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Yowie Group (YOW, 60 cents)
Market capitalisation: $83 million.
Speaking of transformative deals, Australian confectionery company Yowie Group announced a beauty in February, with the news that its Yowie chocolate, which encases a toy animal, will go on sale in 1507 Walmart stores and 1318 Safeway stores throughout the US. Walmart is the largest company in the world and the largest grocery retailer in the United States.
Why the deal is so good is that the company has got around a US ban on selling confectionery with embedded toys, because of choking risks. Yowie has designed a special capsule for the toy, and last year was granted the only patent for a chocolate-encased toy by the US Food and Drug Administration (FDA). Yowie’s much bigger global rival, the Italian-based Ferrero Group, which makes the Kinder Surprise chocolate egg, does not have this and cannot sell the Kinder Surprise in the US.
Yowie also sells in the 1900 North American convenience stores of the Valero Corner Store chain. Yowie is also expanding into Asia, where the product was sold until eight years ago – before Yowie Group owned the rights to the product – and Europe and the Middle East are the priorities for the “second-stage” brand roll-out. The company has created the online presence of yowieworld.com to build brand engagement.
The major caveat with Yowie Group – which has been listed since 2012 – is that it made a loss of $6.4 million in FY14, and a loss of $996,000 for the December half-year. It does not pay a dividend. But cracking the huge US market ahead of its rivals at least gives shareholders some confidence that profitability is not too far away.
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