Little Island has big dreams
Little Island Coconut Creamery is planning for growth, despite the global uncertainty created by the coronavirus.
The plant-based foodmaker is using the online investment marketplace Snowball Effect to raise more than $2 million to fund its expansion after merging with a smaller yoghurt company.
Investors are being offered ordinary voting shares in the company, which was valued at $6.5m after the merger.
The identity of the yoghurt company has not been revealed to investors due to a confidentiality agreement.
Little Coconut Creamery cofounder James Crow said the company wanted to increase sales in New
Zealand and overseas, with a particular eye to the
United States.
Global sales of plantbased dairy alternatives were expected to reach $19.5 billion this year, according to research insight group Oliver Wyman. Sales for Little Island and the yoghurt company were $5.7m in the year ending March.
The Asia Pacific market accounted for the largest share, followed by the US and Europe. But Little Island’s investor memorandum places the focus squarely on development of the New Zealand plant-based food market due to the global economic uncertainty created by Covid-19.
The company’s results for the year ending March 31 showed an operating loss of $69,000.
The investor memorandum forecasts an operating profit of $3.2m by 2024.
Little Island Coconut Creamery said it was also open to other mergers to grow the company.
The expansion plans are a far cry from its origin as a dairy-free ice block producer supplying local Auckland festivals. Crow and acquaintance Tommy Holden launched Nice Blocks in 2010.
‘‘We sold those at festivals and added into the range a chocolate, coconutbased ice block. That was such a hit that became the genesis for the whole business because it was mimicking a dairy experience,’’ Crow said.
‘‘We had lots of people who were vegan or dairy free, and weren’t really being understood yet in the market as they are today, supporting us.’’
The business grew quickly on the back of the previously unmet demand and expanded from its small cafe in Pt Chevalier, Auckland, to a large factory in Penrose, Auckland.
The Little Island brand was developed four years after the business was launched to reflect its expanding range.
‘‘Ice-cream was great but our goal was to become a true plantbased alternative to the kind of quality we have come to know in New Zealand, because we make great dairy products.’’
Crow said the options were lacking for people looking for a dairy alternative.
‘‘We wanted to produce something where you were quite happy to have a dairy-free product because it was a different experience, it was a lifestyle choice and you weren’t suffering through a really bland gritty product,’’ he said.
Little Island has a 50 per cent share of the dairy-free ice-cream market, he said.
In 2015, Little Island moved into coconut, calcium-enriched, oat, almond and barista ‘‘milks’’, and last year the company decided that the next big thing it would tackle was yoghurt.
‘‘It wasn’t a product we had entered into yet because we didn’t feel comfortable that the current plant-based yoghurts were meeting the requirements that yoghurt should have,’’ Crow said. ‘‘It’s not like an ice-cream, it should be a healthier product with lower fat but have a great flavour and texture and that is actually quite difficult to achieve.’’
Little Island decided it would merge with an existing plantbased yoghurt company. It also needed extra capital to fully develop the new product line and to strengthen the business, Crow said.
Plans for the capital-raising were delayed at the end of last year until after the Christmas season.
‘‘We decided to put it on hold and come back to it but the comeback date happened to be two weeks before lockdown.’’
It was the wrong time to be asking for money from investors, Crow said.
The capital raise was launched a week after the move to level 3 with a new proposal that included information on how Covid-19 could affect the business, and with a reduced emphasis on export sales.
So far, just over $2.4m has been raised.
The offer closes today.
‘‘We decided to put it [the capital-raising] on hold and come back to it but the come-back date happened to be two weeks before lockdown.’’ Little Coconut Creamery co-founder James Crow