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Rising interest rates, inflation and supply chain concerns have all played a part in the collapse of innovative dairy startup Made by Cow, the company revealed over the weekend.

Back in 2016, Made by Cow became the first company to gain regulatory approval to legally sell unpasteurised or raw milk in Australia, after years of working on the concept.

The milk, which retailed for $7.95 for a 1.5 litre bottle, was made using a ‘cold pressure’ method to kill harmful bacteria and therefore make it safe to sell to consumers.

The sale of unpasteurised milk has long been prohibited in Australia, however, Made by Cow said its process ensured an “equal level of safety as heat pasteurisation”.

Made by Cow soon gained national exposure, with its milk products eventually stocked across selected Coles and Woolworths stores, as well as hundreds of independent grocers and health-food stores. According to the company, its milk was being sold by more than 1000 stockists.

In 2016, the company also told SmartCompany it would be paying dairy farmers 50 per cent more per litre of milk than major dairy processors.

However, CEO Wade Porter took to social media this week to explain, “with a heavy heart”, that the business will be closing.

Kate Conneely and Scott Kershaw from KordaMentha were appointed to oversee the voluntary administration of CBH Fresh Pty Ltd, trading as Made by Cow, on March 25.

According to a notice on its website, the company has already ceased operations. The first meeting of creditors is due to be held on Tuesday, June 6, in Sydney.

According to reports, the company’s shareholders include ROC Capital, Light Warrier Investments and Bega.

Customers thanked for “believing in us”

Porter said the Made by Cow team is proud of the company’s journey over the past seven years, and until recently had been “on a strong trajectory with our business growing upwards of 50% year-on-year”, with a customer base in the “thousands”.

The current “economic uncertainty” has changed that, he said.

“In this climate of uncertainty, growing interest rates and inflation, the business has faced economic uncertainty and supply chain challenges and, as a result, the very tough decision has been made to cease production,” Porter said in the post shared on Instagram and Facebook.

Porter paid tribute to the distributors and retailers who he said were instrumental in the company’s ability to scale, as well as Made by Cow’s employees, who he described as committed and dedicated.

“We know that you will continue to be ‘legen-dairy’ in all that you do,” he said, referencing one of the company’s values.

Finally, Porter thanked the brand’s customers for “believing in us”.

“We started as an unknown dairy brand trying to do something different and have grown into a brand so many of you love,” he said.

“Our morning coffee will never be the same, but it’s sure been good while it lasted.

Cost pressures

Made by Cow revealed it was facing increasing production, freight and labour costs last September, deciding at the time to increase its own prices in response.

“Rising prices have been affecting everyone recently, and unfortunately our business has been impacted too,” the brand told its Instagram followers at the time.

“This was a hard decision, but something we had to do to not only remain a sustainable business, but to also ensure we pay a fair and premium price to our dairy farmers.

“We are a 100 per cent Australian-owned and operated business, so by supporting us you’re also supporting the Australian dairy industry.

“For those of you that can stick with us, we thank you for your continued support.”

Online liquor retailer Hairydog Group has acquired Boozebud and is set to optimise its combined potential to “transform the online liquor retail domain”.

Boozebud – which sold a range of beer, wine and spirits products online – collapsed earlier this month with administrators arranging to sell the business’ assets.

Ryan Agar, head of e-commerce at the Hairydog Group, said the acquisition strategically aligns the “strengths” of both businesses.

“This merger of two brands creates a powerhouse that is set to transform the online liquor retail space to provide better drinks and experiences to our customers.”

The acquisition will boost Hairydog Group’s annual revenue beyond $75 million, driving its profitability and strengthening its position in the online liquor retail industry.

Meanwhile, a redesigned Boozebud website relaunch is underway with the former chief technology officer of the brand, Damien Smith, joining the Hairydog team.

“To celebrate the return of BoozeBud and its new beginning, we have lined up a series of compelling promotions that we believe will thrill our customers and provide them with an unmatched shopping experience,” Agar said.

Food and restaurant technology start-ups Mr Yum and me&u have appointed investment banks to advise them on a potential merger.

The food and beverage digital payments companies are weighing up a combination as traditional funding sources like venture capital dry up for start-ups.

MA Financial is advising Mr Yum and boutique investment bank Record Point is working with me&u, people familiar with the discussions said. Earlier this month, The Australian Financial Review first reported the pair were in talks.

A potential transaction would likely be structured as a scrip-for-scrip merger. A combination is expected to bolster cash flow, while international aspirations could scale back as they consolidate their positions in Australia’s hospitality market.

The companies are still determining what a board structure would look like, and there is no guarantee a deal will materialise.

