South Australian pickles and preserves company Spring Gully Foods has gone into voluntary administration after a experiencing a sudden fall in supermarket sales.
The family-owned company, which supplies the major supermarket chains, went into voluntary administration late last week with debts of more than $3 million.
The company has pointed to a tough retail environment and rising utility costs, but says it's still trying to figure out why it experienced a sudden 60 per cent plunge in sales about month ago.
It is now appealing for customer support to help secure its future. The company sells a large range of pickled onions, gherkins, relishes, sauces, jams and honey under the 60-year-old Spring Gully brand, as well as the Gardener and Leabrook Farms brands. It also produces Dick Smith jams and Ozemite.
Spring Gully Foods hopes to trade its way out of its financial difficulties, so the business will continue to operate. The fate of it's 43 staff, however, hangs in the balance. Its administrator, Austin Taylor of Meertens Charted Accountants, will hold a creditors' meeting soon.
Last year the company invested in a new warehousing facility to help it deliver on a distribution contract for Dick Smith Foods. The year before, it won a Premier's Food Award.
Its managing director Kevin Webb has made a heartfelt plea via the media for South Australians to support his company.
The call looks to have been successful. Reports say that Spring Gully products have been selling out on supermarket shelves in South Australia since its financial woes hit the headlines.
Coles, which buys 35 products from Spring Gully, on Monday awarded a new national contract for its Coles brand pickled onions to the company.
The new 12 month contract will involve 35,000 units of Coles Brand Brown Pickled Onions for sale in 525 gram jars across Australia.
Coles general manager for South Australia, Vito Borrello, said Coles had been in discussions with Spring Gully for a few weeks but had expedited the process given the difficulty the company was facing.
“Spring Gully has been an important supplier to Coles for many years and we are keen to back them by increasing our supplies,” he said.
Spring Gully's brand and contract coordinator, Russell Webb, told Food & Drink Business the Coles contract would provide a boost to the struggling company.
"It will have a great impact on our business and we are very thankful to Coles for their support," he said.
