What made Synlait (NZX:SML) introduce its first consumer food product

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What made Synlait (NZX:SML) introduce its first consumer food product

 What made Synlait (NZX:SML) introduce its first consumer food product
Image source: pilipphoto, Shutterstock.com

Highlights

  • Synlait Milk witnessed a quite challenging FY21.
  • The Group unveiled Synlait Swappa Bottle, SML’s own-branded first consumer foods product on Tuesday.
  • The Group is targeting to eliminate plastic waste and enable greater use of reusables in coming years.

Synlait Milk Limited (NZX:SML) is a dairy processing company in Canterbury, New Zealand. It produces a range of nutritional milk products by using the art of processing and expert farming.

The Group posted a 78% drop in EBITDA and a 138% decline in NPAT numbers in FY21. However, the revenue grew 5% to $65.3 million in the period due to the contribution of Dairyworks.

Synlait’s details

Image source: © 2021 Kalkine Media New Zealand Ltd, Data source- Refinitiv

The Group had invested substantially in its diversification approach and witnessed a phase of strong orders from The a2 Milk Company Limited (NZX: ATMASX:A2M) during the period.

RELATED READ: ­What are the effects of changing China infant nutrition market structure on The a2 Milk (NZX:ATM)?

However, SML received a modified consumer-packaged infant formula demand forecast from ATM five months into FY21, which was quite sudden and huge. The huge impact of COVID-19 on SML’s key customer ATM affected Synlait’s revenue and led to a shift in its product mix from consumer-packaged infant formula to ingredients.

Launch of an own-branded consumer food product

On 5 October 2021, Synlait unveiled its own-branded first consumer foods product, Synlait Swappa Bottle. It uses the concept of drink, return, and repeat. Consumers buy the Swappa Bottle and enjoy quality milk, then they return the bare bottle and cap to the supermarket. This subsequently helps SML to lower waste and get rid of plastic packaging.

ALSO READ: The bullwhip effect that led to Synlait Milk’s (NZX:SML) losses

Synlait Swappa Bottle is a refillable stainless steel milk bottle of 1.5 litres that has locally sourced treated milk. It also carries the B-Corp stamp indicating 2020 authorisation of SML and dedication to using business as a power for good.

ALSO READ: Synlait Milk gives a nod to new funding arrangements

The Bottles will be first introduced in 2 South Island New World stores and the company will further expand the distribution over the time.

Hamish Reid, Synlait Director, Sustainability & Brand, stated that that plastic waste had been a troubling issue for Kiwis since long but there were not many alternatives to milk. He also added that SML has taken a step ahead in this matter by launching Synlait Swappa Bottle to eliminate plastic waste while adding to a better future.

DO READ: Synlait (NZX:SML) proposes organisational restructure

On 5 October, at the time of writing, SML was trading at $3.73, up 0.27%.

Bottom Line

Synlait Milk is looking at a change by launching Synlait Swappa Bottle and considers reusables to play a much larger role in the country’s food and beverage future.

Moreover, actions taken in the final quarter of FY21 to revise its approach, align structures, refinance the business, and improve financial performance through a blend of initiatives will set the company up for future growth.

(NOTE: Currency is reported in NZ Dollar unless stated otherwise)

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