Bega Cheese Limited (BGA) Earnings Call Transcript

So I guess that means we're ready to start. Hi, everyone. Obviously, and welcome to the Annual General Meeting to Bega Group Limited. Obviously, this is a very formal meeting. So forgive me for reading my speech, as you all know, it's not my style, but very important that we get the formalities right on important days such as this. So I'll begin my presentation. For those that are joining online, I will call out the slide numbers so we can follow in. Welcome to the Bega Group Annual General Meeting, which is being recorded and webcast. Sorry, I'm going to move that. As we have a quorum, I now declare the meeting open. When you registered this morning, you will have received an admittance card. For all shareholders and proxy holders who are voting, you should have received a yellow voting card. If you are a shareholder who is not voting, you should have received a blue card, if you're a nonshareholder, you will have received a red card. Yellow cardholders will be able to vote for or against resolutions and ask any questions they may wish relating to the business of the AGM. Blue cardholders will be able to ask questions but not vote. Red cardholders are most welcome at the meeting, but will be unable to participate in proceedings. Further information regarding voting procedures will be provided prior to the commencement of the resolutions to be put to the meeting. Shareholders attending this meeting in person and online are able to ask questions. For those shareholders attending in person, I would ask that you identify yourself before asking a question. For those shareholders attending online, please follow the process contained in the online guide. The Company Secretary, Brett Kelly, will then read out your question. So for the Slide 3 of the agenda. At today's meeting, we have a number of formalities to deal with, including the consideration of the group's 2026 annual report, the adoption of the remuneration report and the election of directors. Slide 4. Welcome. I'm pleased to welcome new shareholders and our long-term shareholders who know the company so well and have supported the strategy and directors of the company over many years. Let me introduce my fellow directors: Raelene Murphy; Janette Kendall. Peter Margin, Terry O'Brien Harper Kilpatrick, and Rick Cross. Unfortunately, due to an urgent family matter, Patria Mann, is unable to join us today. I'm also pleased to welcome Sam Lobley, representing our auditors, over there. PricewaterhouseCoopers, Laura Hartley and Lesion Chu from Addisons lawyers, we're down the front here with us. Reggie Harbrum from MUFG Corporate Markets Limited and a number of Bega Group staff. As I mentioned, we have apologies from Patria Mann and Donna and Steve Solway. We will now move on to the formal part of the meeting. Slide 5. Thank you for all joining us at our Annual General Meeting. Having presented the Bega Group story for many years, I remain as confident as ever in the company's position and strategy. As you know, our long-term strategy has been to transform a more cooperative and commodity-focused business-to-business operation into a branded consumer company with significant growth opportunities. The company's history is always significant to us. Without going into detail, this slide represents well the approach that has been taken over generations. We have built strong foundations. We have always looked for opportunities to expand. We recognize the importance of having a balanced business as we grow. We create strength and capability with a constant eye to the future. Today, the business has a portfolio of strong brands, supported by deep supply chain and operational expertise. During the past year, we have demonstrated our agility and resilience in all circumstances and continue to create opportunities for the future. Our CEO, Pete Findlay, will discuss the performance of the company in more detail. While there is more work to do, significant opportunities exist in Australia and across our neighboring international markets. Our vision, purpose and values, Slide 6. I would reinforce that the vision to become the great Australian food company is well on its way. We have built this company on the basis of values that are very important to us. This year, we have made some significant investments in our infrastructure, growing our milk pool with a 7% increase in supply, increased our sales to customers in Australia and around the world and, of course, continue to develop our people, creating a great team that embrace all that we are trying to achieve. Creating long-term competitive advantage, Slide 7. When I think about our business, it is built on a simple model. We want to own mainstream everyday brands that hold #1 and #2 positions in their categories, connect strongly with consumers and are supported by a best-in-class operating network. We have 5 power brands with leading positions in growing categories. These brands are supported by strong marketing capabilities, extensive sales and distribution networks and deep relationships across major retailers, food service customers, distributors and small business. Our focus is on delivering trusted brands that meet consumer needs and provide compelling value. Supporting those brands is a highly efficient operating model, and manufacturing scale helps us drive down -- unit cost down, allows us to remain competitive while continuing to invest in growth. We have streamlined and focused our supply footprint to improve service levels, support innovation and enhance responsiveness to customer needs. At the same time, we continue to invest in technology and automation to further improve productivity and efficiency across the network. The third element of our model is maximizing value for our key ingredients. We purchased approximately 1.4 billion liters of milk each year and our ability to generate value from every component of that milk across both our branded and ingredients and nutrition business is a meaningful competitive advantage. Ultimately, success comes from excelling in these 3 areas: building strong brands, operating an efficient network and maximizing the value of our milk pool. By continuing to execute against these priorities, we believe we can deliver sustainable growth over the long term. In terms of performance highlights on Slide 8. We are very pleased with the financial performance of the business in FY 2026. All our key metrics have demonstrated improvement. Pete will discuss the financial performance in more detail, and you will see this slide again. From my perspective, we have seen revenue growth of almost 7%. Profit after tax growth of 36% to $69 million return on funds employed reached 10%. We have a very strong balance sheet and have been able to reward shareholders with a 21% increase in dividend, which is fully franked. From my point of view, there have been many highlights this year, and I'm pleased to have shared that short overview with you. Bega Group CEO will now present his perspective of the year and provide some more detail on the business performance and position. Pete leads a great team and has demonstrated great leadership in always focusing on the success of the business, its people, and it's important to our customers, suppliers, staff and communities. I'm pleased to introduce Pete Findlay.