Hungry for capital

Led by chief executive Kim Teo, Mr Yum cut 17 per cent of its workers last year. The company scored $92 million in a Series A funding round in 2021. That investment was led by Tiger Global Management.

With similar technology, me&u was propelled by the same forces as Mr Yum, helping restaurants automate ordering during the pandemic. The start-up was founded by Stevan Premutico in 2018.

Mr Premutico nabbed early backing for me&u from restaurateur Justin Hemmes, who owns Merivale establishments like The Ivy complex, and chef Neil Perry, behind two-hatted restaurant Margaret in Double Bay.

In May last year, me&u mandated Record Point to gauge investor interest for a roughly $50 million capital raise.

Despite the early tailwinds of contactless ordering during the pandemic, both Mr Yum and me&u are evaluating joining forces as inflation bites and consumers dine out in greater numbers, a factor that may mitigate demand for QR code ordering systems.

Pullback from start-ups

Moreover, international growth VCs are stepping back from Australia’s start-up scene, Jason Georgatos, president of Partners for Growth, told the Financial Review this week.

The likes of Tiger Global and Japan’s SoftBank have retreated from innovative companies that fed off low-cost capital when interest rates were near zero.

Another challenge for early-stage investors is meeting the lofty returns their funds expected from investments originating in the earliest stages of the pandemic. Start-ups in particular have seen their valuations slashed, making it difficult to stomach a potential sale at a value well below what they would have garnered a couple of years ago.

Data from Cut Through Ventures underlines how much funding has slowed for start-ups. Deals of between $20 million to $49.5 million are down more than 50 per cent compared to the quarterly average from 2020 to 2021.

In the first quarter of this year, there were only two funding rounds exceeding $50 million: agritech firm Loam Bio raised a $105 million Series B and fintech Till Payments collected $70 million in a Series D fundraising.

A merger would stave off any need for Mr Yum or me&u to turn to costlier debt markets.

Spirits company Bacardi has appointed Luiz Schmidt as MD of Bacardi in Australia and New Zealand.

Schmidt has more than 20 years of international experience across a range of sales, marketing, and leadership roles.

Most recently, he was the regional marketing director for Bacardi in Latin America and the
Caribbean where he improved the market share for brands including Patron and Bombay Sapphire in the region.

Of his appointment, Schmidt said: “These markets are one of the most developed and attractive premium spirits markets in the world, offering Bacardi a tremendous opportunity to accelerate the growth of our brands in close partnership with our customers and consumers.”

Vijay Subramaniam, Bacardi’s regional president for Asia, Middle East & Africa and global travel retail, said Schmidt is both “uniquely and abundantly qualified” for the role.

“His extensive international experience leading both developed and emerging markets with the company and more broadly within the industry brings a deep and nuanced understanding of the global premium spirits market.”

Schmidt will be based in Australia and will oversee the sales, finance, marketing and supply chain functions of the brand and assist with market and portfolio expansion in the region.

Chinese wine sales will not return to the same level for Australia’s Treasury Wine Estate even if high tariffs imposed during a political dispute with Canberra are dropped, its chief executive said.

The world’s biggest standalone winemaker drew a third of its profits from China before anti-dumping and subsidy tariffs of up to 212 per cent were imposed on Australian wine, effectively ending sales, in 2020.

Australia’s trade minister met with his Chinese counterpart in Beijing last week seeking an end to all trade impediments as diplomatic relations improve, although wine tariffs remain in place.

Treasury is closely watching how the Chinese and Australian governments work through a process to resolve tariffs on barley, outside of the World Trade Organisation, hoping the same path will be followed for wine, Treasury chief executive Tim Ford said on Tuesday.

The company had continued to invest in marketing the luxury Penfolds brand in China over the past three years, and supporting staff there to maintain relationships, despite making no profit, he told the Australia-China Relations Institute at the University of Technology, Sydney.

“Our brand awareness in China has gone up in the last two years on Penfolds,” he said.

The biggest lesson learnt from the situation was that Treasury should have invested more in the local Chinese wine industry earlier, he said on Tuesday.

It was most likely tariffs would be dropped, although they could also be reduced, he said.

“This isn’t going to be a big tap that gets turned on overnight for us. We don’t have incremental wine sitting there ready to go at the A$100 above,” he said.

“The A$30 level we would be able to start supplying to China pretty quickly, but it is going to take us two, three, four years to start building up the Australian supply,” he added.

Many Australian wine growers had exited the industry, while in China, the luxury wine segment had shrunk, he said.

Treasury will not get back to China being a third of profit in the next six years without diverting wine from the other markets it had built to replace Chinese sales – “which we are not going to do”, he said.

