WA’s oldest and largest dairy company, Brownes, has been put up for sale after its Chinese owner got into financial difficulty over a $200 million loan.
Western Australia’s largest dairy company, Brownes, has been put up for sale after its Chinese owner got into financial difficulty over a $200 million loan.
Brownes Dairy has been owned since 2017 by Australian Zhiran Co Pty Ltd.
McGrathNicol will oversee the sale of Brownes after being appointed as receivers of Australian Zhiran.
The receivership is not expected to affect the day-to-day operations of Brownes, which recently reported an increase in sales revenue and profit.
CEO Natalie Sarich-Dayton said the appointment of receivers to its owner presented a rare opportunity for interested parties to acquire the Balcatta-based dairy.
McGrathNicol partners Keith Crawford and Rob Kirman were appointed receivers on 14 April.
The appointment was made by a subsidiary of Hong Kong-listed China Mengniu Dairy Company Limited, which is understood to be owed some $200 million.
It came after Australian Zhiran defaulted on loan payments.
“We are engaging with key stakeholders to commence an orderly sale process for the iconic Brownes Dairy,” Mr Crawford said.
“As our appointment is limited to holding company shares only, we do not anticipate any impact on day-to-day operations.”
Balcatta-based Brownes recently reported a 10 per cent lift in annual revenue to $268.7 million.
That flowed through to a $4 million net profit for the year to June 2024, up from $3.2 million in the prior year.
A better guide for the sale comes from its underlying earnings, or EBITDA, of $18.4 million (before non-recurring expenses.)
The growth in revenue was driven by increased sales to export markets including Singapore, Malaysia and the UK, led by Brownes’ cold brew coffee product, Hunt and Brew.
The sale process creates an opportunity for Brownes, which was established in 1886, to return to Australian ownership.
It had been part of the Perth-based Peters & Brownes Group, headed by Graham Laitt, until 2002.
Since then it has been owned by New Zealand dairy giant Fonterra until 2011 and Sydney-based private equity fund Archer Capital until 2017.
Rival producer Masters Dairy, established in Byford in 1925, launched an advertising campaign last year promoting its Australian ownership.
Masters is owned by ASX-listed Bega Group, which bought the business from Lion Dairy and Drinks, part of Japanese drinks giant Kirin, in 2020.
Its past owners include Perth-based conglomerate Wesfarmers.
WA’s third major dairy company, Harvey Fresh, is owned by Italian company Parmalat, which in turn is controlled by French dairy giant Groupe Lactalis.
Parmalat paid $114 million when it bought Harvey Fresh in 2014.
Another smaller player in the local market is Bannister Downs Dairy, which is jointly owned by its founders, Sue and Matt Daubney, and Gina Rinehart’s Hancock Prospecting.
Brownes Dairy operates out of its main site in Balcatta with a second site in Brunswick collecting about 150 million litres of milk each year from more than 50 dairy farms located in WA’s South West.
It has a diverse portfolio of products including milk, cream, yoghurt, flavoured milk, juice and desserts.
