DAVID WINNING
January 09, 2013
Dow Jones Newswires
IT isn’t just Australian waistlines that are expanding. Opportunities for investors in the market for healthier drinks are, too.
The Natural Cordial Company, which produces cordial from real fruit juice and natural sweeteners, is seeking to raise more than $5 million by selling a 20-25 per cent stake to a strategic partner.
The company has hired Sydney-based Emerald Partners to run the sales process, as it gears up for a major rollout of its products in Australian supermarkets backed by a $4m marketing campaign that includes television ads on Channel Nine.
“The cordial category in Australia alone is worth more than $200m,” says Stew Bailey, The Natural Cordial Company’s chief executive and owner.
“Once you get into ready-to-drink pops for children’s lunchboxes that’s another $300m there.”
Mr Bailey thinks he has found a sweet spot in the Australian drinks market. At a time when consumers globally are becoming more concerned with the calorie count in drinks as well as artificial colours and flavourings, he says the answer lies in a zero-calorie ingredient already used by Coca-Cola and Pepsi elsewhere in the world.
The Natural Cordial Company product range uses sweeteners made with stevia, a herb native to parts of South America.
“The cordial category has been flat for the past two years because people think it is all sugar-infused product. What I’m trying to do is come out with a healthier alternative,” Mr Bailey said.
The US Food and Drug Administration declared sweeteners derived from the stevia herb safe for use in foods and beverages in 2008, prompting Coca-Cola to use it in more than 30 products in seven countries. Three years later, the EU followed suit by approving its use.
In Australia, Pepsi recently launched its Pepsi Next cola drink, backed by a marketing campaign including billboards in Sydney.
It is sweetened with stevia, and Pepsi claims it has 30 per cent less sugar than regular cola.
The planned rollout of The Natural Cordial Company product range comes just two months after the Australian Bureau of Statistics published data showing that Australians are losing the battle of the bulge. According to the 2011-12 Australian health survey, 63 per cent of the population is now classified as overweight or obese — an increase of two percentage points on the previous study four years ago.
Mr Bailey hopes to capture 20 per cent of the cordial market within two to three years, with sales of more than $60m by the 2015 fiscal year, which he says could be the right time to sell the company.
The Natural Cordial Company range is on sale in supermarket chain Woolworths and independent grocers, with other major retailers poised to follow early this year. Sales at Woolworths are up more than fivefold in a year, data shows, and the number of flavours on offer is expanding.
Mr Bailey has a strong track record in brand development and the grocery sector.
In 2004, he sold field marketing business and food brokerage The Bailey Group to the then unlisted Photon Group.
He currently leads the Brand Influence Group, which has helped grow and develop brands in Australia, including cranberry juice drink Ocean Spray.
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