BLT - Blis Technologies

[simla]

Continuing that train of thought, what if we've been reading this upside down for some time? What if Blis has always been about accumulating brands and trade marks rather than selling ingredients? That is, the ingredients are the building blocks that allow building the brands?

After all, Blis has always scrupulously pursued intellectual property. And it has gone for BLIS K12 (TM) and BLIS M18 (TM) right from the start. And the marketing gurus have always said you want the brands. And there's a strong marketing guru on BFF. And most of all it would answer the riddle of just what BFF is aimed at. "Blis Functional Foods" suggests way more than "Gourmet Ice Cream", and they named it that right from the start.

One thing is for sure. Blis is a very complex company and the share market really doesn't understand it much. I watch it very closely but I'm never sure just how much of it I understand. But if BFF is going to do something in the next 6 to 12 months, maybe some of the intended scale will finally become more obvious.

[Nigel]

Good support at 1.8 and 1.9 cents. Looks like 2c could be the bottom. Onwards and upwards? Time will tell

[simla]

Yes, but if my stuff on FSANZ is right, then the following is possible too. The FSANZ stuff came out before Christmas and was law in mid January. Nobody expected this as the FSANZ have been working on this for a massive 12 years.

So, imagine Gourmet sales are going well but not making a profit. Great proof of concept, but now you have to decide what to do. You want to close it down, but feel obliged to chew over whether there is cash to be had there. The only obvious option is to buy equipment to reduce cost of manufacture.

Then the FSANZ suddenly passes new food laws, after a staggering 12 years of inaction. Instantly the Gourmet brand is toast. It is high in sugar and fat, so will have to be withdrawn in the next couple of years anyway, so no point in investing in it. Likewise, it is already losing money so no point in carrying on. It goes as you already have the evidence you need for proof of concept.

Now you are stuck with an ice cream shop but you realise you can turn that to advantage by making it Blis headquarters, which you may have been tossing over anyway. Necessarily these decisions increase this year's loss, but they are the obvious and sensible thing to do.

Meanwhile you are delighted that some good news fell into Blis's lap for once, as you are now allowed to make solid health claims on the labels AND you are allowed to advertise the claims and the product in the media in NZ and Australia. Brilliant. Do you launch a product somewhere, or is this an opportunity to go for a full brand launch as I wondered above? Either way, it's a great opportunity.

Meanwhile you have to announce all this to the market. Unaware or disinterested in the context, all the market hears is: closing Gourmet, 1.8m loss, moving into ice cream shop because no choice. The share price plummets. You are disappointed as you had recently said that Gourmet's main point was proof of concept. Mr Market should be on antidepressants!

Actually you see it all as great news all round, since you have now tidied up a whole lot of decisions and you have the opportunity for a full GRAS launch right here in NZ and Aus if you want. So you call it "Moving Forward."

Have I a shred of evidence that this is what happened? No, not a dickey bird. But we know the underlying facts are true I think. The thing is though, why did they make that announcement that so puzzled us? This theory at least explains that. I'm not saying this is the explanation, but nobody seems to be considering the possibility that the announcement really was "Moving Forward", and then wondering why.

The alternative theory, which the market is working on, is that a bunch of hard working and clever people have sat there for a year twiddling their thumbs while things got worse. I find that much harder to credit.

The company needs to come up with some good news? No, the shareholders would like that! Meanwhile people not used to the pace of Blis are maybe making decisions too quickly. As I said when this came out, I'll wait for the May report to find out more.

[CJ]

Has anyone contact the company to ask?

I assume there is no shareholder meeting till the next AGM (in July?)

[simla]

Way you go, CJ. I'm not sure what your question would be. Did they close down Gourmet because it was losing money and only a proof of concept? Yes, they said so already. Did they move in the premises because it was available? Yes, they said so. Did it cost more? Yesm they said so. Did they feel it was "moving forward".? Yes, they said so. Does FSANZ let them do more? They may feel we could read that for ourselves! That only leaves: was it in that sequence? Answer, it doesn't matter one bit.

The only real question is whether we should be heartened or disheartened by developments to date, and their answer to that would be: see you in May because that's how the market works.

I don't think the question is for the company, it is for the market: why is everyone assuming this is very bad news?

[emearg]

Has anyone contact the company to ask?

I assume there is no shareholder meeting till the next AGM (in July?)

Anthony Offen
T: 021-463-336

[emearg]

Way you go, CJ. I'm not sure what your question would be. Did they close down Gourmet because it was losing money and only a proof of concept? Yes, they said so already.

Are you forgetting they were planning on taking the ice cream global? Only a proof of concept? What rubbish!!

I'm glad they cut their losses but if you want to discuss stuff here please tell the whole story. Thanks

[CJ]

I don't think the question is for the company, it is for the market: why is everyone assuming this is very bad news?

The mention licensing to replace the Gourmet Ice Cream. That is the question that remains unanswered as that is where the new revenue will come from.

[simla]

The only reference to global Gourmet was an ODT interview with the staff at Gourmet who said maybe they could export it eventually, as I recall it. I have no doubt however that they intend Bis dairy products to be available globally if they last the distance, and nothing here is inconsistent with that. I've already agreed that I thought they could be selling it at a profit now and that was wrong with the existing equipment. I guess I had assumed they had put in more equipment as the sales grew but apparently not. But I've also hypothesised that the decision to expand further with more investment was made impossible by FSANZ, and I assume the cash situation made them pretty reluctant to go there presently anyway if that's what you mean. I agree that Blis remains constrained by the lack of solid revenue, but that existed before the last announcement too.

If the FSANZ is part of the decision, then a full GRAS approach to NZ/Aus will obviously reap way bigger rewards than pressing on with just the Gourmet ice cream. If that was part of the decision, then the logic is the same as the global situation: we'll do better by getting a bigger party to run with this than by feeding limited resources into growing it ourselves. I'm very sad that Gourmet isn't to go on, but I can't see how it could have within the FSANZ rules except by completely re-equipping the factory - see last sentence. If you're saying the FSANZ stuff blew Gourmet out of the water and that is bad news, then yes I suppose that's true. I'm not really sure what you're saying, Emearg.

I really would appreciate someone reading the FSANZ stuff and saying if they agree. It seems important to me. They have similar permission in the US with GRAS and Europe as I understand it (not sure about advertising there) but things happen so much more slowly outside NZ.

[simla]

I think I feel like someone just bought a car for $20,000 and all anyone is saying is that we lost $20,000. This announcement was a package of decisions, and I assume they are rational people, so they did this for a reason. The market has plunged the price dramatically because they take it to be very bad news. But nobody seems inclined to think these people must be doing things, and maybe there's another side to this, and nobody is looking for another view of things. I'm trying to. I mean, the fact (if true) that they can now openly advertise GRAS foods in NZ/Aus is major news in my book, but I don't think anyone has even mentioned that I posted that, for example. Why the determination to see things badly?