Thank you for that introduction, Barry. I'll now take you through our FY 2026 performance, the key achievements of the year and our expectations for FY 2027. Slide 10, key messages. We are pleased with our position at the end of FY 2026. We developed our strategy in the latter part of FY 2023 around a principal, simplify and focus. That meant concentrating on the channels and categories where we have a right to win, streamlining our asset base to create cost advantages and improving asset utilization to make the business more efficient. Three years into that 5-year strategy, we are confident we are delivering against these objectives. The strategic pillars that we established remain highly relevant and are being executed against effectively. As a result, we have refreshed our 2028 outlook through to 2031 and continue to see significant opportunities ahead. This year's result was driven by a strong branded performance. Our focused categories of yogurt, milk-based beverages, spreads and cream cheese performed well, particularly in international markets. Across these categories, we achieved strong growth through our better for you innovation pipeline. A trend we expect to continue over the next 5 to 10 years. The team has done an excellent job positioning the business to capitalize on this opportunity. Our foodservice channel, a key strategic focus over the past 3 years also delivered a strong result, growing 6%. While this was below last year's growth rate, it was achieved against a backdrop of more subdued consumer sentiment. We believe this performance outpaced the market and remain confident in the channel's growth prospects. Our international branded business continued to perform strongly, particularly in Southeast Asia. Supply constraints during parts of the year driven by the Middle East conflict and demand exceeding our medium-term expectations, impacted our ability to fully meet the market opportunity. We continue to see Southeast Asia as a significant long-term growth opportunity. Our bulk business also delivered a strong performance reflecting the work undertaken following a challenging 2023. We have premiumized much of the portfolio, increased value-added protein in offerings and better integrated the business with our branded operations enabling us to capture additional value. Our Nutraceuticals and Infant Nutrition business continues to perform well, strengthening our confidence in its ability to generate value independently of commodity milk price cycles. Supporting this growth has been ongoing focus on efficiency. Continuous improvement remains part of our DNA and is fundamental to how we operate. As a result, return on funds employed increased to 10%, up 1.6 percentage points on last year, achieving our 2028 target ahead of schedule. Leverage ratio reduced to 0.8x, providing greater flexibility to reinvest in the business through both organic and inorganic opportunities. EBITDA, earnings before interest, tax, depreciation and amortization increased by almost 12% year-on-year, delivering a double-digit CAGR compound annual growth rate across the 3 years of our strategy. We believe this compares favorably with peers and highlights the momentum we've built across the business. Slide 11, strong financial metrics. We are particularly pleased that in FY 2026, we're able to grow EBITDA, increased top line revenue and expand margins simultaneously delivering growth across all 3 metrics reflects the strength and quality of the business. Net revenue growth was driven by volume, product mix and pricing. EBITDA continued its strong double-digit growth trajectory, which is flowing through to earnings per share. As a result, we are not only delivering growth across the business but also increasing returns to shareholders as reflected in our high dividend. Return on funds employed remains one of our most important metrics. Our objective is to maximize the productivity of our asset base and generate strong returns from every dollar of capital employed. Consistently improving returns creates a competitive advantage over time, support sustainable long-term growth and helps deliver lower unit costs across the business. Slide 12, our transformation program. Since 2023, we've completed a series of significant initiatives designed to strengthen capability, improve efficiency and position the business for long-term growth. This has included investments in yogurt and milk-based beverage capability, the installation of new pouch and packaging lines and upgrades across our manufacturing network to improve productivity and capacity. We've also simplified and optimized our footprint. This included consolidated manufacturing sites moving production from Canberra into Penrith, integrating the Better Milk acquisition into Line Valley. Additionally, we have sold the let and juice extraction site and our peanut processing assets in Queensland. More recently, we completed the closure of the Strathmerton site transition -- transferring volume into Ridge Street Bega. Alongside these operational changes, we restructured our corporate head office, reducing costs by more than $20 million annually, while aligning capability more closely with our strategy. We also strengthened our international foodservice team we're now seeing the benefits of these investments through growing sales in key international channels. Innovation has been another key pillar of the transformation. We expanded into lactose-free, no sugar added and protein products including the launch of dairy farmers protein smoothies and our protein yogurt range. These