Little Island Webinar
Little Island held a webinar on Friday, 22 May 2020. You can watch the replay by clicking the button below.
Investment Highlights
- Prominent foundation brands with a strong market share in the main plant-based dairy alternative categories, including 50% market share, in 2019, in the dairy-free ice cream category
- Strong projected revenue growth from $5.7m in FY20 to $22.2m in FY24, a Compound Annual Growth Rate (CAGR) of 40.4%
- A profitable business, with the inclusion of the yoghurt business smoothing out the current seasonal business model
- Global plant-based product sales are forecast to grow from USD 17.3 billion in 2018 to USD 29.6 billion by 2023, a CAGR of 11.4%
- NZ market opportunity estimated to be worth $117m annually over the next 7 years, based on historical growth rates from more mature markets
- Strong board and management team with significant industry and management experience
- Pre-money valuation of $6.525m for the combined group (including yoghurt business and after loan conversions), implying a multiple of 1.14x FY20 revenues of $5.7m
Introduction
Little Island is a leading New Zealand plant-based food manufacturer, producing a range of dairy-free products with combined revenues of $5.7m for FY20.
The business was inspired by its founders and is led by an experienced management team, with strong support and governance from its board. Our vision is to challenge the traditional dairy market and to become part of the daily family diet by creating delicious products from the best plant-based ingredients.
The plant-based food segment is one of the fastest-growing trends in the global food and beverage sector. This is primarily driven from consumer values being influenced by environmental, ethical and health concerns. Plant-based foods have quickly evolved over recent years from servicing a niche population to becoming mainstream.
The growth and size of the global market illustrates this growing trend. In 2018, global plant-based alternative product sales exceeded US$17.3bn and is expected to reach US$29.6bn by 2023. The Asia Pacific market accounts for the largest share of the global market, followed by the US and Europe.
The maturity and success of the global market provides validation of the opportunity emerging in New Zealand. We estimate that the New Zealand market opportunity will follow similar growth trends and will reach $117m over the next 7 years1.
Little Island has created two recognised brands in New Zealand, Little Island and Nice Blocks, with both forming a strong connection to consumers. A mix of organic plant-based milk and ice cream products are sold under the Little Island brand and healthy ice block products are sold under the Nice Blocks brand. Little Island and Nice Blocks products are sold throughout retailers and supermarkets across New Zealand, with more than one million units sold in FY20.
Little Island has agreed terms for the acquisition of a complementary plant-based yoghurt business under a mostly share for share transaction2. The addition of this yoghurt business will create a single-minded organisation that is a specialist in dairy alternatives across traditional dairy dominated segments.
Our intention is to dominate the plant-based movement in New Zealand. Our core business is already a prominent brand across the premium plant-based milk and ice cream segments and our position will be strengthened following the integration of the yoghurt business. We are the only New Zealand company specialising in plant-based dairy alternative products with product coverage across the main segments of the category, creating, we believe, a unique competitive advantage in a competitive FMCG market. The addition of the yoghurt business will mean Little Island will have the largest solely plant-based offering in New Zealand across categories.
This fast-growing market segment provides compelling growth opportunities for Little Island, and we believe the strength of our brand and our competitive advantage places us in an excellent position to capture a significant share of it. We believe with focussed strategies on developing these three core segments, Little Island can sustainably grow sales to $22.2m by FY24, including $4.55m of export revenues.
We are now raising between $1.5m and $2m of new growth capital, in addition to loan conversion of $695k, at an attractive pre-money equity valuation of $6.525m to drive our growth strategy. The company reserves the right to accept up to $500k of additional oversubscriptions.
We have a clear growth strategy that aims to capitalise on the market growth opportunities and will focus on five key areas:- Increasing category coverage through the integration of the yoghurt business.
- Investing in product development and innovation.
- Building an even stronger brand by increasing investment in branding and marketing.
- Build out our capability by continuing to grow a strong team.
- Create a more scalable and NZ centric business and export proposition by building our local supply chain, researching and testing new markets and investigating future merger opportunities.
FY20 was a strong year for the business, with the new management team outperforming EBITDA targets and returning the business to revenue growth.
The focus now is to continue profitable growth within the NZ market, including creating a more scalable NZ centric position, before developing an export proposition that we can successfully take into specific target regions that have demonstrable strong growth in this market segment.
We love what we do and we love sharing our world-class, plant-based products with New Zealanders. This is our opportunity to strengthen the Little Island team at an exciting point in our growth journey, and we invite you to join us.