In February, Treasury said net profit for the first half through December jumped by nearly three-quarters to A$188.2 million ($131.51 million) from the same period a year earlier, but below analysts’ estimate.

If you’ve ever made a toasted sandwich, experimented with an air fryer or set up a barista station in your home office, there’s a decent chance you’ve come into contact with ASX-listed Breville Group.

The Australian-founded kitchen goods business has come a long way since being founded by Bill O’Brien and Harry Norville (whose names merge to form “Breville”) in the 1930s. These days, it’s one of Australia’s biggest consumer goods exports, a $3 billion brand that sells its products into retail giants like Walmart and John Lewis.

Breville has delivered strong results over the past few years as consumers directed their spending towards home goods and getting the best technology available for their kitchens. The business has also seen volatile conditions recently, however, with inflation hitting all elements of the supply chain, while the war in Ukraine changed trading conditions across Europe.

Stock watchers are weighing these short-term headwinds against the company’s longer-term growth trajectory.

Industry: Consumer goods.

Main products: Coffee machines, air fryers and juicers.

Key figures: Chief executive officer Jim Clayton, non-executive chairman Timothy Antonie.

How it started: In 1932, Australian entrepreneurs O’Brien and Norville merged their names together to launch Breville, a business that started off selling radios. Over the next several decades the company branched out into other consumer electronics goods, and in 1974 invented the jaffle maker, which quickly sold hundreds of thousands of units.

How it’s going: Since listing on the ASX in 1999, the business has delivered returns of more than 2200 per cent and is ahead by 83 per cent over the past five years. The growth in share price has been a major win for Solomon Lew’s Premier Investments, which owns a stake of around 25 per cent, worth $809 million at the start of this year.

The bull case: The majority of analysts watching Breville say the company has three key things going for it: it sells into a wide range of overseas markets, it continues to invest in innovating new products, and it has a strong brand position that is well-marketed.

Despite sales in Europe being more volatile over the past year, largely due to the war in Ukraine and retailers taking a more conservative approach to how much Breville stock they are holding, those watching the stock say there’s plenty of opportunity for fresh growth.

“Given the early success of the South Korean launch (June 2022), we expect Asia, specifically China, to form the next stage in growth globally for Breville,” Wilsons analyst John Hynd said last month.

UBS analysts say the company has been able to meet its profit and sales guidance even when product sales are softer.

“Over the medium term, we are attracted to Breville’s exposure to the structurally growing coffee category, opportunity to build scale offshore, and rollout of new products,” the UBS team said in a note to clients.

The bear case: Those that are more cautious on the stock have the consumer spending slowdown front of mind.

Australian Bureau of Statistics data for March shows that while most categories of household spending are continuing to grow, spending on furnishings and household equipment is declining.

The RBC Capital Markets team say that even though Breville is a premium brand, there could be challenging conditions ahead for overall spending.

“The upcoming challenging macro environment causes us to be cautious despite Breville’s strong historical track record,” its analysts said when initiating coverage on the stock in March.

RBC’s price target of $21 per share is just above Breville’s share price of $20.70 on Tuesday morning.

The investment bank pointed out that Breville trades at a premium to its peers, thanks largely to its track record of growing earnings and its strong profitability.

“However, at present, these factors look fully priced in which supports our Sector Perform rating,” RBC analysts said in a note earlier this year.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

Australia’s biggest beef producer will target affluent European and Middle Eastern customers willing to fork out a premium for wagyu steak as it reported a 35 per cent jump in operating profits, yet declined to reinstate dividend payments.

The Australian Agricultural Company (AACo) said its operating profits jumped to $67.4 million in the 2023 financial year as total sales climbed 14 per cent to $313.4 million, helped by a 17.3 per cent price rise in branded wagyu sales to $21.98 per kilo.

However, the company once again made no mention of dividends, meaning shareholders have not been rewarded for their investments for roughly 15 years.

Chief executive David Harris, who told this masthead six months ago that the company would “keep pushing until we potentially find [the price ceiling]”, said the latest earnings were “one of our strongest operating results in recent memory for the business”.

AACo’s profits were driven by revenue growth across all markets as sales from North America increased 22 per cent. The European and Middle Eastern markets saw a 43 per cent lift as the beef producer raised the profile of Westholme Wagyu, one of its key Australian brands, among key chefs to command a price premium. Revenue from both Australia and Asia rose 13 per cent.

Harris earmarked the Europe and the Middle East as a “real area for expansion” and “a really high price-paying market” for the $946 million beef company as it rotates its focus between different global regions based on their economies’ transition out of the COVID pandemic.