initiatives have supported our wellness strategy and delivering strong growth across several categories. Within ingredients and nutritionals we repurchased and reconfigured the Tatura dryer to support protein valorization. This has delivered strong results in FY 2026, and is expected to remain an important driver of value creation in the years ahead. We also invested in infant formula canning capability, helping secure and grow our infant nutrition business. To support our customer relationships, we rolled out a new digitally enabled sales portal across our customer base, improving connectivity and service. Importantly, these initiatives have been delivered on time, on budget and with the outcomes we set out to achieve. They have reduced costs, strengthened our competitive position, created new growth opportunities and expanded our access to international markets particularly across Southeast Asia. Looking ahead, we will continue investing in yogurt, cream cheese and milk-based beverages throughout FY 2027. These projects support both the wellness trends reshaping consumer demand and our ambition to expand further into Southeast Asia. As they come online in FY 2028, they will provide the next platform for growth. This track record gives us great confidence in our ability to continue transforming the business and creating value for all of our stakeholders. Slide 13. Operating highlights. I'll now touch on some of the key operating highlights that demonstrates the progress we've made against our strategy and the strength of our execution across the business. A major focus has been innovation, particularly in high protein and better for you. While delivering strong earnings growth, we've also continued to increase investment behind our 5 power brands supporting both brand strength and long-term growth. Internationally, we've continued to expand our presence by investing in specialist capabilities across sales, marketing, consumer insights, market development and distribution. These investments are helping us build stronger positions in key export markets and are creating new opportunities for growth. We've also performed strongly in food service through continuous innovation and the introduction of new formats we've strengthened our offer to customers. Our transform manufacturing footprint now provides a highly cost competitive position, giving us confidence that we can continue to grow in this channel despite near-term headwinds. Our bulk and greetings business has benefited significantly with increased integration with our branded business. What is especially exciting is the growing integration of our protein capability. As demand for our protein enhanced branded products continues to grow. A greater proportion of that protein is being supplied internally through our ingredients and nutritional business. This creates additional value across the group and further strengthens the benefits of our integrated operating model. Our infant formula business also continues to perform well. We remain a manufacturer of choice for customers in this category and are increasingly utilizing our asset base as industry capacity tightens. By maintaining capability while others have exited or reduced participation, we are now beginning to capture additional value from these assets. From an operations perspective, and manufacturing transformation continues to deliver. The successful transfer of production from Strathmerton to Ridge Street within 14 months was an outstanding achievement by the team, particularly given the complexity of managing supply chains during a period of significant global disruption. Our yogurt plant at Morwell is undergoing significant transformation,; while Tatura continues to benefit from investment focused on expanding cream cheese capability. These projects support future growth and reinforce our competitive position in attractive categories. Across our distribution network, we continue to optimize efficiency through increased automation of our warehouse at Laverton and the consolidation of facilities. These initiatives further improve our cost to serve and simplify our operating footprint. Finally, technology, software and AI remain important priorities for the group. We are already seeing strong outcomes from AI initiatives across pricing, promotion, marketing, back office functions and our manufacturing operations. We see artificial intelligence and automation as significant opportunities to drive further productivity, improve decision-making, lower costs and strengthen customer engagement. We will continue investing in these capabilities over the coming years as they represent an important lever for both efficiency and growth across the business. Slide 14. Strategic planning. Simplify and focus for growth. The initiatives that I've described above are the key foundations for our next 5-year strategic plan, which is outlined on this slide. These priorities provide clear pathway to sustainable growth, improve competitiveness and long-term value creation through to 2031 and beyond. Slide 15. Changing consumer trends. Consumers are becoming increasingly deliberate about the food and beverages they choose, seeking products that support specific health and lifestyle outcomes. This trend is evident globally and is reshaping the consumer goods landscape with many companies evolving their portfolios to address these changing needs. In 2025, we undertook extensive consumer research to identify the key trends influencing purchasing behavior. This work resulted in Project Thrive, our consumer-led innovation road