Vegemite brand back in Australian company hands following $460m Bega acquisition

ASX-listed taking over one of Australia’s most iconic brands as part of purchase of Mondelez International’s A/NZ grocery and cheese business

Bega Cheese says acquiring the iconic Vegemite brand as part of its $460 million purchase of Mondelez International’s A/NZ grocery and cheese business will give it the leg up it needs to become a leading Australian branded consumer goods business.

The ASX-listed company has entered an agreement to acquire the majority of Mondelez International’s local grocery and cheese business, a portfolio which includes Vegemite, Bonox, ZoOSh, and a transitional royalty-free licence for several Kraft products such as peanut butter and cheese as well as nut spreads. It also gains a licence for the Dairylead and Snackabouts brands, along with inventory, property, equipment and employee entitlements. The deal does not include any Philadelphia products.

In its presentation to investors, the company said it was already developing a brand rationalisation and transition strategy to support the peanut butter, cheese and salad dressings business once the licence runs out in December 2017.

“It is a rare opportunity to acquire Vegemite – this is a moment where Vegemite doesn’t often change hands – in fact, it hasn’t changed hands for 90 years,” said Bega executive chairman, Barry Irvin, during the investor presentation.

“The combination of Australia’s most iconic food brand with Bega Cheese’s product portfolio creates a leading Australian branded consumer goods business.”

The combined portfolio is expected to generate pro-forma annual net revenue of $310 million and EBITDA of $40-$45 million in its first year under Bega ownership. The deal is being funded from a $500m debt facility provided by existing lenders. More than 200 people will be coming into the Bega Cheese business as part of the acquisition agreement.

In its investor statement, Bega said the acquisition delivered a strong branded consumer food platform and scalable production facility based in Port Melbourne, along with a strong sales and marketing, research and development and operations team. It also provides the group with the opportunity to diversify outside of its dairy category with a wider consumer products range.

“It significant enhances Bega Cheese’s already strong retailer and food service relationships… and adds further diversification to Bega Cheese’s large B2B dairy foods and nutritional business,” the presentation read. “The combined Bega Cheese and Mondelez Grocery Business is expected to energise staff and create new marketing, development and brand opportunities.”

Irvine noted the two businesses had a combined heritage of 200 years.

“This is a food manufacturer with iconic brands and some great opportunity into the future,” he said. “Our view is a simple one: We are expanding by acquisition with a business that has strong cashflows from strong brands, but also an opportunity to grow into areas such as peanut butter and salad dressings. And at the core of both our businesses too is cheese.”

Irvin also highlighted an excellent culture across the Mondelez grocery and cheese division. “Not unlike Bega, very long-term staff members are product of the brand they produce and service and they’re depicted to the success of the business they operate in,” he said, adding a host of marketing and consumer brand expertise would be coming into the group as a result.

According to Mondelez figures, Vegemite is found in more than 90 per cent of Australian pantries, with more than 300,000 jars produced every day. In addition, Mondelez claims its grocery business represents 31 per cent of the $550 million spreads category in Australia, growing 5 per cent on a year-by-year basis since 2013.

Irvine pointed out Bega had been producing the Kraft cheeses on behalf of the brand for Mondelez for many years.

Mondelez A/NZ and Japan vice-president, Amanda Banfield, said it has been an absolute honour and privilege to have nurtured brands such as Vegemite for the past 90 years.

"But as we further our focus on core snacking categories and global Power Brands, the time is right for these brands to take the next step in their journey," she said. "We are pleased to have found a home for these talented people and grocery brands in a company that shares our passion for their future.”

The news comes as Bega ushers in COO and former sales and marketing general manager, Paul van Heerwaarden, as its new CEO, effective on 1 February 2017. In a statement announcing the appointment last November, van Heerwaarden said an early focus would be on building out the group’s food service and consumer products sales and marketing capability to complement its manufacturing expertise.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+:google.com/+CmoAu

Join the newsletter!

Error: Please check your email address.
Show Comments

Blog Posts

Innovations in retail will bring creative and technology closer than ever

While approaching a customer in a shop and asking what you can help them with is Retail 101, how many of us actually enjoy being approached? Generally, you have to give the forced, fake smile and say, “Just browsing, thanks,” while screaming on the inside, “just leave me alone!” Maybe it’s just me?

Jason Dooris

CEO and founder, Atomic 212

There’s a brand in my digital soup

Not a day passes by in the life of business executives where digital innovation or the prospect of disruption is not front of mind. This in turn, drives an unrelenting flow of questioning, discussion and strategy papers.

Jean-Luc Ambrosi

Author, marketer

Can marketers trust agencies again?

Unless you’ve been marketing under a rock, you’ll probably have questioned whether your media agencies are offering you transparency.

Nic Halley

Founder and managing director, Mindbox

Nice post Brad! very useful information. The retail stores are really mean for every brand I am agree with you. Now Online Service Market...

Srialto

The rise of online retail marketplaces and what they mean for brands

Read more

Minor correct Nadia, just wanted to clarify that the "Marketo consultants" that did this work, were actually Hoosh consultants

Fab Capodicasa

What it's taking for Edible Blooms to grow a stronger personalisation strategy

Read more

Im not surprise though, been in the industry for couple of years and I feel and see it with my tow eyes how eCommerce platforms innovated...

Jason Smith

Australia Post earmarks $20m for Australian ecommerce innovation investment

Read more

For marketers that are "going Agile" I recommend using Ravetree. It's a really powerful suite of tools for Agile project management, reso...

Janice Morgan

7 ways to run your marketing department like a software startup

Read more

Over the years very part of our lives has become technological. That’s why I am not surprised to see that Australian home loans are going...

GreatDayTo

Why Aussie Home Loans is embracing digital transformation

Read more

Latest Podcast

More podcasts

Sign in