Ann: Trading Update FY2022, page-6

Great post dabozza. Your analyses are always interesting!

I never like to exaggerate, but BGA may have some pricing power.

It is an increasing force in supermarkets such as MTS' IGAs/COL and the #1 chain WOW.

With its c.82 per cent share of peanut butter sales through the BGA and Simply Nuts brands, plus its iconic Vegemite spread that as luck would have it only 18 per cent of Australians (including me) dislike the taste of, it can to some extent dictate those sub-categories.

In cheese, many buy BGA products in preference to woke Canadian company Saputo's Devondale as the latter received much adverse publicity when for a false 'reason' it altered the name of Coon cheese to Cheer.

You are also forgetting that with the easing of COVID-19 restrictions, BGA's unparalleled cold chain distribution network must be coming to the fore as offices, pub, cafes and restaurants reopen and in many cases enjoy good trading conditions (notwithstanding for two years a lot of these haven't, and many cafes closed for good).

With WOW/COL/ALdi/Costco and MTS' IGAs increasing prices, milk won't be immune. The three main processors cannot operate like a cartel, but unless I'm mistaken, they will be passing on increased milk fat costs to supermarkets and others. Despite the publicity around oat milk and other plant-based products, white milk remains a dominant force that I can't see changing as most Australians enjoy it as an additive or beverage.

However while I don't expect BGA to be my best performing stock - it's no JLG, SNL,YAL or WHC - nonetheless it can make some productivity gains from factory rationalisation and larger scale.

I wouldn't underestimate the ability of dairy industry hand Mr Barry Irvin to occasionally pull a rabbit out of a hat.