map that will guide product development across our brand and categories over the next 5 to 10 years. Our strategy is focused on 5 key consumer themes. Gut health and wellness -- sorry, gut health and well-being, weight wellness, everyday performance, treat and reward and long-term consumer transformation. Overall, these global consumer themes aligned strongly with our portfolio strengths, and we are investing heavily to ensure we remain well positioned to capture future growth. Slide 16, market-leading brands in growth categories. The consumer trends discussed earlier are driving strong growth across our core categories. Importantly, this growth is coming from both volume and value, reflecting increasing consumer demand for products that deliver tangible wellness and functional benefits. These trends are playing directly into categories where we hold leading market positions with #1 or #2 positions across many of our key segments. This strong market presence combined with increased increasing consumer demand for wellness-focused products positions us well to capture continued growth in the years ahead. Slide 17. Top 5 brand investments driving penetration and category growth. We've significantly increased our investment in marketing with spend rising by $9 million year-on-year to strengthen awareness of the functional health benefits across our 5 key brands. Our strategy is focused on clearly communicating the value of benefits such as protein, gut health and overall wellness using highly targeted digital and social media campaigns to reach consumers more effectively. The results have been encouraging. We're seeing strong engagement growing reach and improve consumer awareness, helping reinforce our brand proposition and drive growth across our key wellness focus categories. This targeted marketing approach is an important enabler of our broader growth strategy supporting both increased consumer demand and the expansion of our functional health portfolio. Slide 18. Our manufacturing network. Our manufacturing network remains a critical enabler of growth and a key source of competitive advantage. The Ridge Street project is a strong example of our approach. We closed an aging underutilized facility and reinvested in a modern site equipped the state-of-the-art technology. As a result, we have doubled production capacity, improved efficiency created a globally competitive operation and established a platform that is well positioned to support growth for at least the next decade. This model is consistent with the work underway at Morwell as well as previous investments across our manufacturing facilities. Slide 19. We've always taken the view that our results and performance are best judged on a normalized basis, removing any one-off financial events that occur in a particular year. Having said that, it's important to understand the key items that have been normalized and the bridge between normalized and statutory results. The material normalization, this material normalization this year were related to our manufacturing footprint rationalization, particularly the closure of Strathmerton and the sale of Peanut Company of Australia. Slide 20. Our balance sheet. We always endeavor to have a strong balance sheet, which positions us well to respond to significant opportunities, either internally or externally. We're always comfortable to increase leverage to build the business, which has been demonstrated on a number of occasions in the past. Slide 21. On this slide is a detailed cash flow, and I would just like to highlight the strong operating cash flow of $129.3 million, a significant investment in future growth with capital expenditure of $109.8 million and a fully franked dividend of $37.3 million. Slide 22. Our outlook. We've entered FY 2027 with a strong outlook and confirm our previous EBITDA guidance range of $240 million to $245 million, with first half earnings being relatively flat and strong growth in the second half. Growth will be driven primarily by our branded business, supported by a strong innovation pipeline across both yogurt and milk-based beverages. We continue to see significant opportunities to capitalize on consumer demand for functional health, protein and wellness products through new product development and range expansion. In addition to revenue growth, earnings will benefit from the productivity and efficiency initiatives implemented over recent years. This includes the closure of the Strathmerton side, the Laverton Logistics transformation and other operational improvement programs are expected to deliver increasing benefits in FY 2027. Within the nutritionals and ingredients business, several strategic initiatives are progressing well and provide further confidence in the long-term growth outlook. At the same time, we plan to invest approximately $110 million in capital expenditure to expand manufacturing capacity and support future growth opportunities. particularly those expected to emerge in FY 2028 and beyond. In closing, management acknowledge the outstanding contribution of employees, whose commitment and discretionary effort have been instrumental in successfully transforming the business over recent years. Appreciation is also extended to customers, consumers suppliers and shareholders for their ongoing support. Overall, the business enters FY 2027 with strong momentum, a robust innovation pipeline expanding manufacturing capability, a strong balance sheet and a clear confidence in its long-term growth strategy. Thank you for your attention. I will now hand back to Barry.

