Lotus Bakeries, the Biscuit Priced like Luxury

The success behind the famous Belgian biscuit

With a share price around 10,000€ and a PE above 50x, the Belgium biscuit company has very intriguing metrics: a stock price that may discourage most of the individual investors and the PE of a big American technological company. But why? Is there some kind of explanation or is it just a market anomaly?

In this article, we will present the company and its main strengths. Of course the fair valuation estimation will be interesting.

Let’s begin this delicious journey together!

Company overview

In 2023, the company reached the 1 billion euros revenue threshold for the first time with 20% growth from prior year. 20% is an incredible metric for the food industry where mature companies (like Nestlé, see the article about it) rarely reach 5%.

Founded in 1932, it took the company 80 years to reach 300M€ revenue, 6 years for the next 300M€ and 4 years for an additional 400M€. Since 2015, the company has been doing several acquisitions to create a complete snacking portfolio.

The company is divided into 3 segments:

• Lotus Biscoff, the original brand of the company. With more than 50% of the revenue, this is still the main segment. The strategic ambition is to build Lotus Biscoff to a top 3 global cookie brand

• Lotus Natural Foods has 5 brands: nakd, Peter’s Yard, Bear, Trek and Kiddylicious. It has been growing at a 17% organic CAGR since 2015. This is the fastest growing segment and the company wants to accelerate growth through internationalization, innovation and new acquisitions. It represents around 1/4 of the revenue

• Lotus Local Heroes, gathers 5 brands with few growth ambitions: Dinosaurus, Peijnenburg, Lotus Suzy, Annas and Snelle Jelle. Those are local brands growing slowly (3% 2013-2023 CAGR). The ambition is to maintain market share and cash flow. It represents a little bit more than 20% of the revenues

The revenues are well distributed around the globe: UK 24%, US 17%, France 13%, Belgium 12%, Netherlands 8%, China, Spain and Germany 3% each, Swiss, Australia, Korea, Sweden, Czechia, Canada 1% each and 11% in other countries.

The companies has a strong industrial worldwide footprint but France, Belgium and Netherlands own 9 out of the 13 production sites.

The strategy to maintain this dynamic

As we saw, each division has its own ambition and growth driver:

• Natural Foods will expand internationally. International sales were 6% of the sales in 2015 for the segment and it is now 33%.

• Lotus Biscoff wants to enter the TOP 3 of the global cookie brands just behind Oreo and Chips Ahoy. They are now 5th (6th in 2022 and 7th in 2021)

To manage this performance, they have a clear strategy around 4 pillars:

• Focus on what they call the heroes (the core range)

• Communicate using the brand halo to strengthen it

• Propose the heroes and haloes in the most relevant indulgent demand spaces

• Amplify everything through partnerships with other leading brands (like KitKat or Häagen-Dazs

It is difficult to estimate if the trend will last but this strategy is for the moment very effective.

Everything is supported by a strong investment policy. CAPEX have increased since 2022. 2024 and 2025 CAPEX should be 200M€ combined. Interesting to note, not all CAPEX are for expansion, in 2023, 19M€ were dedicated to maintenance.

Everything is done with a very reasonable and well monitored financial leverage currently around 0.5x EBITDA.

Outlooks

As Lotus Bakeries expands, it is expected that its growth rate will gradually taper off. Revenue projections indicate a slowing trend, with an estimated annual growth of around 15% over the next three years.

Looking ahead to a 10-year horizon, growth is anticipated to further decline, but strategic mergers and acquisitions could potentially sustain a growth rate ranging between 10% and 15%.

And now, it is time to analyze the stock metrics, the risks and opportunities and the estimate the fair price of the company.

Stock metrics

Growth metrics