Forbidden Foods leverages health-conscious market to launch $6m IPO

A decade after introducing its “better for you” product range to the nation’s food and beverage industry, Australian health food manufacturer Forbidden Foods is gearing up for the biggest capital raising in its history.

The Melbourne-based company is hoping to raise $6 million in an IPO this month to help expand its market reach and increase brand awareness through an official listing on the Australian Securities Exchange.

With 30 million shares on offer at an issue price of $0.20 per share, the raising will imply a market capitalisation of $15 million for the company which was founded on a mission to “feed the world with the world’s best”.

The offer closes on 14 August with Forbidden Foods anticipating commencement of trading on the ASX on 31 August under the ticker code ‘FFF’.

Brand names

Known for its differentiated products and exotic ingredients – think coloured rices and gluten-free flours – Forbidden Foods caters to health-conscious consumers by offering premium products manufactured under the Forbidden, Sensory Mill and Funch brand names.

Forbidden produces wholegrain foods including a core microwaveable rice range, sweet and savoury snack products and a flour selection comprising rice flour, mixes and blends.

Sensory Mill products include plant-based flours, powders and grains, while Funch is based on packet mix products and gut health smoothie blends.

Funch is also set to launch an Australian-made organic baby foods range later this year, targeted for domestic distribution and export to China and other Asian countries.

Flagship launch

Forbidden Foods launched its flagship Black Rice product onto the Australian market in 2012 and its red and green rices locally and into New Zealand the following year.

By 2016, the company had expanded its operations to include a New Zealand distribution centre and a further two years later, had grown the existing Australian rice flour accessible market from just three types of flour to 35.

Through direct and distributor arrangements, Forbidden Foods today supplies to over 3,500 major and independent retailers including Woolworths and Costco, 500 restaurants, and some of the world’s leading food service and food manufacturing operators.

Its export market includes customers in New Zealand, Ireland, the US and Singapore.

Growth opportunities

Chairman Mark Hardgrave said the public offering would provide access to capital markets and give Forbidden Foods the financial flexibility to pursue growth opportunities.

“The demand for healthy, better‐for‐you food products is expected to increase and [we believe we are] well placed to establish and grow our market share in targeted sectors of the food and beverage industry,” he said.

“Our experienced management team will continue to utilise their skills in identifying key consumer trends for specialty food products and drive [our] growth by exploiting new opportunities.”

Consumer trends

Promoting a healthy lifestyle alongside growing disposable income levels, food safety concerns and a focus on environmental sustainability has increased the demand for organic, clean, healthy, natural foods.

In Australia alone, revenue generated by the organic foods and beverages market reached $2.1 billion per annum in 2018.

“The demand for organic products in Australia and overseas has risen as consumers increasingly consider the health and environmental consequences of their food choices,” Mr Hardgrave said.

“Consumers are placing greater scrutiny on where their food is sourced and how it is produced [and] they are increasingly seeking food that is cultivated using environment-friendly farming practices, including limiting the use of chemicals they perceive as harmful to their health.”

There has been an equal demand for healthy snacks with high nutritional value, as well as all-natural, “clean” foods free from artificial colours, preservatives, flavours or other additives.

“Given these broad trends, [our] core strategy is to target retail buyers with existing and new lines of our organic food products and healthy snacks, and also wholesale channels which buy healthy food products in bulk,” he said.

“Each of these segments represents a significant market opportunity in Australia and overseas.”