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Yowie Group Acquires Ernest Hillier, Australia’s Oldest Chocolate Producer

Confectioner Yowie Group Acquires Australia’s Oldest Chocolate Producer, Ernest Hillier Chocolates, Out of Administration.

Australian stock exchange-listed confectionery company Yowie Group, based in Perth, Australia, acquired Ernest Hillier Chocolates, Australia’s oldest chocolate producer, for AU $375,000 (USD $239,000) on September 5, 2023. Yowie Group bought the assets from the Chocolate and Confectionary Company, which owned the Melbourne-headquartered Ernest Hillier Chocolates. The Chocolate and Confectionary Company went into voluntary administration in June 2023 due to the increasing costs of raw materials and shipping. The deal included the leased plant in Coburg North, along with all the equipment and intellectual property related to the business name and brands of Ernest Hillier. Yowie will apply for a new facility lease, stressing that the transaction excluded liabilities.

Transaction Summary

Our Take on the Acquisition

Yowie Group’s (buyer) acquisition of Ernest Hillier Chocolates (target) can be classified as a bargain purchase. The nearly century-old target company was in voluntary administration and searching for a prospective buyer to keep it alive. The purchase price paid by Yowie Group of USD $239,000 included the leased factory, equipment, and brand, and excluded all existing liabilities. Additionally, Yowie Group gained Hillier Chocolate’s distribution partners in Australia and New Zealand, which it can utilize to sell its own products in the region.

The Facts of the Acquisition

  • Target: Ernest Hillier Chocolate, established in 1914, is Australia’s oldest chocolate maker. In recent years, the company struggled financially, going into voluntary administration in 2015 and then again in 2023. However, it has a strong, almost century-long brand presence and recognition in the chocolate and confectionery industries.
  • Acquirer: Yowie Group is a publicly listed producer of surprise-inside confectioneries in Perth, Australia. The company has mainly focused on serving the Australian, New Zealand, and United States markets. Yowie test markets new products in Australia before introducing them to the larger American market, such as the Giant Yowie, which was recently introduced to Australia and is expected to launch in the U.S. in late 2023. The company has struggled financially in the recent past, but due to expanding to the U.S. market, it is experiencing a strong comeback.

The Transaction

Date:September 5, 2023
Price:USD $239,000
Purpose: To expand product range
Details:The total consideration amount was for the factory, equipment, and all related intellectual property, including recipes, business names, and brands, and excluding any existing liabilities.
Acquirer’s Statement:Sean Taylor, Yowie Group chairman – “The addition of the Ernest Hillier business enables us to further expand our product range of premium Australian chocolates, providing greater control over the production of our products. We are excited about the future potential that this acquisition provides.” He added, “It enables us to preserve an iconic Australian manufacturing business with significant heritage value and capability.”

Target/Seller: Ernest Hillier Chocolates

Company Information

Target:Ernest Hillier Chocolates
Website:ernesthillier.com.au
Parent Company:Chocolate and Confectionary Company Pty Ltd
Founded:1914
Industry: Food Manufacturing – Confectionery
Type:Subsidiary
Employees:11 (Self-published on LinkedIn)
Locations:Head Office and Factory: 10 Hocking St, Coburg, Victoria, Australia

Product Information 

Products:Dark Chocolate Fruit and Nuts: Fruit and nuts coated with dark chocolate
Dark Chocolate Mints: Dark chocolate with a minty flavor
Milk Chocolate Licorice: Milk chocolate with a small licorice center
Milk Chocolate Coated Macadamias: Macadamia nuts coated with milk chocolate
Milk Chocolate Scorched Almonds: Cooked almonds coated with milk chocolate
Market Reach:Australia
New Zealand

Financial Information 

Revenue:USD $3.5 million (Unconfirmed source: ZoomInfo)
Revenue per Employee:USD $318,181 (i.e., USD $3.5 million / 11 employees = USD $318,181 – estimated based on the self-published number of employees and revenue from ZoomInfo)

Did You Know?

According to IBIS World, a global industry research and analyst firm, the switch in consumer spending to healthier, low-sugar snacks has suppressed consumer spending on chocolate and confectionery products. Only 14% of chocolate and confectionery manufacturers in Australia earn over AU $2 million. Furthermore, almost 90% of industry businesses employ fewer than 20 employees. However, the premium chocolate segment is gaining popularity because household incomes and consumer health consciousness are rising, supporting an increased demand for dark chocolate and other premium confectionery.

Target/Seller Overview: Ernest Hillier Chocolates

Ernest Hillier was born in England but migrated to America, where he operated a chain of restaurants in San Francisco. Then, in 1906, a devastating earthquake destroyed 500 city blocks, including Hillier’s restaurants. Hillier decided to move to Australia, and in 1914, he founded Ernest Hillier Chocolate, Australia’s oldest privately owned chocolate maker still operating. Before entering into voluntary administration, the company supplied the Australian and New Zealand markets, including the Woolworths, Coles, and Aldi retail grocery chains. It also provided co-manufacturing services to other confectionery companies.


Ernest Hillier Chocolates produces a variety of chocolate confectioneries in Australia.

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Buyer/Acquirer: Yowie Group

Company Information

Buyer:Yowie Group
Website:yowieworld.com
Founded:2012
Industry: Food Manufacturing – Confectionery
Type:Publicly listed company (Ticker: YOW on Australian Securities Exchange)
Employees:17 (Source: Datanyze)
Locations:Head Office: Level 4, 216 Street Georges Terrace, Perth, Western Australia, Australia

United States
Regional Office: 1000 Walnut St, Suite 1400, Kansas City, Missouri, United States

Product Information 

Products:Surprise Inside Chocolate: Chocolate with a surprise collectible toy inside
Lollipop: Lollipop in different flavors shaped like Yowie branded characters with a tangy powder for dipping
Giant Yowie: A large half-pound version of the Yowie surprise-inside chocolate with two exclusive baby animal collectibles inside
Market Reach:Australia
New Zealand
United States

Financial Information 

Market Cap:USD $4.94 million
Revenue:USD $15.6 million (Source: Pitchbook)
Revenue per Employee:USD $917,647 (i.e., USD $15.6 million / 17 employees = USD $917,647 – estimated based on the number of employees from Datanyze and revenue from Pitchbook)
EBITDA:$954,000
P/E Ratio:5.88x
EV/EBITDA Ratio:N/A – EV is negative

Buyer/Acquirer Overview: Yowie Group

Since the mid-1990s, Yowie Group has specialized in creating novelty candy innovations featuring a surprise inside. Yowie chocolate is responsible, educational, without GMOs, gluten, nuts, palm oil, or anything artificial, and is Kosher and Halal-certified. In 2014, Yowie products went on sale in the United States with solid growth due to a lack of competition. However, in 2018, the company’s financial health temporarily deteriorated due to disputes with its American manufacturing partner and sales suffered due to the introduction of Kinder Surprise in the United States.

Fortunately, Yowie Group bounced back and its novelty treat is now available in 30,000 retail outlets across the United States. One reason is because consumers appreciate knowing that purchasing Yowie chocolates helps support global conservation efforts, including the Virginia Zoo, WIRES Wildlife Rescue, Rainforest Alliance, and Sydney Zoo, as well as efforts to protect the apes in Africa, elephants in the northern Congo, and tigers in Indonesia.


Yowie Group sells chocolates with collectable toys in Australia and the United States.

Sources

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