The company cited flow on effects from COVID-19, which have resulted in labour shortages, increase training costs for incoming staff, and more expensive harvesting and distribution practices, driving up the farm gate price of milk.

“We are sensitively undertaking the sale process to ensure our people and our customers of these businesses are not disadvantaged, and the businesses have the opportunity to thrive and return to growth under potential new owners,” CEO & Managing Director Chantele Millard said in an ASX statement last week.

“Both businesses were also impacted by local and global events which increased costs and created inflationary pressures outside the control of MBH.”

St David Dairy was hit especially hard thanks to quality issues caused by skilled labour shortages, resulting in supply and delivery issues that caused further customer losses. Furthermore, the company lost its general manager in May, forcing MBH Chairman Reg Weine to step in temporarily to take over operations.

Pars Creek Farms were forced to delay the spread of products to 400 supermarkets across New South Wales and Victoria due to the impacts of COVID-19 and flooding in northern NSW. Additionally, the loss of a private label milk contract back in March and the higher competition for a diminished milk supply resulted in the company having a much lower than expected throughput.

Maggie Beer Holdings entered InDaily’s South Australian Business Index for the first time last year at number 53 with reported revenue of $52.8 million. The company’s FY22 revenue was $49.8m.

Now in its eighth year, the South Australian Business Index is established as the state’s most credible snapshot of our leading private and public companies.

The state’s top 100 companies are ranked by market capitalisation and revenue over the previous financial year, giving a clear indication of business trends.

MBH began considering its dairy assets non-core back in May, after the purchase, and subsequent success, of Hampers & Gifts Australia. Since this acquisition, MBH has relied more on its e-commerce and gifting market, which now makes up 76 per cent of their gross sales as of the end of the financial year.

“MBH now has an engaged digital audience of more than 900,000 consumers,” the company stated in their FY22 report.

“Combined with our range of new innovative products and hampers, our e-commerce businesses are positioned for sustained growth.”

MBH first purchased B.-d. Farm Paris Creek back in 2017, when the company was still named Longtable Group. The group went on to purchase St David Dairy in 2018. Longtable Group later rebranded itself as MBH in 2020 after acquiring a 100% stake in Maggie Beer Products the year before.

The company confirmed on 22 June 2022 they had appointed advisors from Nash Advisory to help determine the company’s strategic options for their dairy assets and initiating an active process to search for potential buyers.

MBH were confirmed to be in exclusive negotiations with potential buyers for both Paris Creek Farms and St David Dairy when the company’s FY22 report was released on 24 August 2022, with further information on the sale of these companies to be released at the annual general meeting.

This report also outlined the poor performance by both subsidiaries, which contributed to a net loss of $19.8m for MBH when accounting both for decreased sales performance and a perceived $17.5m asset depreciation from the underperforming companies.

This announcement has caused some concerns for investors, with the Maggie Beer Holdings’ share prices dropping more than 10 per cent over the week following the release of the company’s FY22 report.

The impact of the divestment of their dairy businesses will be revealed in where MBH falls on the South Australia Business Index this year.  

With nominations now closed, this year’s top 100 will be revealed at a celebration lunch at the Adelaide Convention Centre on September 29. Tickets are available here. 

This article features a Business SA Member. Business SA are proud partners of the Regions in Focus program which highlights regional journalism. Business SA is South Australia’s Chamber of Commerce and Industry and peak employer body. To find out more click here.