July 16, 2020

By Lynda Kiernan, Global AgInvesting Media

The A$250 million (US$175 million) Victorian Business Growth Fund (VBGF) has made its first landmark investment in Flavorite, the largest hydroponic grower of tomatoes in the state of Victoria. 

Launched in June 2020 and managed by Sydney-based Roc Partners, VBGF is backed by a A$200 million (US$140 million) capital commitment from First State Super, and another A$50 million (US$35 million) commitment from the Victorian state government. VBGF is also a first for the state of Victoria in that it will be making investments in companies in exchange for equity stakes in the business rather than providing grants.

“We’re partnering with the private sector to invest in local companies – to boost the economy, drive employment and help businesses grow,” noted Tim Pallas, treasurer, Victoria. 

The financial particulars about the size of the investment were not disclosed, however, all investments made through VBGF are conducted through Roc Partners. 

Flavorite was launched in 1988 in Warragul, Gippsland Victoria by co-founders Warren Nichol and Mark Millis with the goal of producing high-quality tomatoes on a year-round basis. Since the company’s beginning with only 1,200 square meters of greenhouse space, the business has grown to include specialty tomatoes, capsicums, cucumbers, and most recently, blueberries, grown across 420,000 square meters of growing area, with an additional 200,000 square meters of space managed by external growers.

“We have worked up an exciting partnership with the Flavorite Group, they were pioneers in the protected cropping industry in Australia and have a proven record of innovation and first-in-market experience,” said Michael Lukin, managing partner, Roc Partners. 

With this investment behind them, Nichol and Millis plan to build upon the company’s success, and work with Roc Partners to further expand the business into new fruit and vegetable categories, and into new markets.

Together, the funding combined with Flavorite’s successful business model and Roc Partners’ strategic expertise, will not only drive the company to fully realize its growth potential, but will create new jobs in the Gippsland region, and eventually in the Goulburn Valley.

“This investment in an agricultural producer in regional Victoria will create new jobs and will support the local economy to grow – we’re proud to be partnering with the Victorian Government to make a difference in regional communities,” said Deanne Stewart, chief executive, First State Super.

“The numerous growth opportunities available to the business through this capital injection is expected to deliver a strong return on investment for our members.”

To streamline the business and better position it to achieve its growth objectives, Flavorite has announced the merging of its three business entities: Flavorite Hydroponic Tomatoes Pty Ltd, Flavourwave Pty Ltd, and Flavorite Marketing Pty Ltd into a single business to be known as the Flavorite Group. 

This investment, business merging, and partnership will also serve to give Flavorite and Roc Partners the dry powder needed to increase their exposure in export markets being eyed for growth.

Australian fresh vegetable exports increased by 16 percent over the 12-month period to May 31, 2019 to land at 242,000 tons and a value of A$299 million (US$209.5 million). Within this growth, tomatoes saw an increase in exports of 36 percent over the noted time period to 1,054 tons, according to data from ITC.

Likewise, Australian fruit exports have seen significant growth, rising five-fold in four years, according to a 2018 report issued by ANZ, which noted the opportunity to drive up vegetable exports into Asian markets. 

Michael Lukin commented, “Flavorite has a vertically integrated structure and strong management team which makes them an ideal platform business on which to further grow and diversify within the Australian produce industry that is crying out for a more robust and reliable supply chain, which is what consumers rightly expect.”

– Lynda Kiernan is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, and HighQuest Group’s Oilseed & Grain News. She is also a contributor to the GAI Gazette. She can be reached at lkiernan@globalaginvesting.com.