SPC Ardmona changing strategies to stay afloat

In response to the difficulties Australian food manufacturers face, including the supermarket price wars and the high Australian dollar, SPC Ardmona is embracing new packaging technology to reduce costs.

The iconic Australian brand has long been famous for the tins its foods, including fruits and vegetables, have always been available in.

But to keep up with the big guys – the major supermarkets – SPC had to re-evaluate how to stay afloat in the market.

"We have no choice. We have to work around the high dollar; accept that house brands are a growing reality of food retailing and lift productivity so we can absorb rising food commodity costs," Pinneri said.
The company also got a leg up in the industry when it introduced fruits in plastic containers and screw-top bottles, which provided an easier alternative to the traditional tins.

The company was losing its place in the market as, like so many other sectors, it was being pushed out by cheap imports and private label products sold at a lower price.

Last August it announced it would cut 150 jobs and close its Mooroopna manufacturing plant due to a slump in trading as a result of the strong Australian dollar.

Together with parent company Coca-Cola Amatil, it worked hard to source local ingredients for its operations, with only five per cent of its products made from foreign components, usually only used during shortages in local supply.

SPC’s exports suffered a 25 per cent slump over the last five years, largely due to the high Australian dollar.

But Pinneri pointed to the predicted 70 per cent rise in global food demand in the next 40 years as a great opportunity for food processors.

"Now we’re committed to getting out of the minor league and staying the course," he said.

"We’re getting on with investing in new opportunities in this industry.
"You’ll hopefully see a change in our products in store – what we produce will be more consumer-centric.

"We’re no longer a canned fruit business – those are Nanna’s products – we’re about new technology and product lines.”

"Well make this investment in Australia work.

"We’re commited to achieving phase one of our transformation by 2015."

The company is also examining possible plans to develop specific supermarket house brand lines.

"I take a different approach to a lot of thinking on private labels – I’d rather leverage my infrastructure by producing private label products than see them imported from somewhere else," Pinneri explained.

He also believes more cooperation between government and industry is needed if the Australian food manufacturing and packaging industries are to survive the changes to the market.

Governments need to encourage scale and capital investment, he said, to help companies lift productivity at the rates needed to compete with China.

"We must reduce the burden on local manufacturers, accelerating tax depreciation allowances on re-equiping costs and investments in carbon reduction and water saving technology," Pinneri said.