How Arnott's is making a new business

As one of Australia’s most iconic brands, Arnott’s, embarks on building a whole new business unit, Kim Berry catches up with some of the team to find out how a heritage brand maintains currency and drives growth. This article first appeared in the June 2021 issue of Food & Drink Business.

The Arnott’s Group portfolio of brands continues a 155-year legacy of the Arnott family. It is headquartered in Sydney with operations in New Zealand and bakeries in Sydney, Melbourne, Brisbane, Adelaide, Indonesia and Auckland. Around 3500 people work for the company.

In addition to Arnott’s products, the brand also includes Campbell’s in Australia, Malaysia, Hong Kong and Japan, and 180degrees based in New Zealand.

It recently purchased the majority stake in Diver Foods and the cereals and snacks division of Freedom Foods, which have combined to form a new business unit, Good Food Partners. More on this later.

Heritage favourites

The constant challenge for a heritage brand is to not get left in the past in the eyes of consumers. Arnott’s chief marketing officer, Jenni Dill, says the mindset is about acknowledging a rich, 150-year history while focusing on building a strong brand for the next 150 years.

“We’ve had to adapt to find effective and relevant ways to communicate about our Arnott’s masterbrand to consumers, reigniting our loyal customers, while bringing new generations into our portfolio,” Dill says.

Over the past few years, Arnott’s has focused on dialling up its “locally made” message, reminding consumers that their favourite bickies are baked in one of three bakeries across the country with Australian-made ingredients.

Dill says there are always new flavours and biscuits in the innovation pipeline – the latest launch being a collaboration with Krispy Kreme on five new flavours of teeVee snacks – but she can’t give away too many secrets.

“We’re looking to release a ‘free from’ range soon, so watch this space,” she says.

Time to grow

In November, The Arnott’s Group acquired Freedom Foods Group’s Cereals and Snacks business for $20 million.

Since then, it has bought a 75 per cent stake in snack foods and cereal specialist, Melbourne-based Diver Foods, and the New Zealand premium cracker company 180degrees.

Arnott’s Group head of transformation Simon Lowden says the acquisitions were the manifestation of the company’s goal to become a regional powerhouse of consumer food brands.

“Our strategy for growth focuses on two separate approaches – acquisitions and innovation.

“With all three companies – Freedom Foods, 180degrees, Diver Foods – we were looking for businesses with strong foundations, strong values, delicious products and of course potential for growth in existing and new categories as well,” Lowden says.

The Freedom Foods deal includes three manufacturing facilities in Leeton and Darling Point New South Wales, and Dandenong in Victoria.

Diver Foods makes branded (for example, Sam’s Pantry) and private label muesli and cereals, porridge oats, nut, cereal, protein, and muesli bars.

Its Melbourne factory is 16,000 square metres.

The creation of Good Food Partners

The upshot of the acquisitions and growth has been the creation of a new business division called Good Food Partners. Diver Foods owner and managing director Chris Diver is the operations manager for the unit.

Lowden says Good Food Partners unlocks a strong growth engine for Arnott’s.

“It presents a rare opportunity for a legacy business like Arnott’s to enter the snacking whitespace and unlock the innovation and capabilities that have been at the core of Diver Foods for the past eighteen years,” he says.

Good Food Partners managing director, Chris Diver, says the division was created to complement and diversify Arnott’s existing portfolio.

“It’s been a significant undertaking, and an unbelievable effort from the team. In the past six weeks, Good Food Partners has grown from one premises in Victoria, to now managing a total of four sites, including three Freedom Foods facilities.

“Good Food Partners is one of the largest producers of branded and private label muesli and snack bars in Australia, with a large client base of contract manufacturing, including for some of Australia’s leading brands,” Diver explains.

The current focus is on combining the companies’ processes and production and identifying opportunities to streamline where possible.

Its products continue to be available in supermarkets nationwide, including white-labelled muesli and cereals such as Sam’s Pantry (exclusive for Woolworths), Messy Monkeys and Freedom Foods.

Diver says the focus is on high quality products with local ingredients and sustainable supply chains.

Utilising its new capabilities, its short to medium focus is on expansion within existing and into new categories.

“Good Food Partners has the potential to become a high growth vehicle, for the Group, delivering extraordinary value and driving it to become a cross category leader in cereal and snacking,” Diver says.

William Arnott opened his first biscuit factory in 1865. Today, the Arnott’s brand and many of its biscuits are Australian icons. In the first four months of COVID-19 lockdown last year, Australians ate 270 million Tim Tams. With its recent acquisitions and the launch of Good Food Partners more national favourites are sure to come.