A force to be reckoned with
WE’VE LONG been a holder of Clover*. The long-term picture here is likely to be a larger company distributing a wide range of products into thousands of stores across the country alongside their dairy products. The company already has cheese, fruit juice, and the announcement that it is not renewing its Danone SA agreement when it expires, further adds to this strategy. Currently, Clover sources inputs and then distributes a range of products for Danone, mainly yoghurt. Come 2015, when the deal has ended, Clover will have its
RBA HOLDINGS own branded yoghurt. The Nestlé water deal added to its product range last month.
The recent results were decent but not fantastic as input costs hurt and Clover only just managed to pass on the increases to consumers, meaning its operating margin slipped from 5.1% to 4.9%. But the results showed that its strategy and internal restructuring are starting to deliver. We see Clover as a cold product Tiger Brands of the future.
*The writer holds shares in Clover.