Yowie plucks one of Australia's oldest chocolate companies Ernest Hillier from administration

One of Australia's oldest chocolatiers has been picked up from administration for the second time in eight years with Yowie Group (ASX: YOW) announcing it has reached a deal to buy the assets and intellectual property (IP) of Ernest Hillier for $375,000.

Founded in 1914, after more than a century in business the Melbourne-based chocolate company first entered into administration in 2015 when it was owned by Re:Capital from the UK, before being rescued by the Chocolate & Confectionery Company.

But in June this year it was déjà vu under the new ownership as Ernest Hillier struggled with operational costs to keep its Coburg North factory afloat, standing down 20 staff as Glenn Livingstone and Alan Walker from WLP Restructuring were appointed as voluntary administrators. 

In steps Yowie Group from the forest - a rather strange beast for an ASX-listed company with a market capitalisation of just $6.6 million and a cash position of around US$8.01 million ($12.36 million) as at the end of 2022.

This discrepancy between market value and the cash in its coffers has attracted bargain-hunting investors, in the past making Yowie the subject of tussles between previous incumbents and Keybridge Capital (ASX: KBC), helmed by Nicholas Bolton who now sits on the board.

Yowie recorded negative earnings of US$1.13 million for the first six months of 2023 as economic conditions bit into consumer appetite and retailers remained cautious in their inventory management and promotional spending. In the June quarter, sales were down 31 per cent at US$2.7 million.

The group reports in US dollars as the US market has traditionally been its mainstay, but it has been making headway in Australia and New Zealand recently - markets where Yowie is targeting growth and has been entering partnerships with major franchises to boost its appeal, such as the children's television show Bluey, the NRL, and the AFL, although the latter is limited to just Australia.

The company is now further diversifying with the Ernest Hillier acquisition, giving it 4,000sqm of leasehold operations and the capacity to produce a wide range of products including chocolate-coated scorched almonds, macadamias, liquorice, crème centred chocolates and healthy snack bars.

Yowie is not assuming any of the existing liabilities of the sellers.

Yowie Group chairman Sean Taylor says the deal represents an important step in the evolution of the business.

"It enables us to preserve an iconic Australian chocolate manufacturing business with significant heritage value and capability, and in doing so take greater control over our future," he says.

"When the current board were appointed, Yowie was a one-SKU business, concentrated on the US market.

"Since then, the Yowie product has returned to Australian stores, and we have expanded our product offerings through a range of seasonal Christmas and Easter products and more recently the collaborations with the AFL, NRL and Bluey."