Case Study - Berry Yummy Marketing

Specialists combine to market strawberry business.
 
Third-generation farmer Ray Daniels understands the importance of specialisation.
 
In the past, the Queensland-based family – Ray’s grandfather and then his father (also named Ray) – had grown a range of crops, including beans, corn, peas and strawberries, but the berries were merely a boutique product.
 
Ray followed the family heritage, initially selling produce from city fruit stalls, before establishing a property at Wamuran, near Caboolture, north of Brisbane.
 
He soon identified that farming’s future lay in “specialising in a crop and doing it well”.
 
So he focused on growing strawberries, establishing Sunray Strawberries Pty Ltd and several associated enterprises, including temperature-controlled transport and farm services businesses.
 
Ray was cognisant of the need to improve the berries’ genetic stock, so negotiated with US-based Plant Sciences Inc (PSI) to get Australasian rights to varieties that enabled farmers to extend their growing seasons and supply strawberries year-round to hungry clients, predominantly through the major supermarket chains.
 
Ray established Berry Yummy Marketing Pty Ltd (BYM) in 2011 as a corporate entity through which to buy the genetic rights and work with a broad range of mainly fragmented, family-operated strawberry farms to give them combined leverage in a competitive market.
 
BYM, through its network of growers, has 10 million strawberry plants in the ground around Australia and is the nation’s largest winter strawberry supplier.
 
BYM’s biggest customers are the national supermarket chains, Coles, Woolworths and Aldi, followed by the warehouse club Costco, and growers’ markets and export markets.
 
Ray had big aspirations to grow the business but it was not something he had the ability to pursue alone.
 
Along came Perfection Fresh Australia Pty Ltd, a private company backed by the Smorgon and Simonetta families, which specialises in producing, marketing and distributing fresh fruit and vegetables. Perfection Fresh has been buying produce businesses to build scale in several sectors.
 
When Perfection Fresh representatives approached Ray with the view to buying all or part of his network of companies, Ray knew he needed a specialist to help him negotiate the optimum deal.
 
An agronomist who had previously worked with Moore Stephens recommended the firm, and Ray met Corporate Finance (Queensland and northern NSW) Director Brett Plant.
 
It was a perfect fit – a combination of diverse specialist skills.
 
“Mergers and acquisitions are not within my experience, but it’s what they do,” Ray said.
 
Drawing on Moore Stephens’ specialist knowledge has helped him negotiate a deal for Perfection Fresh to buy the BYM component of his business empire, including the PSI genetic rights.
 
Perfection Fresh and Ray, in a new role as grower liaison and mentor, are now working together in a bid to bring some of Ray’s broader aspirations to fruition.
 
Ray said Moore Stephens’ value in negotiating the deal was the firm’s vast experience.
 
“They’ve got the know how in developing structures and putting a deal together,” he said.
 
The outcome was more complex that Ray had expected, taking seven months rather than his initial estimate of three or four, but he appreciated that Brett and the Moore Stephens team could initially help him “identify what we were actually selling”.
 
The deal’s complexities included issues that required large amounts of legwork by the Moore Stephens team, including taxation, earn-out provisions, and how the final arrangements would be structured to enable the best outcome for both parties.
 
The acquisition takes Perfection Fresh’s Australian strawberry market share to about 10% and gives it access to exclusive licences for premium strawberry varieties. For example, Perfection Fresh gains access to the PSI-developed brand Splendor, a high-yield, great tasting variety, plus other popular PSI varieties, Arabella and Confidence.
 
Perfection Fresh will continue BYM’s transparent approach that enables its growers to receive daily returns with cost breakdowns and quality reports.
 
BYM took the stress out of the supply chain by managing marketing and distribution and implementing quality assurance (QA) to help growers achieve maximum returns. It also helped growers finance their crops.
 
The sale agreement includes other Daniels Family Group companies continuing to supply services, like refrigerated transport, to BYM growers.
 
But Ray’s ultimate dream takes the entire concept further. His goal is to establish a Berry Consolidation Centre.
 
He has invested significant resources into research, with the assistance of Griffith University, to develop vision technology to automate QA processes. The Berry Consolidation Centre would also facilitate heat-sealed, tamper-proof punnets. That would give supermarkets greater confidence to assist in rebuilding the industry, which was severely affected by product contamination incidents in 2018.
 
Ray has secured a $2 million grant towards installing automated packing and testing equipment.
 
“The industry’s future lies in traceability, accountability and tamper-proof packaging. That’s what the supermarkets require and Perfection Fresh has the ability to deal with the compliance and regulation requirements,” Ray said.
 
He is confident BYM’s new owner, which is conducting feasibility studies on establishing the Berry Consolidation Centre, will appreciate the value in building the facility on a greenfields site.
 
Ray says he plans to work for another six years, “maybe longer”, with Perfection Fresh.
 
He admits the transition from being a sole CEO to working within a larger corporation has challenges, but says there are strengths Perfection Fresh brings to the arrangement, through its well-established corporate structures.
 
Perfection Fresh CEO Michael Simonetta told industry news website Fruitnet.com about consumer benefits to flow from the BYM purchase: “We’ll concentrate on varieties that better withstand the vigour of the supply chain and taste better so, when customers buy a punnet of Perfection-branded strawberries, they can be confident of premium quality.” 
 
Moore Stephens will continue working with the Daniels Family Group on improving its Sunray Strawberries farming and transport companies.
 
“Moore Stephens is now our main financial adviser, and we’re working internally with the other companies to grow them,” Ray said.
 
He was coy about future plans, but said: “We’re branching into other areas with the farming ventures and have aspirations within the berry business.”
 
For example, Ray sees potential to improve production at Sunray’s Tasmanian-based blueberry farm and a market window to expand product distribution in New Zealand.
 
“Moore Stephens is helping us set up the right corporate structures to enable future succession planning across the group,” he said.

To view the Berry Yummy Marketing deal announcement, click here.