Food Revolution Group nets $8 million sales deal with Chinese daigou platform
A new sales deal will see ICC Global order $8 million of Food Revolution products, with the first order of orange juices to be shipped to China in June.
Australian food processing company The Food Revolution Group (ASX: FOD) is building on its presence in the Chinese market, inking a sales memorandum of understanding with international cross-border e-commerce platform ICC Global Pty Ltd.
The agreement will see ICC order a minimum of $8 million of Food Revolution’s existing and future products by the end of 2020, with ICC’s first order of 10,000 units of the company’s 1L and 2L orange juices to be shipped to China this June.
In addition to orange juice, ICC is interested in Food Revolution’s citrus oil and its upcoming range of sachet and gel products containing marine proteins and collagen, which is planned to launch in early fiscal 2020.
ICC is an e-commerce platform that links Australian manufacturers to Chinese ‘daigou’ or personal exporters and other emerging sales channels in China, as well as other international markets.
According to Food Revolution, the signed deal comes after more than 70 daigous attended a site visit at the company’s Mill Park operations in Victoria.
Food Revolution chairman Dr Norman Li said he believed “further distribution deals will be forthcoming” following this visit.
Important distribution partner
According to Food Revolution, the MoU will see the two companies establish a long-term strategic business relationship with ICC becoming an important distribution partner.
Dr Li said the inked deal would also help the company “further grow awareness of its brands in China”.
“The daigous were very impressed to see our orange juice being produced in real time, with citrus oil that can be produced from peel (waste product) and our upcoming sachet products, and these new products could potentially be a large growth driver for the company going forward,” he said.
“We look forward to further building our sales and distribution relationship with ICC over the next few years,” Dr Li added.
Presence in China
Earlier this year, Food Revolution announced it was upgrading its processing facility at Mill Park and expanding its product range in order to meet the mounting demand from the Chinese consumer market.
The company has China inspection and quarantine certification for its fruit farm juices and already ships orange and apple juice to the country as part of a deal with strategic partner JJ Global Fine Foods.
It also has a distribution deal with Careline, which manufactures and exports skincare products, supplements and baby milk formulas into Asia, as well as an MoU with Chinese oil and gas company Sinopec to distribute Australian canola oil to a network of more than 35,000 petrol stations and convenience stores.
Food Revolution said updates on initial orders from Sinopec were expected in the “not too distant future”.
By midday trade, Food Revolution shares were up 14.58% to $0.11.