Flahey’s Future is new to the Australian market and is progressively being rolled out nationwide through a range of major branded retailers in the Australian pharmacy market, including Chemist Warehouse, Chemist Outlet, Blooms the Chemist, Priceline, Soul Pattinson and Pharmacist Advice stores.
Flahey’s Nutritionals is also developing a range of infant formula products designed to give it a “cradle-to-grave” market position.
Peter Skene, CEO of Australian Dairy Farms, said, “Bringing Flahey’s Nutritionals into our company is a major further step in Australian Dairy Farms Group’s overall strategy of transitioning from a conventional basic producer of low value products, to a premium differentiated branded business.
“The acquisition represents the first step for us in entering the organic formula market.”
Skene said the market for organic infant formula in Australia and New Zealand was expected to more than double in size between 2017 and 2023, from A$230m (US$168m) in 2017 to A$546m (US$399m) by 2023.
Further out, Australian Dairy Farms is eyeing the Chinese market, Skene added.
Australia Dairy farms currently owns six farms producing 17m liters of milk – the farms are currently in the process of converting to organic milk production, to become Australia’s largest single farm entity for the production of organic milk.
“Infant formula sales in China are growing at 9% a year, but organic infant formula sales in China are growing at 46% a year,” he said.
As part of the purchase of the Sydney-based Flahey’s Nutritionals business, its principal Chris Flahey will join Australian Dairy Farms as sales and marketing director responsible for the execution and transition to a fully branded business. Flahey was previously sales and marketing director of Bellamy’s Australia Limited.
The acquisition includes stock necessary for ongoing trade and Flahey’s Nutritionals’ intellectual property for the rollout of a range of infant formula products.
Total consideration for the acquisition is A$1.5m (US$1.1m), made up of A$400,000 (US$292,000) Cash and 6,875,000 AHF stapled securities, in four tranches, based on key milestones and retention of the key executive over a three-year period.