Rare Foods Australia has reported more record annual results as it upscales its premium offerings served with internationally recognised sustainability credentials.

Sales for FY23 were up a very healthy 28% on the previous year’s record at 95.5 tonnes. This earnt the company record annual sales revenue that was a whopping 40% higher than FY22’s record.

The $5.6 million in sales revenue included a record 87 tonnes of Marine Stewardship Council (MSC) accredited ranched greenlip abalone  – a figure that represents 16% of global supply of the highly sought-after seafood.

Feeding into the sales was a 11% increase in the Rare Foods Australia (ASX:RFA) biomass value to $8.4 million compared to FY22 value of $7.6 million.

Making up the total sales were wild greenlip, as well as brownlip and roei, provided by third parties and processed and sold by RFA.

To meet demand for this third party product RFA’s processing facility throughput increased to a record 117 tonnes, a 24% lift on FY22.

Given the success of the third party product to date RFA will increase its intake of wild origin product in the coming year thanks to the mutually beneficial partnerships it has with local quota holders.

Across its abalone products RFA achieved an average price of $54.7 per kg.

Importantly, MSC accredited greenlip, which bears the MSC blue tick for sustainability, fetched an average of $55.3 per kg. That was up 8% on the FY22 average price and is a reflection of consumers’ growing consciousness about the origins of their food, particularly in the upscale segment of the market that RFA supplies into.

 

Sustainability hero

Adding to its credibility with this premium market, RFA’s founder and Executive Director Corporate Development Brad Adams won the internationally recognised Marine Stewardship Council (MSC) Sustainability Hero Award in early 2023 for his persistence and years of trial and error in developing RFA sustainable, a wild-enhanced fishery.

Those efforts led to the invention of RFA’s ‘ABITATs’ – abalone habitats – which form a regenerative artificial reef that’s scalable on the company’s 413ha ocean lease. They also mean that RFA’s harvests are not subject to quotas.

 

Investing in growth 

The record sales generated a hefty 73% increase in cashflows from operations. The company has ploughed this back into the business, investing $0.2M directly on activities to build its core business and $0.6M in due diligence costs on relevant businesses that can create further growth.

 

Strengthening the core

To achieve this target the company has been developing a data base to help it understand, on a daily basis, what is happening on the reef. The finetuning of the database is an ongoing project aimed at further improving juvenile deployment going forward.

 

The ‘chosen few’

To make the most of its ocean lease, processing capabilities and sales channels, RFA has been on the lookout for other premium and sustainable products from WA’s South-West to enhance its range.

In a region that offers a rich choice of such products, the company is focused on doing its due diligence on a “chosen few” to which it can add value and that are scalable.

 

Latest innovation

After a successful trial in 2020, RFA now has formal agreements with two wineries from the local Margaret River wine region, Glenarty Road and Edwards Wines, to expand its unique ocean cellaring business.

Ocean cellaring involves maturing wine by the currents, and constant pressure and temperature, of the seabed. This process gives the wine enhanced flavours and, importantly for a company is based on sustainable practices and generates fewer carbon emissions than wine matured on land.

RFA will have 2,300 bottles available from November 2023 and it’s in the final stages of planning a trial to significantly lift production using a patented technique from the Northern Hemisphere.

 

Building global markets

RFA has been nurturing new markets for abalone in the past year by attending large seafood industry shows in Spain and the US, which have generated numerous enquiries.

This work is continuing with the sales and marketing team set to attend key conferences and develop relationships with master distributors in India, Singapore and Vietnam.

Already there are strong forward orders for FY24 taken by RFA’s master distributors. These distributors sell tonnage to wholesalers, who in turn supply smaller quantities to restaurants, making the sales and marketing channels more efficient for RFA.

RFA is well positioned to grow the core abalone business and scale up the Ocean Cellaring  while looking to bolt on other premium and sustainable products from WA’s South-West.

 

 

 

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.

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