1 NZ Grocery Express Report - Snapshot, iRi (Feb 19)
2 The parties have signed a conditional agreement that is dependent, in part, on raising capital of at least $1.5m. Under the terms of the agreement, $387k cash is required to settle the transaction with the balance of the consideration in the form of the issuance of shares.
Team Overview
Our team and board have significant experience in the food and beverage market and are all personally committed to guiding the business. The leadership team is capable and motivated to build a quality, high growth and profitable food and beverage business.
Little Island board of Directors
Matt McKendry
Chairman, Non-executive director
Matt chairs Little Island and represents the largest shareholder group, associated through Marmont Capital. Since Marmont’s investment in 2014, Matt has worked closely alongside the founders and through the recent transition to Bharti’s leadership. He comes from a consultancy background, having been a Deloitte partner, and works with a number of NZ companies that are expanding internationally. Marmont Capital is a specialist food and beverage investor in New Zealand.
John Evans
Non-executive director
John is one of the original seed investors in Little Island and was the former Chief Operating Officer of Better Drinks Company, a subsidy of Japanese multinational, Asahi Beverages.
His experience heading up the operations for a multinational company provides knowledge in scaling the manufacturing capability of food and beverage companies. He is involved in the oversight and governance of our product development and how we engage with contract manufacturers to ensure quality standards are met and scalable.
James Crow
Co-Founder, Non-executive Director
James is a man on a mission. He comes from an entrepreneurial family in the snow and ski industry and is genuinely concerned about the world around both his family and the wider globe. He is equally passionate about both community and commercial solutions and the impact Little Island has on the planet. He understands people and effortlessly communicates with individuals from all walks of life.
Yoghurt Company
Co-Founder, Non-executive director
The yoghurt business co-founder will join the board immediately after the completion of the capital raise. She is a passionate and multiple industry award winning commercial marketer with over 15 years’ experience in the FMCG industry, including the Marketing and Sales teams of some of New Zealand and Britain’s biggest blue-chip food companies
– Fonterra (Tip Top Ice Cream), Goodman Fielder, Gri ns and Premier Foods (UK) to name a few. Since founding and managing her own award-winning food company, she has become accomplished in all facets of business including finance, sales, business development, people management, legal, operations, branding, marketing and new product innovation.
Independent Director
Non-executive director
To be appointed after the completion of the capital raise.
The Management Team
Bharti Kendrick Chief Executive Officer
Bharti joined Little Island in April 2019 to create a leading plant-based business. She is passionate about plant-based foods and creating a Global company from New Zealand. She recently returned from a 20-year period in Europe and the UK and her previous role was the Managing Director, Yoplait UK and Ireland. Prior to her Yoplait role, Bharti worked for a range of Food and Beverage companies, including Danone, HP Foods and Griffins NZ.
Alice Rawson National Sales Manager
Alice joined Little Island in September 2019 from a large FMCG company where she was the Key Account Business Manager for the Woolworths and Farro supermarket channels. Alice has proven solid experience in account management and new business development, with demonstrated ability to grow and establish strong customer relationships. Alice is responsible for the sales execution of the business.
Christian Holden Production Manager
Christian is responsible for our factory operations and the development of new products. He is founder Tommy Holden’s brother, has been with the company from its early days and is responsible for product taste and quality. From the film industry, Christian understands how to make things happen. His years at Little Island means that he knows the properties of coconut and other plant-based ingredients and how they respond in scalable factory environments.
Yoghurt Founder Research & Development
The co-founder of the yoghurt business will join the business immediately after the completion of the capital raise. She is a food scientist and product developer with 17 years’ experience in FMCG Research & Development, product development and innovation. She has developed and launched hundreds of new food products for the likes of Fonterra, Vitaco/Healtheries, Tesco, Asda, Marks and Spencer, Sainsbury’s and Waitrose. Having launched her own business, and developed a range of plant based dairy alternative products, she has gained significant knowledge in plant based food science and processing, plant based consumer drivers and sustainable/eco focused product and packaging development.Warning statement
It's crucial for you to understand the characteristics and risks of this investment opportunity. New Zealand law normally requires people who offer financial products to provide in-depth information to investors before they invest. The usual rules do not apply to offers by companies through Snowball Effect. As a result, you may not be given all the information you need to make an informed decision. Investing is risky. Some of the key risks include loss of capital, illiquidity, lack of returns, dilution, loss of key people and customers, and lack of control. You should only invest money that you can afford to lose.
