Inside Noumi’s curdled European Milklab deal with Sunday Collab
Surfing champion Joel Parkinson and his manager, Gold Coast Titans founder Michael Searle, are now suing the billionaire Perich family business over a soured milk deal.
On a mild September day in 2019, the company formerly known as Freedom Foods greeted a rock star delegation from the Gold Coast at its office near Sylvania Waters, in Sydney’s south.
The company’s then chief executive, Rory Macleod, met champion surfer Joel Parkinson and his manager, Gold Coast Titans founding chief executive Michael Searle, to discuss an exclusive European distribution deal for Freedom’s flagship Milklab range.
Milklab was at its height a range of oat, soy, coconut and dairy milk products that were wildly popular at cafes around the country.
But it is that September meeting that now risks costing Freedom – renamed Noumi last year – up to $24m, with Searle and Parkinson suing the group in the Supreme Court of Queensland for lost future profits after their relationship dramatically soured.
Parkinson and Searle had big plans for Milklab via their Sunday Collab outfit – a global business that markets itself as from a beachside commune in southwest France but is registered in the Cayman Islands, with its Australian office in Coolangatta.
Documents filed with the Supreme Court show Sunday Collab planned to sell Milklab’s range throughout Europe – and even into Egypt and Russia.
It seemed like the deal of the century.
Warehousing, travel and distribution across 14 countries was estimated to cost €30,000 ($43,214) in the first year of the agreement, rising to €125,000 by year five.
Macleod – a former investment banker who would quit Noumi in June 2020 after the board unearthed a near $600m hole in its accounts – was keen.
At the time, he was on a tear, launching 130 products within a year. Later, the company would find this made inventory management difficult and created significant confusion about what products were actually being manufactured. As one source familiar with the matter said: “Rory shot at anything that moved”.
Complicating matters was that Macleod never signed the distribution contract – nor did Noumi’s board. The company’s new management says since the deal was never activated. Sunday Collab says while the agreement was never signed, it was still binding.
Macleod agreed to provide Milklab products for a booth at international food expo, Host Milano, in Italy in October 2019 and for European regulators to test, with Noumi and Sunday Collab executives exchanging a flurry of emails talking up the partnership.
Searle even shared personal details, including his father’s cancer diagnosis, with Noumi’s former chief commercial officer Matthew Vince.
Searle revealed his father’s illness in December 2019, apologising for a delay in sending reports on proposed European customer profiles, distribution plans and sales forecasts.
“Mr Vince was very comforting and said he was extremely sorry for the circumstances and asked how Mr Searle was doing,” the filings read.
“(Searle) explained to Mr Vince that the surgery procedure had gone ‘OK’ but that his father was undergoing chemotherapy and radiation daily and he was driving him to Brisbane from the Gold Coast as we was the primary carer as his father’s partner worked in Queensland Education and could not afford to lose her job.
“(Searle) asked Mr Vince to brief Mr Macleod and explain this was not apathy towards the (Milklab distribution) project, but that it was simply a difficult time for him”.
Via a consultant, Lachlan Marshall, Searle asked Macleod whether he should travel to Europe to work on the project and ask his sister to look after his father.
“Ideally … there would be a signed agreement before his flew over to Europe, not only because they were to incur substantial cost but also because Mr Sear was going to ask his sister to come to Australia and would lose time with his father if he went,” the filings read.
“Mr Macleod responded that ‘yes, he should go, we have a partnership in place” and said words to the effect that he was going to follow up with Mr Vince about the paperwork”.
By February 2020, Sunday Collab had spent €387,517.56 on the partnership, including €61,944 on travel and accommodation, and €230,983 on salaries and wages.
But within five months, Macleod and Vince had both left the company after its board revealed a hole in its accounts, shocking investors and triggering two class actions in the Victorian Supreme Court. The board found accounting irregularities and more than $60m of “out-of-date, unsaleable and obsolete inventory” that had been left rotting in warehouses.
Michael Perich – whose billionaire father and uncle, Ron and Tony, are Noumi’s biggest shareholders – succeeded Macleod as chief executive. He was left to untangle a range of products now considered too complicated to pursue.
This included unwinding a deal with Blue Diamond – a key supplier of Freedom’s Almond Breeze products. The California-based company later sued for breach of contract.
The case was settled in February, with Noumi agreeing to pay Blue Diamond $US35m ($50m). In exchange, Blue Diamond removed restrictions on the sale of almond milk products.
The company also sold its Freedom Foods-branded cereal and snack division to Arnott’s for $20m, with the deal stipulating a name change for the company, with it later settling on Noumi. It embarked on a $280m recapitalisation with Oaktree Capital Management.
Perich told Sunday Collab in June 2020 – the day of Macleod’s resignation – that “Freedom Foods is putting its business on hold”. Searle told Perich that Sunday Collab “remained at all times ready, willing and able to perform the distribution agreement”.
Perich replied: “I am unaware of any agreement between our respective companies. Are you able to send me a copy of the agreement that you refer to in your email?”
“As you are aware the senior executives that you were working with are no longer in the business so we are keen to understand what has been agreed,” he wrote.
Searle sent Perich a copy of the unsigned draft agreement.
But Perich said since the agreement was not signed it was not binding and “Freedom Foods was focusing on securing its existing business (and) not interest in the European market”.
“Mr Searle said words to the effect that the position of Sunday Collab was that the distribution agreement was binding because it had not been signed,” the court filings show.
Sunday Collab now claims Noumi engaged in misleading and deceptive conduct and says it has lost the ability to generate €17m in profits over five years from the failed Milklab deal.
Noumi says these losses are “wholly unsupportable” and argues that Macleod and Vince never had the authority to enter such a contract – even if the pair had signed it.
“Mr Macleod and Mr Vince did not have express authority to bind the defendant to contracts unless they had express delegation by the defendant’s board of directors in respect of a particular contract,” other court filings in the dispute read. “There was no such delegation. International product distribution contracts are typically the subject of signed written contracts before parties consider themselves bound to terms commercially negotiated.”
In a statement to the ASX, Noumi dismissed the case as “without merit”.
“Noumi also considers the quantum of Sunday Collab’s alleged losses are misconceived and will not succeed, particularly given: Sunday Collab provided little or no demonstrable relevant previous distribution experience in connection with dairy or plant-based beverages; the highly competitive nature of the market in Europe; and the significant disruption caused by Covid-19 and broader economic challenges which affected, and continue to affect, supply chains and distribution networks,” it reads. “Noumi will continue to defend the action.”
