Mungalli Creek Dairy Pty Ltd

Mungalli Creek Dairy Pty Ltd (ACN 095 509 407) are offering up to 2,000,000 fully-paid ordinary shares at $1 per share to raise a maximum of $2,000,000. This Offer is made under the CSF regime in Part 6D.3A of the Corporations Act 2001 (Corporations Act).

The general public in Australia can buy up to $10,000 worth of shares in this company, as part of the new equity crowdfunding legislation (Note: there is no cap on how much Sophisticated Investors can invest). Please make sure to read the risk warning statement, offer document, and understand the Cooling-Off rights. Instructions on how to register to invest and pledge are here.

Letter from the founders 

At Mungalli we have always been driven by big dreams. 

We dreamed of regenerating our land using innovative Biodynamic farming methods so that we can produce healthy food without poisons, GMO’s or salty fertilisers.

… of rejuvenating our local communities that had been devastated by the deregulation of the dairy industry. 

… of supporting family dairy farms, by helping them earn a fair price for their milk. 

And then we filled our dreams with delectable cheeses, yoghurts, milk and cultured products made the traditional way with minimal processing. 

Over the past twenty years we have been chipping away at our dream, first as a family and then as a team as more and more amazing people resonated with our vision. We are proud to say that we have turned those dreams into a reality. 

Mungalli employs 50 staff (FTE), supports eight other family farms and turned over $10.6 million in sales in 2018. Last year the farms we support produced 3.9 million litres of milk across our two brands. Mungalli Creek Dairy which produces Biodynamic Certified milk, yoghurt and cheese and Misty Mountain Farms which produces Jersey milk and cream.

Until recently, our growth has been hampered by the amount of milk we could ethically and sustainably produce. So in 2015 we decided to act and purchased additional farms to convert to Biodynamic and organic farming methods. It’s a 3 year process but by July 2019 we can proudly announce that we will have an additional 1,000 acres of land fully certified Biodynamic with Demeter Australia. This will double our capacity and ensure we can meet the ever-growing demand for our Biodynamic milk. 

With more supply, our original processing area needed a major upgrade to handle the increased volumes of milk. So in August 2018 we commissioned a new state of the art processing facility that is both cyclone and fire proof; constructed to optimise production flow, reduce contamination issues, be fully compliant and allow us to obtain export accreditation - the final touches to the fitout are happening as we write this and due for completion in July 2019.

With a new state of the art facility and a consistent supply of milk we are now ready to scale up.

To do this we need working capital to fund things like machinery, vats, churns, ice-cream and butter making equipment as well as product and market development costs. We also want to offer sustainable packaging methods just as much as you! As every parent knows, growth spurts are expensive. To be able to do these things sooner we are offering our crowd a chance to invest in Mungalli Creek via Equity Crowdfunding.

Our success has always been a result of the support of our customers and community, our greatest advocates, so it makes sense to bring our crowd along on the journey.

Become part of the Mungalli Creek family and invest in your food future.  

We want to make a difference sooner and with your help we can. 

Thanks

Rob & Dan Watson

Invest in your food future

Our vision has always involved the health of the people and the land. We believe as the current caretakers of this beautiful land, we have a responsibility to leave it better than before, so that this pristine part of Queensland is here in all its beauty for future generations.

Biodynamic Farmers use no pesticides, fertilisers or herbicides. We estimate that on the Watson 500 acre home farm alone, they have prevented the burning of 22,500 tonnes of fossil fuels by farming Biodynamically. That’s the amount of fossil fuels needed to make fertilizers like urea. It takes approximately 5 tons of coal to make a ton of urea. That’s costly for the farmer and the earth!

We have also regenerated and converted 30% of our farms back to native rainforest. These trees can absorb up to 3.67 tonnes of carbon dioxide for every 1 tonne of their own dry mass. That’s a huge reduction of carbon dioxide in our atmosphere.

We’re not interested in simply being carbon neutral, we go beyond achieving net zero carbon emissions to actually create an environmental bene t by removing additional carbon dioxide from the atmosphere with our regenerative practices.

