It was meant to be the magic formula for Bega Cheese investors – team up with China darling, Blackmores, in the infant formula market and watch the money roll in.
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"We are running fast on new product development," said Bega's big cheese, executive chairman Barry Irvin, in February after the new business helped boost its first-half results just months after the venture had been announced.
"To not only announce a partnership and complete the documentation on that partnership but also [deliver] from concept to market in about 10 weeks was an extraordinary effort," he said at the time.
Alas, the aroma that greeted investors at Tuesday's AGM was not that of milk formula, or cold hard cash.
Bega shares were trounced – hitting Irvin's investment to the tune of millions of dollars – after he admitted the venture had soured to the point where Bega is planning to take a hit of up to $7 million on its share of the JV's inventory.
That's a lot of milk formula down the drain, and it will be interesting to hear Blackmore's take on it when chairman, Marcus Blackmore, and CEO, Christine Holgate, face investors on Thursday. Blackmore's shares have now halved in less than a year.
