Bega's (BGA) joint venture with Blackmores (Bemore) is taking time to gain traction. BGA has taken the highly unusual step of providing guidance at its AGM with FY17e EBITDA to be broadly consistent with FY16 levels, before the impairment of the Bemore JV by $5-7m. From our standpoint, we see two key drivers at play. In FY16 the JV contributed a loss to BGA of $0.8m on proportional sales revenue of $3.3m, while also generating $13.4m in revenue for BGA in the form of high margin nutritional sales to the JV. We interpret the impairment against the carrying value of BGA’s investment as an indication that the Blackmores product has failed to gain material market traction in its short life. As such we see the double whammy of a lower JV contribution and lower product sales to the JV occurring in FY17e.