Demand Problem, page-17

The last court case was the simple one which ACC couldn't really win. The next one, regarding breach of contract and associated damages is one which could potentially hurt the company. I hope they win if they even have a court case (Yowie) and there's probably minimal risk to the company at this stage but that's the bigger of the two legals with the most negative potential.

In terms of the company and it's performance, firstly, the product, new and old tastes average and yes, I tried the old one from Qld and the new one when I was on holidays in October. Maybe it's because I prefer UK style chocolate than the US 'Hershey' style but in saying that, choco surprise tastes pretty ordinary too. If they could use Lindt under license then that would be much better than using whatever rubbish they currently are. I also think it's overpriced compared to other products out there.

The other thing is, like it or not, Yowie's (the characters) have not taken off in the US as originally hoped. Management wanted a boom in popularity, movies, licensing, cereal packets etc which hasn't occurred. If they could somehow get a movie in the works, then that will change the ballgame but until then I dont think they have achieved anything much in this area.

Lastly, secondary markets need to be cracked, Australia would be a logical choice as although small would be an easy one with a partner to produce the product locally under license for a fee, little risk or capital outlay for a decent return. Get that model working right and then roll that format out into other markets, with local producers making the product under license, paying Yowie a fee to produce and a royalty on sales. The company is just not big enough, cannot grow quickly enough and hasn't got the cash to reach the saturation they would otherwise achieve if they were to try and just produce and export.