“We move the product around the world to keep driving that price out of markets that might have been doing it more difficult, and into better ones,” he said, naming Paris, London, Geneva, Stockholm and Copenhagen as key cities.

“Where the [price] ceiling is, I couldn’t tell you, and I won’t make a punt on that. But I think our distribution network is set up brilliantly in order for us to continue to push it, and we’ll certainly be aiming to do that.”

Harris is confident that demand for premium steak will remain high despite rising cost-of-living pressures and said he was still seeing “huge demand” around the world for AACo’s beef.

“People don’t sit down to really large portions of wagyu – so it’s a smaller quantity, higher quality, special-occasion-type product that people like spending their money on and having wonderful experiences with,” he said. “I still see tremendous opportunity for us to increase supply and for us to extract excellent value.”

Statutory net profits slumped by 96 per cent to $4.6 million, which Harris attributed to softer cattle prices forcing the company to write down the book value of its herd in its accounts. The business “decouples” the price of live cattle from the performance of its branded beef products.

Despite the lack of dividend, shareholders seemed pleased with AACo’s performance, sending the share price more than 10 per cent higher in early afternoon trading.

Brisbane-headquartered AACo is the country’s largest cattle herd operator, owning around 6.4 million hectares, or 1 per cent, of Australia’s total landmass.

More than half of the company is held by billionaire Joe Lewis, a British investor with a net worth of $7.7 billion who owns Premier League soccer team Tottenham Hotspur.

Iron ore billionaire and mining magnate Andrew ‘Twiggy’ Forrest has an 18.5 per cent stake.

The company found itself in the middle of a billionaire beef battle late last year, with Forrest upping his stake in the “asset-rich” business.

Michael Courtney has been appointed as the new CEO of Coles Liquor, effective July.

Courtney is the former chief of Coles Express and lead the business for four years. He replaces Darren Blackhurt, who resigned last month in order to return to the UK to be with his family.

In a LinkedIn post, Courtney said he is “excited” to take on the role, adding “providing an exceptional drinks experience for customers is key to Coles Group’s strategy”.

“We’ve got three really strong brands in the liquor business Liquorland, First Choice Liquor Market and Vintage Cellars and they each cater to a variety of customer missions and give us the opportunity to really differentiate in the market.”

Coles CEO Leah Weckert described Courtney as “exceptionally well-placed to lead liquor in delivering the strategy and transformation plans underway”.

Australian cattle prices have dropped 20 per cent this year from herd restocking, but analysts are still bullish on the outlook and predict a return of more stable market conditions that will benefit exports.

The industry benchmark, the eastern young cattle indicator (EYCI), has skidded to $6.1 per kilogram. That has almost halved from the peak in 2022 when supply could not keep up with global demand and made Australia’s cattle prices among the world’s most expensive.

Since then, Australia has rebuilt its cattle herd thanks to heavy rainfalls from weather phenomenon La Niña which helped replenish grass and grain.

Industry trade body Meat & Livestock Australia estimates national cattle to expand to around 29 million this year, the largest herd since the late 1970s, reflecting the most intense rebuilding period in nearly 50 years.

Rabobank senior animal protein analyst Angus Gidley-Baird projects prices to be more “normal” in 2023 after dramatic fluctuations over the past three years as the nation recovered from one of the worst draughts in its history.

Health foods marketplace Openway Food Co has opened a $10 million manufacturing plant in Melbourne, which will allow for the first time onshore production of coated mini rice cakes, part of the company’s Table of Plenty product range.

Located within the company’s multi-purpose food plant in Melbourne’s south-eastern suburbs, the new facility will manufacture the coated mini rice cakes range and supply it to its retailers across Australia, New Zealand and Southeast Asia. 

Openway CEO Andrew Loader expressed his enthusiasm for the launch emphasising its significance in Australian manufacturing.

“We have some outstanding local innovators and some of the best quality produce on our doorstep, so we need more onshore manufacturing capabilities to fully realise their value and keep the economic benefits within our local economy,” said Loader.

Kate and Tal Weiss, founders of Table of Plenty, added that manufacturing of products would help reduce supply chain costs and challenges with importing them overseas, improve the environmental footprint, and support local rice and ingredient producers who will supply the facility. 

 “It’s fantastic to bring the production of our much-loved Rice Cakes home to Australia through our investment at Openway Food Co. Australians want more wholesome and healthy foods produced sustainably and locally,” concluded the founders. 

In addition to Table of Plenty, Openway Food Co boasts a portfolio of health food brands, including Keep it Cleaner, Red Tractor, Raise the Bar, and Hammer & Tuffy’s.