Seven years ago, Bega Cheese broke the $1 billion annual revenue mark.
With the latest acquisition of the Lion Dairy & Drinks division, the company has been propelled to about $3 billion.
It was the biggest single acquisition in the company's 120-year history, and now all eyes are watching to see how the former co-operative evolves.
Bega will now have 20 manufacturing sites.
The latest purchase, theoretically for $534 million (but most likely higher than $600 million with costs), brought back some iconic Australian dairy labels from overseas ownership, which seemed to fit with Bega's interest in Australian food brands after its purchase of Vegemite.
Executive chairman Barry Irvin acknowledged it was going to be a big business.
“For me, it's a complete dairy business in terms of supply, geographic spread, customer reach and product range,” Mr Irvin said.
“I see this as an adjacent business.
“We have been traditionally a longer shelf-life dairy business, like cheese, milk powders and nutritionals. We haven't been in the fresh, daily delivered products.
“So there an adjacency between the two so the milk supply chain could be more effectively managed around the timing of supply, the logistics, the peaks and troughs of supply.
“They should lend themselves to greater efficiency across the supply chain. As well as the duplication. There may be some opportunities for cost savings there, too.
“And general efficiency product mix where we now, with market returns, need to deliver to market as it requires, but there is a range of products that we can place our milk in.
“I would argue that having the options that allow you to deliver milk to the highest value product across the range, is an opportunity with the two businesses together.”
Asked if this meant factories closing and people losing their jobs, Mr Irvin said there may be some positions duplicated — which would result in change, but there would be new jobs created.
“I think there will be relative stability.”
He said it was too early to talk about changes to factories, but the factories were required for specialist production and there weren't any plans for factory closures.
He pointed to two aspects which made the acquisition attractive.
“One is that Lion Dairy & Drinks had been on the market for some time, so the team within Lion had been preparing for separation and they are working well with the Bega team.
“There is a significant integration plan required but that is not foreign to us, just on a larger scale.
“This is a business that is adjacent to us. This will be as seamless as possible but takes a lot of planning and organising in the background.
“This is about creating one Bega and growing the great Australian food company.
“The nice thing about this acquisition is that many of the people we have known for years and respected them greatly.
“The history of both organisations, although different in recent times, you think about Lion, with origins in Dairy Farmers and National Foods, very traditional long-term dairy companies. There are a lot of parallels.”
Asked about the company's concentration on traditional Australian brands like Farmers Union and Vegemite, Mr Irvin said their Australian customers were concerned with where their food comes from, how it is manufactured and how it is delivered to them.
“I think that's the history of Bega — where we have a relationship with our farmers, relationships with our staff, manufacturing facilities in regional communities and we deliver to customers every day.
“Creating customer trust and customer reassurance is with good, well-known, well-respected brands.
“We're an old fashioned business coming back into fashion.”
Bega financed the latest acquisition through debt and a capital raising program late last year.
He was encouraged to see institutional support for Australian food and agriculture.
Mr Irvin was cautious when asked if the company had aspirations for more Australian food labels.
He wants to see the latest acquisitions bedded down first. But he did add: "I don't think it's the end of the journey.”
FACTORIES:
STRATHMERTON
Bega Cheese had been manufacturing processed cheese at both the hometown factory in south-eastern NSW and at Strathmerton in northern Victoria.
The transfer of processed cheese capacity to the Strathmerton factory was completed at the end of December.
“Strathmerton continues to be an important part of the network in terms of our capacity to cut, pack and process cheese,” Mr Irvin said.
KOROIT
In 2018, Bega Cheese purchased the Koroit factory in western Victoria from Saputo for $250 million.
Mr Irvin said the plant was now integrated into the business and gave them a strong manufacturing capacity with milk powder, nutritionals and butter, enabling them to balance spring peaks and flatten out supply for other parts of the year.
BRAND HISTORIES:
PURA
Pura was established by a German immigrant who bought a dairy in Preston, Victoria in 1935. By 1964, the PURA Dairy was supplying 32 per cent of Melbourne's milk. In 1991, PURA Dairy combined with other food-related brands to form National Foods Limited.
DAIRY FARMERS
The Dairy Farmers Milk Cooperative was formed on January 15, 1900 when 65 stakeholders, many of them dairy farmers themselves from the NSW Illawarra region, came together and agreed to run the organisation on co-operative lines. Now selling A2 milk, which is a type of milk that comes from cows that produce the A2 beta casein protein.
DARE
The blockbuster brand Dare was founded in 2006 and the popular iced coffee is now sold nationally.
MASTERS
Masters is the largest flavoured milk brand in Western Australia and has been produced locally in WA since 1964.
FARMERS UNION
The brand can trace its origins to 1888 when a committee was formed to establish a grain producers’ union. Today, its Farmers Union Iced Coffee is an icon in South Australia. Farmers Union Iced Coffee was first launched in 1977.
BIG M
Big M flavoured milk has been a big hit for Victorians since 1977. Big M accounted for sales of 19 million litres per year, and licence fees of $6-$6.5 million per year prior to the trademarks being sold in 2000 for almost $62 million.
MOOVE
Moove has been a NSW icon since 1978. Moove comes in popular flavours and pack sizes that suit different needs and occasions.
BERRI
It all started with five farming families selling fresh orange juice door-to-door in 1974. Some families still supply the brand today. Previously owned by National Foods.