I'm always aware that the formality of this business creates a very quiet room with little feedback, which makes me always feel like with Pete, that Pete and I are very boring men. But do we pleased to know we're moving move in to questions in a moment. So thank you, Pete. Before we move into questions, I would like to take a moment to reflect on what has been achieved. For those joining us today either in person or online, and for those who have followed the evolution of Bega Group for many years, we are delighted to present our FY 2026 results. Our strategy has always been centered on building strong foundations for the future. That means creating the capacity agility and resilience required to respond to changing consumer preferences. Evolving market conditions and future growth opportunities. We always remember that we have been in business for 127 years and are proudly Australian-owned. We, of course, wish to continue to be in business for generations into the future. As our shareholders are aware, Bega Group continues to build a business that is both financially and environmentally sustainable. We have this week released our better future report for FY 2026, which is available on our website. I hope today's demonstration has demonstrated the significant progress we have made in strengthening the business through continued investment in our manufacturing network, leading brands, product innovation, supply chain capability and most importantly, our people. We've established a platform that is stronger than it has ever been. The depth of capability we've built across the organization, combined with the strength of our infrastructure, customer relationships and portfolio of trusted brands provides us with confidence in our ability to deliver strong long-term sustainable growth. While we are proud of the FY 2026 result, we're even more excited about the opportunities ahead. The strategic groundwork laid over many years is now translating into stronger earnings, improved operational performance and increased growth capacity, positioning us extremely well for the next phase of our journey. Thank you for your ongoing support and interest in the business. We will now open the floor for questions.