Your investment buys shares in Mungalli Creek, which helps us make a difference by:

Our purpose

To sustain good health and vitality in all that we do – across our farms; food production; business development; families, staff and community with Biodynamic principles at the core of our actions.

What is Biodynamics

Biodynamic agriculture is a fully certified enhanced method of natural farming that treats the farm as a living system – to build healthy living soil and dynamic life giving food. It is the next level of farming beyond Organics and at the forefront of regenerative agriculture. Our business and farms have been certified A Grade Demeter Biodynamic since 2000.

Mungalli Creek Dairy is Queensland’s only certified Biodynamic Processor and one of only 2 Biodynamic Milk processors in Australia.

Who are we

Mungalli Creek Dairy Pty Ltd (MCD) is a family owned, on farm, boutique processor of Biodynamic and premium dairy products. Established in 2000, our company produces over 25 different Biodynamic dairy products and supports 9 family farms.  

We have now been farming using regenerative farming practices for 30 years and have brought on board and mentored other farmers and now support 9 family farms. We believe in paying our farmers a good fair price so they can be sustainable and look after their land.

And it is here on our ecologically balanced farm, surrounded by ancient rainforest, that our family produces over 25 different product lines including biodynamic milk, yoghurts, cheese, cream, premium flavoured milk, kefir and bio-eggs. We employ 70 staff (50 FTE’s) across our farms, distribution, café and production.

Our premium range of Biodynamic milks, yoghurts, cream and cheese are sold predominantly in Queensland with smaller established markets in Sydney and Melbourne. 

Our values & impact

“Sustaining Health and Vitality”

The core of our business is happy cows, healthy earth, great tasting food and sustainability way into the future. We strive to demonstrate best practice regenerative farming as a solution to environmental issues – our motto is “regenerate the earth one farm at a time”. To this goal, we have four pillars we focus on: 

1. Promoting sustainable land management  
2. Ensuring the health of our customers 
3. Our community & social impact 
4. Helping farmers look after & stay on the land

The industry

The opportunity

The organic market is growing rapidly across Australia, which creates a large market opportunity for us. Australians are increasingly choosing organic food options as they become more prevalent and consumers are no longer limited to health food stores to buy organic groceries.

• Between January 2017 and January 2018, it is estimated that the organic grocery market rose by $1.1 Billion, up 13.6% compared to 2016 (refer to Australian Organics - include reference)
• In 2018, 384 000 more households claimed to purchase organic grocery products compared with 2016.
• According to the Australian Organic Market Report - household penetration of Australian dairy products in the year ended January 2018 is 33.9% 
• 77% of organic buyers say that a certification mark increases their trust in the product

Currently, the five major Dairy Processors account for 79% of milk volume nationally. All five of these companies are internationally owned. But with movements like the Go local, and Cream of Australia campaign consumers are increasingly choosing to buy local dairy. Our customers want both organic and local dairy. In our region there are no other local organic dairy farms.

The organic dairy industry is growing at a rate of approximately 10-20% per year and we see a great opportunity to expand our offerings and our market share.

What we’ve done to date

In 2016 we started planning for growth, Our two main focus areas were to ensure more certified Biodynamic Milk and improving our processing capacity.

1. Converting land - In 2016 we started buying and leasing land to convert to Biodynamics. One of these farms is now fully certified Biodynamic and the other farm will be as of July 2019. This will give Mungalli Creek Dairy (MCD) a very secure and ever increasing supply of milk to meet the growing market demand.
2. Updating the production facility - To go hand in hand with this increase in certified biodynamic milk intake, MCD has commenced a significant upgrade to our production facility. The new state of the art facility will be completed with all cold rooms fitted and operational by July 2019.

The plan

We intend to focus on the growing dairy market by doing what we love best – making delicious dairy products and making it as accessible to you as we can!

With the foundations laid for our growth, out next challenges are sourcing and funding the equipment to make new products, choosing the right products and doing the associated market and product development so we can bring our newest product ideas to market.

We have identified that demand for organic dairy is growing worldwide by 10-20% per year with the strongest growth areas being fermented foods, no added sugar, lactose-free and full-fat dairy – perfect!

