Rare Foods Australia blends more record sales with sustainability ticks

Rare Foods Australia has again proved it’s possible to combine strong ESG credentials and record sales results, with revenue up a whopping 47% on last year and sales volume up 41%.

Sales revenue from the globally unique abalone ranch were the highest ever for a six-month period at $2.96m from 53 tonnes.

The strong Half Year results builds off Rare Foods Australia (ASX:RFA)’s past two record Quarterlies and closely follows an MST Access report that calculated a 12-month forward discounted cash flow (DCF) valuation of $0.33, up ~358% on the current share price of $0.072.

Another highlight of the latest results was the 16% uplift in its biomass value to $8.8m within RFA’s core greenlip abalone business.

That was thanks to targeted improvements for greater survival rates after deployments of a total of 1.2m juveniles onto RFA’s highly innovative ABITATs, which provide scalable and regenerative habitats for the highly sought after abalone variety.

Sustainability wins

The ABITATs are placed in the pristine waters off WA’s South-West coast and were key to the business winning the coveted Marine Stewardship Council (MSC) certification. The internationally recognised MSC blue tick guarantees the seafood is sourced from sustainable, healthy and wild fish populations.

The company also won the WA Export Sustainability Award 2022 and was this year shortlisted for the Australian Financial Review’s Sustainability Leaders List.

Investing in future

RFA is continually investing in R&D and employs a research officer with a PhD in marine science who oversees systematic efforts to continually improve abalone survival and optimise harvests. In addition, the company introduces wild stock as part of its commitment to not just preserve, but naturally enhance the marine environment.

Organic growth

While the RFA-developed ABITATs are currently underpinning the sales for the profitable and cash-flow positive business, it’s continuing to branch out from the ranch to offer other premium products from one of Australia’s foodie hot spots.

So far these include wild caught Roei abalone, a new revenue stream that’s being developed thanks to RFA’s collaboration with local quota holders and divers. In a win-win for the business and the sole operators, the Roei harvest is being processed and sold under the Rare Foods Two Oceans Wild Abalone brand.

RFA is also leading Australia in ocean cellared wines after harvesting its first 540 bottles from its ocean lease. Now several thousand bottles of fine wines from the neighbouring Margaret River wine region have been placed in RFA’s ocean lease to be matured naturally by the currents, a process used by renowned European producers including Veuve Cliquot.

The company’s recently opened Ocean Pantry retail outlet and café is getting into full swing, offering the tens of thousands of people who visit WA’s South-West each year the full range of premium local products. Also becoming a hit among tourists are RFA’s tours of its innovations and operations at the Augusta marina.

“Organic growth is where we can harness the full potential of our ocean lease, processing facility, and sales and marketing channels to add more value,” CEO Rob Jorden said.

“As well as the Roei abalone and ocean-cellared wine, we’re also investigating merger and acquisition opportunities with other rare and premium local produce. These will align with, but also broaden, our range of products and bolster our revenue streams.”

Master exporter

Backed by a highly experienced sales and marketing team, RFA uses a tiered marketing strategy to sell large volumes to master distributors who supply wholesalers, who in turn service restaurants and retailers

The company already has master distributors in Hong Kong, Australia and the UK, with more relationships under development in the US, Japan, Singapore, Vietnam, Thailand and Japan.

This article was developed in collaboration with Rare Foods Australia, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.