Are there any questions, including questions from our auditors, a lobby. Yes?

You're going to put...

Could you identify yourself?

Sorry, Stephen Target a shareholder. You're going to invest significantly in the business in the years ahead, and that's great to see. Is that -- how is that going to affect the debt? Or is it going to be funded through normal operating?

As Pete mentioned in his presentation, this is a strong cash flow business. And so it will be largely funded through operational cash flow. Of course, we're in a period of time now where we are making significant investments, I think, in the year just past. As Pete mentioned, there was over $100-odd million in investment, and there will be $110-odd million investment in the year ahead of us. So we are going through a heavy investment period. But as you would have noted, we've got a very low debt and a very strong cash flow. So that will be primarily funded through cash flow.

As a shareholder, we appreciate that.

Elton. I could see you shuffle it and so I figure you'll go about to get up.

Elton Ivers, a shareholder. Mr. Chairman. I'm getting a bit confused with this, yes, '28 strategic plan. It had a objective of $250 million by 2028. Now in your financial '27 guidelines, your guidance you're giving it 240 to 245, yet elsewhere when you've gone to strategic play and you're saying you basically achieve, it's, '28.

I think you would recognize Elton that many of the metrics, including that target for next year is very close to the achievement of that. Some have already exceeded those '28 targets summer and to 240 to 245, you're right, we said 250, but it's extraordinarily close to those metrics. So -- and what has caused us to do is to redo the strategic plan out to 2031 because the 2028 plan was fundamentally achieved.

Okay. That's where I thought you were going to be achieving it in...

Yes. So we're very pleased are -- obviously, that's the ambition.

Okay. other question I've got is, it was productivity, the buzzword word. It appears does productivity and here is 9 times in the annual report. Yes. Now what are we as shareholders, what can we do to assist the company to improve your productivity?

Look, I think it's -- I'll answer that question in a different way. I think it's our responsibility to improve the productivity of the company and the initiatives that Pete's outlined, and I've mentioned, are up other focus of improving that productivity. I think anybody following the economic performance of the country overall would recognize that one of the challenges within this country is achievement of productivity. And so we do -- we would recognize very much the productivity improvements in the Australian economy overall and the business environment that businesses such as B are operating is challenged. And it's challenged for a variety of reasons, which I won't go into because I don't want to make a political speech. But we are -- I would argue that we are one of the few manufacturing businesses that is strongly investing in reference to the last question to improve productivity to ensure that we've got a sustainable future. And I think it is recognizing in almost all economic circumstances and indeed environmental circumstances that if you're not investing and you're not creating an environment that builds efficiency, builds capability, responds to market changes, your business will not be sustainable. And so we are mentioning productivity because it's extraordinarily important. I think if you probably went out into the business world and looked at how many times productivity as mentioned, it's significant. And it's significant because there are significant challenges to achieving productivity improvements in Australia.

And the other question I got to do is with risk management in the report talks about the sought under climate change -- and I was expecting to see something about the expectation of there being a hot 2027, '28 -- 2026, '27, sorry, summer. And that normally has such a drought and that normally has an impact on your milk supply. How is that being addressed? I know 1 of the ways that you're addressing it is through international. Look, or hurting at [indiscernible]. I see major that it's from New Zealand.

So I'll separate those 2 questions. The -- so risk management, I always think that risk management in a business such as ours, is it managed in a year. It's managed through positioning, right? So in terms of our milk supply anybody who wants outside it in big today and in the last few months, Saudies living up to its reputation of being the first in the drought in the last hour. So it's very, very dry in the Bega Valley, and I'm sure the farms in the room at all join me in saying and we hope some of those offshore storms that they're talking about find their way onshore. Throughout the rest of our network, interestingly, El Nino has not been as harsh as we have expected. So our overall book supply at the moment is predicted to be on budget or around about where we expected. So part of that is the benefit of a geographic footprint across various supply regions across Australia. And if I was to look back at the year just gone, we -- our farmers in Western Victoria had a very difficult time through drought, but it was the only region that did. And so the El Dino is not yet hitting as hard as we expected. We stay very closely aligned to our farmers and chat about what their needs are. I think across most of our regions, we would recognize that we had 3 or 4 very good seasons where a lot of fodder was conserved and we're seeing the benefit of that follow conservation in these difficult times. The challenge always in agriculture is how long these weather events go for. But at the moment, we're I think the risk management comment is to really demonstrate that we are clearly thinking about these things, recognizing that we need to be alert to them. But they are not they're not risks that we are unfamiliar with our risks that we manage and position ourselves to manage all of the time. In terms of global solid sourcing, we do operate on the global markets to for some ingredients that we wish to put into some of our products, predominantly products are headed for export markets. That includes sourcing from places like New Zealand, but the largest production growth in the globe as we stand here today is coming out of the U.S., and we do also source from the U.S. interestingly as well as sold to the U.S.