1. New products

Our new production facility will provide us with the space to make ice-cream, butter, cream and specialty cheeses. This will require an investment in specialised equipment to make these new product lines. We will also investigate more sustainable methods of packaging and distributing our products is also high in our sights and to have the most impact here we need to raise the maximum amount.

2. New markets

Currently demand is outstripping our supply, however with more milk and our new production facility we will be able to distribute further afield. With your help we will expand our marketing and sales teams so that people across Queensland and Australia have the chance to access our unique Biodynamic Dairy Products.

Our new production facility has the potential to be export accredited. With a strong emerging export market on our doorstep there is opportunity to expand further afield. Global demand for Australian dairy continues to rise and higher commodity prices have boosted the value of this trade.

Where we want to go

Intended use of funds

Research & new product development ($50,000 - $250,000)

Research and New Product Development.  With a minimum subscription, a lot of this will be done internally. With the maximum subscription, we can outsource this work to consultants and food technologists bringing greater skills, experience and more offerings to the table.

Processing equipment and room upgrade ($150,000 - $350,000)

Purchasing new plant and equipment, Ice cream machines, blast chillers, butter and specialised cheese manufacturing equipment. Upgrade of the existing yoghurt manufacture room With a minimum subscription the existing yoghurt room will be upgraded and equipment finance will be used to purchase new manufacturing equipment. With a maximum subscription then a wider range of equipment will be purchased with these funds.

Trialing & researching sustainable packaging options ($20,000 - $250,000)

We are very interested in reducing plastic wastage and looking at more sustainable packaging options. Money will be spent exploring and trialing new ways of offering sustainable packaging and recycling to our customers.

Sales and marketing ($100,000 - $250,000)

We plan to grow and expand our geographic market area significantly. This will require an innovative approach and increasing our Sales Team. We also plan to purchase multiple chiller vans to service farmers markets to help grow sales and employ  Sales staff to look after these markets.

Working capital ($150,000 - $270,000)

We will require a reserve of working capital to deal with new product development costs, the production of ice-cream and long maturation cheese in times of summer milk supply. Working Capital will also provide reserves when changes to our production schedules occur from fluctuations in sales & distribution requirements

Upgrade to our farmhouse cafe & retail outlet ($0 - $200,000)

The movement of the processing equipment into the new processing facility will free up space for our Farmhouse Cafe to expand. This will allow us to upgrade these spaces for groups, buses, and an ice cream making area

External works around our new facility ($0 - $250,000)

Our new production facility is funded and fully compliant. We do however require additional funds to complete external works including hard sealed driveways, car parks, and landscaping. A new factory office, change rooms, and lunchroom needs to be constructed for our team.

Offer Costs ($30,000 - $120,000)

The costs of the Offer include the Intermediary’s fees under the hosting agreement between the Company and the Intermediary. These fees are 6% of the total raised (GST inclusive) which would equate to $120,000 if the maximum goal is reached.

TOTAL: $500,000 - $2,000,000

Our risks

An investment in the Company should be seen as high-risk and speculative. A description of the main risks that may impact our business is included in our offer document. Investors should read this section carefully before deciding to apply for shares under the Offer. There are also other, more general risks associated with the Company (e.g. risks relating to general economic conditions or the inability to sell our shares).

Our team

Information about Investor Rights

• Cooling-off Rights - You have the right to withdraw your pledge for any reason (including if you change your mind about investing in the Company). You must do so within five business days of making your application (the Cooling-off Period) by emailing [email protected] with your full legal name and number of shares you pledged for. 
• Communication Facility for the Offer - You can ask questions about the Offer on the Question tab above.
• Effect of the Corporate Governance Concessions - there are some concessions around the Annual Report, Takeovers and Related Party Transactions. 

Note from PledgeMe

We have completed background checks on the Company (Mungalli Creek Dairy Pty Ltd) and the Board of Directors (Robert Watson and Daniel Watson). We found no adverse findings in our checks. Please read the warning statement, offer document and ask questions before choosing to invest. PledgeMe will receive 6% (GST inclusive) of the funds raised, if the goal is met by the deadline.