SPC partnership lost its fizz

By Geoff Adams

Despite SPC’s sale at a bargain basement price of $40million, the process and announcement was handled with some dignity for the grand old lady.

Its progress in recent years must have been a disappointment for Coca-Cola Amatil management, but they were up-beat at the public announcement last Wednesday.

The purchase of the fruit processor back in 2005 was for a handsome price and gave the business, its grower-shareholders and the city a fantastic lift and a way out for the cash-starved company.

The business had constantly struggled to find sufficient capital to update its machinery and equipment; it faced some poor cultural issues in the workforce; and post merger issues with the Mooroopna Ardmona site.

The major supermarkets also moved rapidly after the merger to import private label competitors.

Coca-Cola Amatil talked about its relentless consumer focus and a belief in the essential goodness of the product: healthy fruit in a consumer-driven environment becoming more health conscious, and one which had already turned away from the company’s traditional line-up of canned fruit in syrup towards fruit in juice, jellies and plastic cups and jars.

The national company also had a sophisticated delivery network and experience in tapping into consumer sentiment through marketing.

The company has poured many millions of dollars into the business, updating the processing lines, introducing new products and rationalising the infrastructure.

But translating the opportunity into a profitable outcome has proven too big a task for CCA.

Under CCA, SPC has been unable to capture stronger market share with its traditional canned fruit and its innovative new products and, at the same time, has lost international markets to competing countries like Chile and South Africa with lower manufacturing costs.

CCA also had some difficulty handling the seasonal nature of the industry, which is characterised by peaks and troughs and unpredictable weather events.

The company (and the region) has been the beneficiary of millions of dollars of investment, in an attempt to return the company to profitability, but for some reason, CCA has been unable to capture the burgeoning health food snack market and truly tap into those changing consumer tastes.

Right from the start, the company had difficulty generating growth from the Goulburn Valley juice lines, with early reports showing a more rapid loss in market share for this product than the sugar drinks, and lagging behind the Mt Franklin and Pump labels.

It’s a real shame, as Goulburn Valley fruit growers have been delivering quality fruit, produced in an environmentally sound manner, which should be a part of every Australian’s diet.

It’s also a shame that CCA has not relinquished one of the most promising snack lines which it had developed at SPC in 2014, Perfect Fruit, a frozen dessert which looks like ice-cream, but is totally fruit.

It’s puzzling to work out how it is going to handle a food product hived off from the manufacturer, when CCA has had so much difficulty incorporating the fruit lines into its business model.

But at least the placing of the business into new hands gives the business another chance at success.

We can only hope that the new owners will be able to create a more efficient, market-focused business which will propel SPC into the next decade.