Julian King, shareholder. It's just been a fantastic presentation. It was really pleasing to read what I did read of the annual report. I've got 3 very varied questions that have come from different perspectives. First is that it's been really good seeing all of the circularity and sustainability, things online, in reports and so on. and Bega's leadership in that. And a lot of people are very, very happy about that, particularly in terms of minimizing waste and maximizing diversion by designing for recovery. And one of the stories I tell a lot of people is that, one, I think last year or the year before about redesigning the lids at that. So I'm just wondering why Bega is putting so much product, particularly yogurt into patches that cannot be recycled. I hear so many times. What do I do with the patch? I mean, there are some people who recycle mito leads and now we can recycle the yogurt patch leads through things like lids for kids. But the pouches I mean I do my best with my kids when they bring in the pouches to try and rent it out and put it into soft plastics, but it's something I hear from so many people.

Yes. So our fastest-growing segment is pouches? So we also hear from consumers what they are requesting and what they require. I might get peak to add in a moment. But the reality is convenience is an extraordinarily powerful consumer trend and to not respond to that consumer trend would actually not see us able to stand here before you and say we market #1 and #2 brands. Our objective in circularity is always to try and maximize the use of resource and try and make it as reusable as possible. We'll continue to work on that with pouches, but I always think that it's dangerous to let perfection be the enemy of good. So as I think we've answered on many occasions around sustainability, we continue to work on improvement in all areas, but we won't do that at risk of not meeting a consumer demand and that is an extraordinarily strong consumer demand. So whilst in the people that you may deal with them might be consumers pouches as far as the market is concerned and equally. And equally, as far as the competitive landscape that we work in to sell yogurt, we need to be in pouches. But Pete, I don't either, you've got anything to add to that?

Sorry. Barry, just to reiterate your comments around a single serve or convening being a major driver of consumer decisions. We do have very good machines. They're very modern pouch machines. The packaging is actually formed and sealed as part of the process. We think that we think that makes us closer to getting a better solution for recyclable packaging. And so we are monitoring that and keeping an eye on it. So because the -- we've got 3 lines that are technologically advanced we think we are probably closer to a solution than many others on older format machines. It's something we do review on a consistent basis.

I mean, one of my kids is one of your average pouch. One of the things that has occurred to me and to some of the people I'm speaking to maybe there could be a little bit of a redesign of the patch so that [indiscernible].

I don't -- I actually don't think -- I think we've got a lot of expertise in the areas we work in. I don't want to take up the time of the AGM by sort of opining on how we can how we can better manage some of the issues that we're very conscious that we're managing.

I'm trying to give you some feedback that I hear a lot. [indiscernible].

We do not -- can I just please ask, I don't know whether you're noting or not, but at every AGM, your questions dominate the room. And I don't think -- and I think we're very happy to answer them, but I don't want to enter into long-term discussions on them. So please move on.

This is my third. AGM in person, and I did dominate.

Please move on.

Okay. The second question is about nutrition and we've heard a lot about that this morning. And certainly, I mean, I'm one of them. I've been eating cheese all my life. And particularly about providing great-tasting nutrition products and clearly communicating the nutrition so people can make the choice. And so last year, it was the first time I as a result of coming to the AGM, tried the credit yogurt in the pouch bit. But I was really surprised at how much sugar was added to it. Now I see that that's no longer the case. But given the consumer trends that we've heard about today, particularly around the health, I'm just wondering why Bega is adding so much sugar to so many of its products, particularly the flavor yogurts, milk and peanut butter.

So I think we've got very strong strategies as you've noted, of reducing sugar and indeed, in reducing salt, and we recently launched a salt reduced Vegemite for kids. So it is part of our strategy. But again, I would say, we respond to a spectrum of consumers, and we offer them a spectrum of options. But part of our strategy is indeed to reduce sugar and in reduce sulfated again.