04 May 2016

Burra Foods Restructures For Growth

Burra Foods Restructures for Growth


Burra Foods today announced a change in shareholding in the company as part of its growth plans to improve market access and raise capital to fund the expansion of its dairy processing facility in Korumburra, Victoria.

Burra Foods’ shareholders have executed an agreement with leading international dairy farming company, Inner Mongolia Fuyuan Farming Co Ltd (Fuyuan), which will see the company take a majority shareholding pending Foreign Investment Review Board (FIRB) approval.

Fuyuan is owned by a number of investors with the largest shareholder being China Mengniu Dairy Co Ltd (Mengniu), a company listed on the Hong Kong Stock Exchange (HKEx), which manufactures and distributes dairy products throughout China.

Fuyuan’s interest in Burra Foods will see the local Gippsland dairy processor gain unparalleled access to the world’s largest and fastest growing dairy market in addition to improved access to capital that will fund expansion projects.

Existing shareholders including Burra Foods’ founder, Grant Crothers and Japanese dairy distributor, ITOCHU Corporation have maintained a combined 21 per cent interest in the company with Mr Crothers continuing in his role as Managing Director/CEO.

“The new shareholder structure will provide Burra Foods with vastly improved access to new high value milk and nutritional powder markets, facilitating low risk growth up the value chain, and access to additional capital,” Mr Crothers said.

“We have always been about maximising value from the milk solids we collect and process and have taken a very cautious approach to China, appreciating the significant risks that come with the increasing opportunities available.

“There are only winners in this deal as the new structure enhances the future for our loyal milk supply partners, provides ongoing employment for our dedicated staff, while ensuring increased and stable supply to our existing customers whether they are located in Australia, Japan, China or other parts of the world.”

The agreement was signed following an extensive strategic review process considering a number of ‘best fit’ opportunities.

The new structure is designed not to impact business operations with the retention of Grant Crothers as CEO / Managing Director and the existing Burra Foods management team who are committed to honouring all customer supply agreements and continuing to deliver a premium to milk supply partners.

“We are nothing without our supply partners and customers and are now in an even stronger position to meet their current and future needs with a solid business model that improves access to markets, technology and capital,” Mr Crothers said.

“Over the 25 years of growing Burra Foods from a very modest base, we have worked hard to live by our values, one of which is ‘nobody is smarter than the market’ where we respond to the market’s needs.

“This injection of capital provides us the scope to meet the ongoing market demand for premium dairy based ingredient products, including nutritional milk powders, and move up the value chain while minimising the risks associated with penetrating volatile international markets with high value products.”

Both Burra Foods and Fuyuan will provide directors for a new board once FIRB approval is granted and the sale is completed.