Stumbled across some interesting observations with a number of bottles of FOCUS I was yet to throw out but had purchased over various dates since being launched.
Initially my production quality eye was drawn to the sloppy label application due to the significant misalignment (something that was a rework fault in the wine industry) as shown below where 4 out of the 6 examples would be considered a fail on labelling standards.
I then checked the date of manufacture using what I believe to be the Julian Date nomenclature as is quite common in my experience, and the photo is sequenced from left to right in earliest production date through to latest on the right (the one I purchased just today on the 27th of May)
As the bottles also have the Best Before date too, I was able to derive what I believe is the shelf life for these products to be 150 days (refer below)
It was interesting to identify that the bottle I purchased just today was actually packaged 49 days prior !
So out of all this labelling quality angle initially, I have ended up concluding that the Company has been working very hard to pre-build stocks in readiness for the rollout into the major retailers, noted by the earliest sample that I have being bottled on the 19th of January and yet it was probably late mid to late February that these started being trialled in a subset of stores, and the eventual market announcement of the 9th of March.
So why is any of this significant ??
Firstly, well I conclude that the Quarterly Activities Report for the March Quarter was definitely now loaded up with a lot of manufacturing expenditure outflows in order to pre-build inventories, and because the Quarterly Activities report is a Cash Flow statement and not a Profit and Loss it means the accounting for inventory isn't taken into effect, and this was kind of supported by there being the extra footnote that unaudited EBITDA for the quarter was over $200K positive.
Secondly, given the terms of credit with the major retailers being say 45 days (probably generous ??), this means that none of that inventory build expenditure would have been offset by any actual revenue, as I doubt that the majors would have pre-stocked these any longer than 14 days out from them hitting the shelves.
Thirdly (and back to the label quality), that problem is known as "label drift" and often occurs when the speed of the line is testing the limits of the labeller to apply the labels whilst the bottle is moving past, I see this as being caused by the conveyor pulling the bottles past the labeller faster than the labeller could apply the label (or is designed to) and the adhesive surface "gripped the bottle" causing a slight tilt as the conveyor was trying to speed along. That tilt causes the difference in height from the starting edge to the finishing edge of the label. Why does any of that matter ?, well it doesn't really because this is not wine and these bottles still went out to trade in this condition, but to me IMO it shows signs that they have been trying to ramp up the line speed to get the product out and the inventory built for what was / is now the Woolworths ranging during May.
So in conclusion, at the end of the current quarter which is end of financial year we will also see thorough accrual accounting practices employed in the accounts, and this will mean any inventory will be brought to account as Inventory Asset (which is not an expense), any orders sent into the Trade will be brought to account as Accrued Income and we should see a better picture of profit against what is obviously a lot of lead up effort going into building of the stock level so as to be able to confidently supply to trade and ensure product availability without risk of reputation damage to FOD for not being able to supply to the majors.
Very interesting clues there indeed from a few crooked labels and a bit of a study of the julian dates and best before dates.
FOD Price at posting:
2.9¢ Sentiment: Buy Disclosure: Held
(20min delay)