Milklab maker hopes for ‘coffee culture’ to continue despite cost-of-living crisis

The chief executive of Milklab manufacturer Noumi (formerly Freedom Foods) is banking on Australians’ enduring love for coffee in the year ahead despite the looming consumer spending crunch as the company looks to pull itself out of multimillion-dollar losses and shake off its turbulent past.

Michael Perich, the CEO of Noumi, which produces plant-based beverages Milklab, Australia’s Own and a range of dairy and protein brands, believes consumers won’t stop drinking coffee – in cafes or at home – even as they pull back on discretionary spending.

Noumi produces plant-based beverages Milklab and Australia’s Own.Credit: Janie Barrett

“Coffee culture is still something that people will continue on for some period of time,” Perich said. “We do see that there are a lot of consumers that have particular discretionary spend that they do like not to reduce as well.”

He pointed to consumer data from December that showed revenue from cafe and restaurant channels were flat while retail rose slightly, signalling a shift away from out-of-home spending towards at-home consumption.

As the Reserve Bank raises interest rates nine times in a row, sparking some fears of a recession, takeaway and restaurant spending is expected to be one of the first casualties of the cost-of-living crisis that has hit a 20-year high and Australians cook more at home.

“It is something that we’re quite mindful of around that change in spend,” Perich said.

While Milklab is marketed and distributed as a cafe-exclusive barista brand, Australia’s Own is Noumi’s retail brand sold in Coles and Woolworths.

“It’s about ensuring the changes in consumer buying behaviour, that we capture that by having a dual strategy.”

Noumi posted net losses of $23.6 million for the first half of the 2023 financial year, narrowing from $65.9 million the same period last financial year. Revenue increased 5.5 per cent to $279.8 million while adjusted operating earnings (EBITDA) shot up 149.1 per cent to $11.4 million.

The company’s share price has sunk at the news, down nearly 4 per cent to 13 cents.

Noumi chief Michael Perich hails from the billionaire Perich family, one of Australia’s wealthiest landowners.

Significant legal costs as well as restructuring costs hampered the company’s cash flow. While it has settled its dispute with US almond grower Blue Diamond and Sunday Collab, it continues to battle a class action lawsuit brought by Slater + Gordon, Phi Finney McDonald, a countersuit against its former auditor Deloitte, and most recently, corporate watchdog ASIC.

Sales in flagship brand Milklab continues to drive the company forward, rising 10.8 per cent to 26.7 million litres, with Perich outlining a focus on growing its oat product in Australia while pushing into export markets, particularly South-East Asia.

“Looking at the coffee culture in other markets outside of Australia will be an important growth area for Noumi, following the same key aspects of how we launched Milklab in Australia, working with where coffee culture is up-and-coming and more focus around having milk alternatives in the coffee in those areas,” Perich said.

“Indonesia, South Korea, Thailand – some of those areas (are) where we see that growth potential.”

However, as the global macroeconomic environment becomes more challenging, the company has had to readjust its export strategy towards lower volumes but higher margins as export markets less exposed to inflation pressures have been less willing to accept price rises.

“We need to continue to improve our margins, particularly in export, to achieve break-even cash flows as soon as possible and to achieve reasonable returns on the capital invested in our facilities in the future,” Perich said.

Perich was installed as chief executive after his billionaire family rescued what was then known as Freedom Foods from the brink of collapse.

In 2020, it was revealed that the size of the company’s write-offs, including out-of-date stock, had blown out from $25 million to $590 million.

Noumi is being sued by ASIC.Credit: Peter Braig

The Australian Securities and Investments Commission is suing Noumi and two of the company’s senior executives who exited the company days before it unveiled a multimillion-dollar company writedown.

Since taking the helm of the company, Perich has led Noumi through its three-prong strategy of “reset, transform, grow” and said Noumi was now firmly in the “transform” phase. “Growth” is expected to be completed in the 2025 financial year.

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