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!

Or
Error: Please check your email address.
Show Comments

Blog Posts

Social purpose: Oxygen for your brand health vitals

If trust is the new currency, then we’re in deep trouble. Here's why.

Carolyn Butler-Madden

Founder and CEO, Sunday Lunch

Customer experience disruption: Healthcare faces a bitter pill

Over the past decade, disruptors such as Amazon, Apple and Australia’s Atlassian have delivered technology enhanced customer experiences, which for the most part, have improved customers’ lives and delivered unparalleled growth. Can they do the same for healthcare?

Alex Allwood

Principal, All Work Together

How can a brand remain human in a digital world?

Some commentators estimate that by 2020, 85 per cent of buyer-seller interactions will happen online through social media and video*. That’s only two years away, and pertinent for any marketer.

James Kyd

Global head of brand strategy and marketing, Xero

https://bit.ly/2qLgzmR Transform your life a proven digital blueprint

Okitoi Steven

How this banking group tackled a digital marketing transformation

Read more

Its great to hear that companies including JCDecaux, oOh!media, Omnicom and Posterscope Australia have all partnered with Seedooh inorder...

Blue Mushroom Infozone Pvt Ltd

Out of home advertising companies strive for greater metrics and transparency

Read more

Much ado about nothingAnother fluff piece around what it could possibly do rather than what it is doing

gve

How AMP is using AI to create effortless ‘experiences’

Read more

is it true that Consumer expectations are also changing as a result. If we trust someone with our data there is also an expectation that ...

Sunita Madan

Society will decide where digital marketing takes us next: Oracle

Read more

This Blog is Very interesting to read and thank you for sharing the valuable information about Machine Learning. The information you prov...

johny blaze

What machine learning has done for the Virgin Velocity program

Read more

Latest Podcast

More podcasts

Sign in