Organic babyfood brand Babease is set to be rescued as part of a pre-pack administration deal – with administrators expected to be appointed this week – despite securing a £5.1m investment just four months ago, The Grocer can reveal.
Babease Ltd – and sister company Brecon Foods Ltd, which owns the factory in Wales where the brand’s veg-focused food pouches are manufactured – filed a notice of intention to appoint an administrator on 11 November, with HM Courts and Tribunals Service.
The Grocer understands that the two companies are not officially yet in administration, but insolvency specialist FRP Advisory is set to be appointed as the administrator this week.
Once appointed, FRP will sell the business back to current owner Amitis Partners in a pre-pack administration deal, which will allow Babease to keep trading as a going concern, according to industry sources.
Babease, founded in 2015 by chef Tom Redwood, has grown rapidly after winning nationwide listings with Tesco, Waitrose, Boots and Superdrug, as well as being stocked by Amazon and Ocado.
Retail sales soared 41% to £925k as volumes increased 49% this year [Nielsen 52 w/e 7 September 2019].
However, the business has made heavy losses since its formation, with a £1.2m loss in the year ended 31 December 2018 at Babease Ltd and a £1.2m loss at Brecon Foods, the latest accounts at Companies House showed. It was in the red by a similar amount in the previous financial period and has made similar losses for 2019, The Grocer understands.
It does not publish a full profit and loss statement detailing revenue totals in the accounts, but sales in 2019 are projected to reach £2.4m, with expectations to hit almost £20m by 2022, according to management forecasts.
And a 2018 crowdfunding campaign on the Seedrs platform – ultimately pulled by management – seeking £850k, valued the business at £12.1m.
But brands in the lucrative babyfood sector are coming under severe pricing pressure as supermarkets get in on the act with own-label products.
The troubles at Babease come less than four months after the company received a £5.1m funding injection from Amitis to grow NPD and expand into new markets, as reported by The Grocer in August.
Redwood’s stake in the company fell below 25% as a result of the investment, but he stayed on in his role as CEO initially before being replaced by Paul Jaggard in October. Jaggard, who was previously the managing director of Emily Crisps, joined Babease in April 2019 as chief operating officer. It is unclear if Redwood will remain with the business following the pre-pack sale.
Babease also received £1m of funding from Bibby Financial Services in July 2018 to help it keep up with the growing demand from retailers as it won more supermarket listings for its babyfood pouches.
The company approached Bibby after raising money to acquire Brecon Foods – and its factory in Wales – in 2016.
Investment in NPD also led to the company winning a Grocer New Product Award in 2017 in the baby & toddler food category for its organic pumpkin, chickpea, tomato & brown rice masala pouch.
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