk with continued access to China’s substantial domestic infant milk formula market, which remained a key focus of the firm’s growth strategy.

“We look forward to making our upgraded new China label IMF product available to parents and their infants and young children in China, building on the strong brand loyalty we have developed with Chinese families over the past decade as the pioneer and leader of the A2 protein category,” Bortolussi said.

Chinese parents represent a lucrative key market for the dual-listed company, with revenue from its Asia market increasing 24.5 per cent in the 2022 financial year.

Bortolussi previously told this masthead the company was also seeking to build back its Chinese daigou community after the pandemic’s closed borders inflicted damage on the reseller channel into its key Asian market.

Synlait chief executive Grant Watson said the registration in China was a significant milestone and the company would benefit from the certainty received through the renewed approval.

“The re-registration is a very important milestone, and we have worked hard together to ensure its success,” Watson said.

Following the announcement, shares in A2 Milk traded 4.1 per cent higher at $5.56 shortly after 1pm AEST, ending the day 1.9 per cent higher at $5.44.

Tribeca Investment Partners portfolio manager Jun Bei Liu said the approval extended for a longer timeframe than most investors were expecting.

“The market was getting quite worried about what was happening with A2’s licence and was only expecting a short renewal or one or two years,” Liu said. “The approval removes an overhang for the company and is quite meaningful.”

Liu said China was a core growth market for A2 and that the company’s outlook was positive.

“A2 is one of the few companies that have managed to capture the imagination of Chinese consumers and the outlook now looks great.“