Brownes Dairy chief Natalie Sarich-Dayton doesn’t much care who owns WA’s biggest milk producer, as long as they’re got the will and financial muscle to back its growth ambitions.
Australia’s oldest dairy company is looking for its fifth owner in 20 years after being put on the market in the wake of a loan default by its Chinese parent.
Tuesday’s unexpected sale announcement has raised the prospect of a return to Australian hands for the business, which was founded in the Perth suburb of Shenton Park by Irishman Edward Browne in 1886.
Ms Sarich-Dayton understands the support for an Australian-owned Brownes, but she points out that the Chinese backers who have owned the business since 2017 have been nothing but supportive.
“It’s not a firesale. I expect that we will find a new owner that will invest in the growth of the business and in the WA dairy industry,” she said.
The sale is being handled by specialist advisory and restructuring firm McGrathNicol on instructions from China Mengniu Dairy.
The Chinese dairy giant, which has had its own foothold in Australia since 2016, has seized control of all the shares in Brownes under a security provided for a $200m loan taken by the Australian group’s Chinese parent, Jilin Zhilan Dairy Tech.
Chinese-based directors at Brownes’ Australian holding company were swapped out for Ms Sarich-Drayton and a Mengniu representative in Australia, Stewart Carson, on April 14. However, news of the planned sale appears to have been delayed until this week to enable Brownes and McGrathNicol to ensure their messaging to nearly 300 employees, more than 50 milk suppliers and the potential buyers was aligned.
The sale, they argue, is the result of a soured transaction in China; it is no reflection on Brownes, which is profitable and growing, and should be unaffected by the auction.
“Clearly ownership changes are not new to us,” Ms Sarich-Dayton said.
Brownes boss Natalie Sarich-Dayton: We’ve had several owners over the last two decades, and in that time, we’ve remained the No.1 diary player in WA and continued our global expansion.
“Nothing changed for us, and nothing will change with the current situation either.”
Edward Browne died in the 1920s, but Brownes remained in the hands of his family until 1962 and its sale to Peters ice-cream and dairy group. When the combined Peters & Brownes was sold again, in 2005, to New Zealand dairy group Fonterra, it supported nearly 800 staff and 140 dairy farmers.
We’ve had several owners over the last two decades, and in that time, we’ve remained the No.1 diary player in WA and continued our global expansion.
Fonterra, however, cut jobs, reduced supplier prices and sold the Balcatta-based local ice-cream division, at the time the exclusive producer of Peters ice-creams in WA and all Connoisseur and Cadbury ice-creams in Australia.
Private equity group Archer Capital bought the reduced Brownes business in 2010 and did what private equity does – sold off the company’s land and cut costs further to maximise profit – before itself selling out in 2017.
Nationwide, the dairy processing industry accounts for about 8 billion litres of milk a year but it is challenged by a lower milk pool, higher supplier prices and increased production costs.
Local players are not immune from the pressures, though the WA industry, which is anchored by Brownes, Harvey Fresh, Bega and Bannister Downs, has been relatively stable in recent years, supplying milk, yoghurt, cheese and cream to WA and overseas buyers from a State milk supply that stands at about 320 million litres annually.
The margins aren’t big – Brownes made $5.9m before tax and $4m net from $268.7m of revenue in 2024 – but Ms Sarich-Dayton insisted that when “done well it’s (dairy) a good business”.
As expected by McGrathNicol, potential buyers have already expressed interest. Mengniu could itself still end up with the business by potentially retaining Brownes if offers for the business don’t measure up.
Mengniu landed in Australia in 2016 with the purchase of infant formula manufacturer Burra Foods in Victoria, and scooped up Burra rival Bellamy’s three years later. However, its attempt to buy Japanese brewer Kirin’s Australian dairy business was blocked the following year by then-treasurer Josh Frydenberg for unexplained “national interest” reasons.
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