The latest company to brave an ASX listing can’t be accused of being off-trend when it comes to tapping the dietary habits of younger inner-urban consumers.
In the throes of a $6m raising, Forbidden Foods (FFF) claims to have a deep understanding of its customer demographic because founders and former university chums Marcus Brown and Jarrod Milani are only in their early-30s.
The duo founded Forbidden about a decade ago, long before organic grains and plant-based ingredients became mainstream products. Brown has an insurance background, while Milani was in charge of marketing booze for Coles.
Forbidden’s well-established eponymous brand covers lines such as black rice and gluten-free grains and is sold in Woolworths and IGA.
Under the Sensory Mill brand, Forbidden sells flours and powders derived from plants such as apple and hemp flower — anything high in protein, nutrients and fibre.
The company last year acquired Funch, which delivers protein ball mixes and non-dairy prebiotic and probiotic smoothies (prebiotics promote the growth of probiotics, which are healthy gut microorganisms).
But arguably the company’s best prospects lie with its Funch-branded baby foods, which are made from ingredients fully sourced from Australia, such as Victorian fruit.
Despite the baby food sector’s ‘‘clean and green’’ export hype, other suppliers such as Bellamy’s (now Chinese-owned) and Bubs Australia (BUBS) use foreign ingredients, if only because local supply is unavailable.
Forbidden may be walking among giants but it’s a small shebang: in the year to June 2020 the company generated revenue of $4.1m, up 20 per cent, and lost $2.4m.
The company has the capacity to grow annual to $20m with its current resources and is also close to break even.
Pitched at 20c a share, the offer closes on August 14 with an expected August 31 listing date. Post-listing, Brown and Milani will own 20 per cent of the company, which will have a nominal market cap of $15m and a slender enterprise value of $9m.
In the baby food space — albeit dairy rather than plant-oriented — Bubs Australia points to revenue of $62m in the 2019-20 year and is not yet profitable.
Bubs market cap?
Half a billion dollars!
Tim Boreham edits The New Criterion
tim@independentresearch.com.au
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