Essentially Group [AQSE:ESSN] the London-based investment company with operations in the UAE was established to acquire businesses in the health and wellness food and drink sectors. It acquired Essentially Holdings PLC and its subsidiary Essentially Juices Manufacturing in September 2022 and listed on Aquis in March 2023 with a market cap of GBP25.65m.
The company primarily operates in the healthcare nutrition sector and through Essentially Juices in Dubai, manufactures and sells hard pressed fruit juices, nut milk, fortified ‘wellness shots’ and protein bars in the UAE and Saudi Arabia. The firm’s initial target market is the countries of the GCC (Gulf Cooperation Council – an economic bloc of six monarchies in the Persian Gulf region of the Middle East), which the company says has a current vegetable juice market of more than USD3.1bn and a projected market of USD4.3bn by 2027.
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Essentially does not use thermal pasteurisation to manufacture its drinks, instead using high pressure processing, that neutralises unwanted microbes giving the company’s drinks a longer shelf life, whilst still retaining the minerals and vitamins of the source materials, explained the company.
A reasonably new listed company, Essentially Group has its own brand manufacturing base in Dubai but exists to acquire other health food companies to build its beneficial beverage empire, to wit it recently announced (8th March) the complete acquisition of Best of Latin, a UAE-based importer of Latino foodstuffs that wholesales to commercial food businesses in the United Arab Emirates.
Essentially set to triple turnover
The acquisition was for just shy of GBP2m completed in shares in Essentially. Best of Latin’s executive director, and sole shareholder, Catalina Oñate will join the Essentially board and the acquisition is expected to complete by 3rd May. There will be a 7.22% dilution to existing Essentially shareholders. The transaction will triple Essentially’s turnover, diversify its product, open up new channels and expand its sources of revenue.
In its last results, for the six months ending June 2023, published in September, Essentially reported a 14% increase in operational trading year-on-year, increased its profit margin by 52% y-o-y, with gross profit of GBP307,481, but a net loss of GBP400,175 and GBP89,027 cash in the bank.
Essentially’s shares opened trading on 26th March at 48.25p. Over one year the shares fell by 12.3% and over the year-to-date they have fallen 3.5%. The company has a market capitalisation of GBP28.2m.
Health drinks a fast growing market
The company is still quite young, but the market that it has focused upon, the health drinks market, is, according to Mordor Intelligence, one of the fastest-growing markets in the world. Consumers are heeding the proliferation of linking food and beverage consumption with health. Owing to this factor, consumers are increasingly shifting toward maintaining a healthy lifestyle that aids in sustaining fitness while reducing the chances of lifestyle diseases.
This factor, coupled with others, such as rising healthcare expenditures and increasing urbanization rates, drives the demand for sports nutrition products. New formulations and improved marketing schemes fuel the health drinks like functional water. Mordor believes that the health drinks market size is expected to grow from USD344.36bn in 2023 to USD408.8bn by 2028, at a CAGR of 3.49% between 2023 and 2028, so the market that Essentially operates in has a lot of headroom.
The GCC is also expected to grow significantly in the next decade, set to outpace global growth, according to First Abu Dhabi Bank, on the back of robust demand in tourism, real estate, transportation, and manufacturing, so again, Essentially is in the right place to capitalise on this growth.