$1.030
Opened: 01-Feb-2022
Shares Held at Open: 7,857,143
What does SPG do?
The Original Juice Co. Limited (ASX:OJC) (originally known as the Food Revolution Group (ASX:FOD)) is a beverage manufacturing company that specialises in premium fruit juices and probiotic wellness shots. It owns established beverage brands ‘Juice Labs’ and ‘Original Black Label’ and its products are available in major supermarkets Coles and Woolworths generating revenue for the company.
What is the macro theme?
As Australian consumers become more health conscious, their grocery preferences are shifting towards natural and locally sourced products.
Our Big Bet for SPG
OJC (formerly known as FOD) executes on a growth strategy (international export) that sees the company grow to $300M valuation and $100M+ annual revenue.
Why did we invest in SPG?
Consolidated Growth for New Products
After launching two new beverage products in 2021 (carbonated cans and probiotic wellness shots), we want to see whether consumers are buying these new products and whether those sales translate into meaningful revenues for the company.
Currently distributing through Coles and Woolworths, with very little marketing spend, we think that there is a large scope to grow revenues through marketing and distribution which was not a focus for FOD in 2021.
Turnaround Progressing
In 2021 OJC became EBITDA positive. We are watching the turnaround story play out and want to see if the company can string together a number of strong quarters of growth and financial performance to establish itself as a strong candidate for institutional investors.
Turnarounds can take time, and are ideal for patient investors. We want to give OJC multiple years to see its Fix → Reset → Growth strategy play out.
What do we expect SPG to deliver?
Objective #1: A sustained strong financial performance in 2022
For OJC we want to see multiple quarters of positive EBITDA and operating cash flow positive. We want to see the debt drawdown and will be disappointed if the company raises capital to fund its current operations.
Objective #2: Consolidate the growth of newly launched products
We want to see sales growth for the new products launched in 2021 (carbonated cans, probiotic wellness shots and apple juice) and increase distribution channels for these products.
Objective #3: New products and innovations
We want new products developed and on shelves for customers to enjoy. New products, that are successful should improve OJC's ability to generate cash and improve its business.
What could go wrong?
Debt Risk
OJC has $5.9M of debt, and although its debt was refinanced to NAB (tier 1 bank) in 2021, debt repayments can hamper the growth of the company – as cash flow that could be re-directed towards growth goes into paying off the debit facility.
Competition Risk
The FMCG space is very competitive and there is no assurance that OJC's products will resonate with consumers once the demand from the ‘new product launch’ subsides.
Key Distributor Risk
As OJC's only distribution channels, if Coles and Woolworths decide not to stock OJC's products, it will impact the company’s ability to make sales.
What is our investment plan?
We originally invested in OJC at 3.5c (14c post consolidation) because we believed the stock was on the cusp of a turnaround and believed FOD’s processing facility, brand value and current distribution network alone is worth multiples of the current market cap.
With the stock trading below 2c (8c post consolidation) and well below our entry price, we will continue to hold our full position during 2022 in the expectation of a share price re-rate on the company achieving objectives #1, #2 and #3.
Disclosure: The authors of this article and owners of Wise-Owl, S3 Consortium Pty Ltd, and associated entities, own 7,857,143* OJC shares at the time of writing this investment memo. S3 Consortium Pty Ltd has been engaged by OJC to share our commentary on the progress of our investment in OJC over time. * 1,964,287 after consolidation
OJC enters Chinese Market with Aldi
May 9, 2023
May 9, 2023 |
11 min
Today, OJC announced that it had signed a deal with Aldi China to sell its juice products, the first step on what we hope is a long and fruitful venture into the broader region.
The Hon. Jeff Kennett joins FOD as its New Chairman
Dec 15, 2022
Dec 15, 2022 |
12 min
The ex-Victorian Premier from the 1990s, Hon. Jeff Kennett, has just joined the board of our turnaround play - The Food Revolution Group (ASX: FOD). We hope that Kennett can utilise his expansive networks and connections to provide FOD with the expertise it requires to achieve our Big Bet.
