Loader partnered up with Gavin Evans, an old school friend and co-founder of agribusiness Eat Group, to explore vertical integration in this fragmented category, and later teamed up with private equity group Five V Capital to support the acquisition of young health food brands.
Loader says it’s a prime time for growth in the health food space.
“I’ve never seen food and consumers’ needs and desires changing so rapidly, so to a degree, I think it’s really good timing to be embarking on a journey like this, where we can pull some of those leaders together and help educate and make it easier for people to find healthier food options,” Loader told Inside Retail.
Powering innovative health food brands
In the last five months, Openway has built up a portfolio of more than 150 SKUs, worth over $100 million in annual turnover. It acquired Annex Foods (owner of Red Tractor, Raise the Bar and Hammer & Tuffy’s) as its manufacturing base in April, as well as rice cake brand Table of Plenty. And in June, it snapped up Metro Food Co, which owns Keep it Cleaner, a sports nutrition brand founded by popular fitness influencers Steph Claire Smith and Laura Henshaw.
“We wanted to find businesses that had the right ‘True North’ around trying to provide healthier food options, that had really strong values, a great story behind their brands, and were on a good trajectory,” Loader said.
“But equally, we wanted to find businesses that had a constraint that they needed to unlock to help them realise their ambitions and dreams for their brands. We’re very fortunate to have found three of those businesses so far.”
Melbourne-based Annex Foods, which already manufactures third party brands for a number of multinationals including Nestle and Kellogg’s as well as some private label products for retailers like Aldi and Coles, can provide manufacturing solutions for the new brands.
All founders will stay on as shareholders with some becoming part of the leadership team at Openway.
“We’ll certainly keep the brands as they are, with their founders behind them, so the consumers still see that story continuing. We think that’s authentic and we want that to continue,” explained Loader.
Tom Paton, CEO of Metro Food Co, said the acquisition presents an “incredible” opportunity for the Keep it Cleaner brand, which was already struggling to keep up with demand.
“It will help us unlock growth, we wouldn’t have achieved otherwise,” Paton told Inside Retail. “The Keep it Cleaner brand has a lot of momentum in the market and our growth rate was putting pressure on us as a small business. Openway and the support from Five V capital means that the brand can continue on its accelerated journey with responsible financial backing and strong back-of-house support.”
With a strong portfolio of brands now under its belt, Loader is eager to explore a potential marketplace in the coming years.
“Entering into a marketplace opportunity would certainly be an advantage for us and something that will probably be on the radar in year two or year three,” he said.
International demand for Australian foods
CSIRO calculates market demand for healthy and sustainable products could be worth $15 billion in Australia and $10 billion in exports by 2030, driven by rising demand in Asia for quality Australian products.
Openway is eager to capitalise on this demand in international markets, primarily through its connections in China and the US.
“We’ve got an office in Shanghai. The Red Tractor brand currently trades in China. We also export some products for Walmart in China. So, we’re starting to get some growth and traction in that market which is good, and growth year on year is pretty strong,” Loader said.
Openway is already trading in the US through Hammer & Tuffy’s, an oat brand from the west coast of America, and is now introducing the Red Tractor brand there too.
“We’ve got our foundations laid in those environments in terms of trading, and there’s opportunity ahead of us because we feel Australian products will be well received in both of those markets.”
While Loader is confident in the potential of Openway’s portfolio of brands in overseas markets, he says they won’t try to be “all things to everyone”.
“It’s important that we’re going where we believe the brands have viability and some resonance with the consumers in that market,” he said.
Over the next 24 months, the brand will seek to grow domestically and internationally while bringing in more innovative leaders in the space.