A spanking new Sydney factory and solid growth in local and Asian markets have set the scene for a better than expected trading year for long life milk processor and cereal products maker, Freedom Foods Group.
Freedom, which specialises in developing ultra-high temperature (UHT) treated lines, including products specifically targeting the Chinese market, is tipping sales for 2017-18 could nudge $360 million.
That’s about $100m more than in 2016-17.
Output from its UHT (long life) packaged beverage lines alone will likely jump almost 200 per cent in the next two years, while cereal product sales (mainly oat-based lines) in China could be worth $15m to $20m in 2018.
“Our top line is growing and we’re seeing a lot of good things happening for us in the food and beverage sector,” managing director Rory Macleod said.
A solid portion of that growth was domestic sales, including burgeoning demand from cafes for almond and soy “milk” lines.
Brands gain Asian traction Freedom has also tapped strong e-commerce and offline retail sales opportunities in China, and enjoys rising recognition for its brands in China, Vietnam, Singapore and the Philippines.
Indonesia is also in its sights.
Until relatively recently its export focus was primarily based on selling milk processed on behalf of Asian food companies who wanted products sourced from Australia.
“I’d never have expected to see all our main business areas going so strongly at the same time, but the demand is certainly there and our business has the capability and capacity to respond,” Mr Macleod said.
That capacity will be significantly enhanced in coming months as 45,000 square metres of new processing plant and warehouse space at Ingleburn in southern Sydney is brought into full operation packing dairy lines – including a new drinking yoghurt – plus coconut, almond, soy and other plant-based products.
Freedom Foods also has factories at Shepparton and Dandenong in Victoria, and at Leeton in southern NSW, close to a support base of about 25 farmers contracted to grow oats, barley, maize and sorghum crops.
Freedom Foods’ considerable product range includes Australia’s Own, Kid’s Milk, So Natural, Almond Breeze and Vitalife UHT products (dairy and plant-based), the Freedom and Arnold’s Farm cereals and snack ranges and Power Foods sports and adult nutrition lines.
It also owns a 10 per cent stake in big dairy farming business Australian Fresh Milk Holdings which milks almost 6000 cows and supplies milk to Freedom’s various product lines.
UHT sweet spot Although it boasts demand growth on all business fronts in Australia and Asia, Freedom’s UHT dairy lines have attracted particularly strong market attention of late.
Total sales for the first quarter of this financial year were ahead of budget and demand indicators suggested continued growth.
Mr Macleod said Freedom’s firm foothold and manufacturing efficiency in the UHT marketplace had allowed it to benefit from a "considerable uplift in demand” following the past year’s significant disruption to southern Australia’s milk supplies and processing priorities.
While many milk processors such as Murray Goulburn have redirected scarce supplies to other production lines and scrapped expansion plans for their own long life milk operations, Freedom emerged in the box seat to meet rising UHT sales.
“There hasn’t been much new capability in the sector, aside from what we’ve been building, but the market has still continued to grow,” said Mr Macleod.
He expected the company’s UHT dairy product volumes would exceed 150m litres in 2017-18, up from 85m last year.
By 2018-19 production was likely to hit 240m litres.
Freedom’s UHT processing plant in Shepparton, built three years ago, will also be the base for the company’s move into dairy nutrition formula powder and related new products, working in tandem with the new Ingleburn site in Sydney.
New Sydney factory Ingleburn will employ about 50 staff and have seven different production lines operating by mid-2018.
It replaces a less efficient 30-year-old plant at Taren Point in Sydney, which is due to be refurbished as expanded head office space and warehousing.
The Taren Point site is owned independently by Freedom’s majority (58pc) shareholders and dairyfarmer suppliers the Perich family from Leppington Pastoral Company.
“The Perichs have been very supportive of our growth strategies,” Mr Macleod said.
“They have a long-term view of the dairy industry which aligns very much with where the company wants to go.
“We’ve also learnt a lot from them about what farmers think is important when it comes to building strong relationships with suppliers.”