FOD delivers another strong quarter, now primed for growth
Jul 27, 2022
Jul 27, 2022 |
9 min
Yesterday, FOD announced $11M in gross revenue, a 22.7% increase compared to the previous corresponding period last year. This is second quarter in a row of operating cash flow positive for the $23M capped FOD.
FOD is Finally Cash Flow Positive - Now for the Growth Phase
Apr 29, 2022
Apr 29, 2022 |
11 min
Our beverage manufacturing company, The Food Revolution Group (ASX: FOD), has just become cash flow positive, which is a clear indication that it's turnaround plans are working well. We also cover our recent site visit to FOD's Beverage Manufacturing plant in VIC.
FOD on Cusp of Turnaround with Strong Quarterly and New Products
Feb 1, 2022
Feb 1, 2022 |
10 min
We look at The Food Revolution Group (ASX:FOD) new product releases, what a cash flow positive quarter means for the business and a peer comparison to Maggie Beer Holdings.
Bigger is Better as OJC mergers into FMCG Behemoth
Oct 3, 2024
Oct 3, 2024 |
4 min
How much juice can you squeeze out of an orange? That’s what it has felt like for OJC shareholders that have been following the turnaround story of the company over the past three years.
PFD Foods’ owner Invests $5M into OJC
Nov 20, 2023
Nov 20, 2023 |
2 min
Last week our small cap Investment The Original Juice Company (ASX:OJC) completed a placement with the owners of PFS Foods.
OJC closes the year with 19% annual sales growth
Aug 31, 2023
Aug 31, 2023 |
1 min
Today our small cap FMCG Investment, The Original Juice Company (ASX:OJC), published its annual financial report to shareholders.
OJC grows winter sales revenue 31%
Jul 27, 2023
Jul 27, 2023 |
2 min
Today our FMCG small cap Investment The Original Juice Company (ASX:OJC) announced a record Q4 revenue figure - achieving 31% revenue growth from the corresponding quarter last year.
FOD to benefit from Brazilian OJ supply chain squeeze?
Aug 30, 2022
Aug 30, 2022 |
2 min
Insights from Industry Leaders at IMARC
Nov 2, 2024
Nov 2, 2024 |
17 min
A few of our team was in Sydney this week for the IMARC conference, and to hear from some of our Portfolio Companies. IMARC is the largest mining conference in Australia - so the big mining companies show up, but also well attended by small cap companies and investors. The sentiment “vibe” is definitely improving, something we’ve been observing and pointing out in recent weekend editions.
Riding the Bull and Bear Cycles
Oct 5, 2024
Oct 5, 2024 |
19 min
Everyone's a “genius” in a small cap bull market. At least that is what it felt like between November of 2020 and June of 2022. All IPO’s oversubscribed, cap raises were highly competitive and good news was being rewarded with on-market buying. Everything was going up. (Remember things like Afterpay? Lithium at $80,000/t? Gamestop? Shells with a $10M EV? The occasional “50 bagger”?) Since then, it has been MUCH harder to navigate the small cap market during the “bear” winter.
The War Begins, Cybersecurity, Food Security, Energy Independence and Precious Metals
Feb 26, 2022
Feb 26, 2022 |
17 min
The Russian troop build-up had been happening for the last couple of months and we think the market had slowly been pricing in a potential conflict, especially one that could accelerate the “west versus east” tensions and all the ramifications that come with it.
The "Lesser Kown" Energy Transition Metals: Copper, Aluminium, Graphite, Helium, Rare Earths
Feb 5, 2022
Feb 5, 2022 |
27 min
We think this investment theme is just getting started and we’re determined to repeat that success across a range of new commodities that are critical to the “energy transition”.
What have our portfolio companies been doing? (Part 2)
Nov 11, 2021
Nov 11, 2021 |
15 min
What have our portfolio companies been doing? (Part 2)
