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Thai cheese: SA producer's Asian mozzarella move

Business

A South Australian dairy firm has sold a $10m stake in its business to a major Thai food importer and developed a speciality cheese in a bid to stretch Asian sales.

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The memorandum of understanding between Beston Global Foods and KCG Corporation (KCG) also includes a long-term agreement for the supply of Beston’s dairy, meat and alternative meat products into Thailand.

Subject to mutual due diligence by both parties over the next two months, KCG will become a strategic investor in Beston and subscribe for 103,626,943 shares in the company at a price of 9.65 cents per share.

Under the arrangements, KCG will become the official representative of and exclusive distributor of Beston products in Thailand and enable the SA company to increase its penetration into ASEAN markets.

Beston and KCG have also collaborated on the development of a mozzarella product specifically for the market in Thailand and several other ASEAN countries.

KCG owns the “Allowrie” and “Imperial” brands in Thailand and supplies products to most of the major supermarket chains in the country including Big C, 7-Eleven, Tesco, Makro and Foodland.

It’s also the leading importer of dairy products into Thailand and one of the largest suppliers of premium quality food products to the Thai market.

The arrangement will extend beyond dairy products.

“KCG has expanded its operations over the last 30 years with the establishment of distribution outlets across most of Asia and has also expanded its product range over this time to include meat, seafood, artisan fine foods and canned goods,” Beston said in its announcement to shareholders yesterday.

“KCG has identified the opportunity to take the meat and plant protein products produced by the Provincial Food Group (PFG), a wholly-owned subsidiary of Beston, and distribute these products into Thailand and other ASEAN countries.

“KCG will also untap the potential of other BFC retail brands, in particular, Eigh+ alkaline water and Immune+ Lactoferrin drinks, as well as exploring the opportunities for co-packing partnerships in Australia using BFC produced ingredients.”

The announcement on Thursday resulted in a 35 per cent spike in Beston’s share price from $0.057 to $0.079 at the close of trade.

Despite increasing production and sales in the past 12 months, Beston this month reported it expects to again make a loss this financial year despite a significant increase in sales revenue in FY22.

The company, which derives about 90 per cent of its income from dairy products manufactured at Jervois and Murray Bridge, released a market update this month with a new group sales forecast of $140 to $150 million, down from the previous forecast of $160 to $185 million.

However, in the same announcement to shareholders on Thursday Beston announced it had recently secured a number of significant export contracts to Japan, representing approximately 20 per cent of its total annual mozzarella production of 15,000 tonnes.

Japan is the world’s second-largest importer of cheese and shipped in 70,000 tons of natural cheese from Australia in 2021.

Beston CEO Fabrizio Jorge said the Japan contracts reflected the company’s progress.

“Producing and delivering premium products to premium markets is a long-haul journey and our goal has always been to establish long-term, sustainable returns for our shareholders through markets and channels that recognise the quality of South Australian produce,” he said.

“Japan is serious about the quality of the cheese it imports and they have found a very capable and like-minded partner in Beston.

“It’s a tough market to break into but the hard work of the Beston team has paid off.”

Beston says it is also on track to sell about five tonnes of its high purity Lactoferrin in several global markets such as China, the US, South Korea, India and Europe before the end of the month, bringing total Lactoferrin sales for the current financial year to about 8.2MT.

Lactoferrin is a multi-functional dairy protein extracted from milk that has a wide range of health benefits, including boosting immunity.

The company was recently granted registration from the Australian Therapeutic Goods Administration (TGA) for three Lactoferrin products that aid bone, muscle, growth and immune system support respectively.

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