Food Firms Yield Rich Pickings
One of the commercial advantage to operating a business outside a large municipal area is that salary levels are lower than in the cities. At Independent Irish Health Foods (IIHF) in Ballyvourney in west Cork, the salary overhead for 103 staff was €3.3m in 2021, with remuneration for directors Henry Bartlett (61) and Richard Wilkins (61) coming in at €1.1m.
In October 2022, the founders made a large capital gain too when they disposed of the venture to Mark Goodman, son of beef tycoon Larry Goodman. It was quite the outcome for Bartlett and Wilkins, who established the venture in Farranfore, Co. Kerry, in 2008 after they had been laid off by their employer due to relocation of that business. The duo set up their own health foods distributor on the cusp of a recession, and in 2009 IIHF doubled turnover to €11m and booked a net profit of €600,000.
From there, the founders kept building the business, up to turnover of €25.2m in 2021 before Goodman came calling. One reason for the success for the wholesaler was a gross margin of 25%, which meant relatively good value for customers. Net cash from operating activities was €1.3m in 2020 and €530,000 in 2021, and the December 2021 net worth of €5.8m included €2.7m in balance sheet cash. One hiccup on the IIHF journey was a €845,000 settlement with Revenue, on foot of an audit case relating to the under-declaration of PAYE/PRSI/USC and VAT.
Goodman’s vehicle Bellingham Capital has been bulking up in the healthy foods space, and in 2021 acquired National Organic Products, owner of the Bunalun brand. Bellingham operates across the farming, hospitality and retail food distribution sectors and its companies employ 230 people. According to Bellingham, group companies currently have a combined annual turnover of c.€80m.
Cork wholesaling giant Musgrave added to its specialist foods network with the acquisition of Italicatessen, a deal waved through by the CCPC. Based in Newtownmountkennedy, Co. Wicklow, Italicatessen was founded in 2002 and employs 75 people. As the name suggests, the business has a focus on Italian food products such as pasta, preserves, cheese and olive oil as well as some wines. Italicatessen also distributes in the UK, based in Brentford, where the firm has 12 staff.
Italicatessen Ltd had turnover of €13.8m in 2020 and trades on a gross margin of 34%. Net profit for the year was €745,000 and company net worth in December 2020 was €2.9m.
The company was owned by PEQ Food Ltd, which in turn is owned by PEQ Holdings Ltd. The PEQ Holdings principal shareholders are Giorgio Guastalla (45%), Teresa Immacolata Luppino (45%), Giacomo Duranti (5%) and Marco De Sanctis (5%).
Guastalla and Luppino, the PEQ Holdings principals and both Andorra residents, are talented investors besides spotting food opportunities. PEQ Holdings reported a €48.4m gain in the 2020 P&L from the change in market value of listed and unlisted investments, following a similar gain of €23.6m the previous year.
Also in Wicklow, Bray food truck specialist Reward Catering found a new owner in the form of Swedish company Teqnion. Reward Catering designs and makes high-end food trucks found in food courts and other venues. The trailers are generally used as food and beverage outlets, but other applications include DJ stands, hair salons, marketing vehicles etc. Reward Catering was incorporated in July 2018 and sold four years later, a pleasing result for shareholders are Kevin Ward (33%), Thomas Ward (33%), John Ward (17%) and Anne Ward (17%). Teqnion said that Reward Catering had annual turnover of c.€3.5m in the year to May 2022 and booked a net profit of c.€1m. Press speculation on the deal consideration centred on a figure of c.€10m.
Teqnion AB is an industrial group that acquires niche companies with good cash flows to develop and own long-term. Its shares (TEQ) are traded on the Nasdaq First North Growth Market.