Australian Lamb Company Group for sale as it cashes in on global demand for protein supply

Australian Lamb Company is looking for a new owner. Picture: Alan Barber

Victoria-based lamb producer Australian Lamb Company Group has placed itself up for sale as it looks to capitalise on the soaring global demand for protein supply.

Working on the sale is understood to be PwC, with documents sent out to prospective suitors.

Non-binding offers have been due in the first half of this month.

ALC, as it is known, is thought to be worth about $350m to $400m, according to market experts.

It is a large supplier of lamb to supermarket giant Coles, which pays the group for its own service processing, while it also has its own branded product.

It exports to more than 70 countries and its global and domestic customers include hotels, resorts, restaurants, supermarkets and butchers that purchase produces from the company’s two licensed facilities in Sunshine, Melbourne and Colac in south west Victoria.

The business is owned by the Verrall family and run by John Verrall and Denis Zarpellon and has more than 800 staff.

ALC’s own brands include Ambassador, Sovereign, 1788 and Everdene Oak.

For the year to June 2021, ALC generated about $21m of annual earnings before interest, tax, depreciation and amortisation and about $430m of revenue.

However, earnings fell about 26 per cent in the year due to the global pandemic impact.

Prospective buyers could include South American red meat giant Minerva Foods, while supermarket Coles could also consider acquiring the business given this could shore up supply in a period of uncertainty due to supply chain disruptions, Covid-19, flooding on Australia’s east coast and the conflict in Ukraine involving Russia.

It comes as the price of protein remains in strong demand, with various groups hoping to capitalise on the high prices for meat through sales processes.

Pork producer SunPork is for sale through Macquarie Capital, while Rothschild is working for poultry producer Baiada for a potential sale and Canada’s Cooke Aquaculture is in pursuit of the $1bn Australian listed salmon producer Tassal.

IBISWorld says that the Australian meat processing industry as a whole generates $23.5bn of annual revenue and $1.2bn of profit with a 5.1 per cent profit margin.

Lamb and mutton accounts for about 24 per cent of the market and over the past five years, rising export demand has driven up prices.

Despite higher prices, Australia’s per capita sheep meat consumption remains stable, as consumer preferences pivot towards premium meats like mutton. This trend, along with rising sheep production volumes, has caused the segment to increase as a share of industry revenue over the period.