The business of food and drink is a fast moving behemoth, with takeovers, downfalls, and events both good and bad. But there is also the unexpected, and on that front, 2024 more than delivered. Editor Kim Berry gives you her take on the last 12 months.
In January, when Prime Minister Anthony Albanese announced the Australian Competition and Consumer Commission (ACCC) would conduct a year-long inquiry into supermarkets’ pricing practices, I’m not sure anyone could have predicted just how that was going to play out.
While the ACCC will release its report in the new year, the instalments throughout 2024 have been everything from shocking and revelatory to causing such severe side-eye it was almost impossible to avoid a migraine.
We thought the peak was in September when the ACCC announced it was taking Woolworths and Coles to court for misleading consumers through discount pricing claims on hundreds of common supermarket products. But then there were the days of public hearings before the ACCC, and broadcast live.
It doesn’t matter how seasoned you are or how long you have been with your employer (23 years in this case), Amanda Bardwell deserves a quiet nod of respect considering she had only been Woolworths’ CEO for 11 weeks.
Meanwhile, Dr Craig Emerson was carrying out his review of the Food and Grocery Code of Conduct. His recommendations formalised what most in the industry long believed – the code needs to be mandatory. And fines for breaking it need to be big.
Then there was the Senate Select Committee on Supermarket Prices, and Allan Fels’ five-month inquiry into price gouging and unfair pricing, which presented some of the most concerning figures around the cost-of-living crisis we covered this year.
The impact of all this? I mean, they’re still making tidy profits but for their reputations it has been devastating. In the 12 months to September, both supermarkets fell more than 200 places on Roy Morgan’s trust rankings. Woolworths was the second most distrusted brand in the September quarter, and Coles came in third. They were only outdone by Optus, managing to jump ahead of Qantas in the distrust queue.
Hold my Beer
If the supermarkets were feeling pummelled, the craft beer industry looked at them and said, “hold my beer”. It was a tough time for the craft crowd with around 22 breweries going out of business or into voluntary administration (VA) in the 12 months to August.
It had a brutal 12 months with the ATO coming after deferred tax debts from Covid times, raw material costs increasing up to 40 per cent, painful freight expenses, a CO2 shortage causing a 51 per cent price rise, and twice-yearly excise increases when it’s already the third highest taxed beer industry in the world. It’s a marvel many small breweries have hung on.
There were good news stories, in Western Australia, Beerfarm bought Feral Brewing’s production facilities from Coca-Cola Europacific Partners (as it began shifting focus back onto its core non-alcoholic ready-to-drink portfolio), which will enable it to triple production and expand distribution.
Mountain Culture, launched in the Blue Mountains on the eve of Covid and opened a second brewery in Emu Plains soon after, launched its Sydney brewhouse in November. It’s in what was the home of Atomic Brewing, which closed its doors in September after five years of operation. There’s little time for sentimentality in this game.
Plant Protein Woes
Breweries weren’t the only sector experiencing hardship, with the alternative protein sector also having a patchy year.
Australia’s first commercial plant protein manufacturer, Proform Foods, folded after operating for almost 20 years. It had supplied many plant-based product manufacturers as well as launched its own retail brand, Meet, in 2020 when it also opened a new $11 million facility.
Sunfed, another early leader in the sector also closed, with founder Shama Sukul Lee saying the company had run “very lean for far too long”. Combined with Covid, tightening markets and shifting priorities, finding new capital was next to impossible.
And when Australia’s first plant-protein isolate manufacturer, Australian Plant Proteins (APP), entered voluntary administration in May, industry leaders expressed frustration at the lack of government support, a reliance on imports, and drop in R&D investment in a sector that has “enormous opportunity”.
A happier outcome for The Aussie Plant Based Co., owner of plant protein brands Veef and Love Buds, which was liquidated in October but snapped up by the Gold Coast food manufacturer, Smart Foods within the week.
There were also shining lights in the alternative protein realm – Nourish Ingredients signed the first major alt protein partnership between Australia and China with Chinese biotech company, Cabio Biotech. Cabio will ramp up Nourish’s animalic fat, Tastilux, production to a commercial scale as Nourish pushes into the APAC region.
Hyper-fermentation biomanufacturing start-up, Cauldron Ferm, has gone from strength to strength, this year being one of the first five recipients of funding from the federal government’s $392 million Industry Growth Program (IGP). Harvest B also secured IGP funding in November for its hybrid plant- and animal-protein brand B Strong.
Cultivated meat leader, Vow, announced its first brand, Forged, and launched two products made from Japanese quail cells – Forged Gras and Forged Parfait. It is only the third company to be granted approval to sell in Singapore, now on the menu in two venues.
Light and Shade
The flip side of VA is acquisition and while 2024 might not have delivered ones on the scale of recent years – Treasury Wine Estates acquiring US Daou Vineyards for $1.6 billion and Paine Schwartz Partners handing over $1.49 billion for Costa Group last year, Cooke acquiring Tassal for $1.1 billion in 2022, and JBS paying $425 million for Huon in 2021 – there were some house moves and remodelling this year.
In January, the industry’s answer to a fairy godmother, Klark and Brooke Quinn, rescued Sara Lee, ensuring the future for apple pies, strawberry cheesecakes, and blueberry strudels across the land (as well as saving 200 jobs). The Quinns plucked Darrell Lea out of VA in 2012, turned the business around in six years and sold it to Quadrant Private Equity for $200 million.
its better-for-you snacking portfolio.
The quietly-going-about-their-business acquisitions included Arnott’s buying three snack bar brands from New Zealand’s Prolife Foods to grow its better-for-you snacking portfolio, ingredients company Hawkins Watts buying Queensland-based Taste Rite Agencies to bolster its national reach, Soulfresh taking over one of Australia’s first cold-pressed juice outfits, Emma & Tom’s, and supply chain integrity company Source Certain continuing its global expansion with its purchase of UK company Agroislab.
And on the global mind-boggling scale, Mars Inc. acquired Kellanova for $55 billion in a move that will significantly expand its snacking portfolio.
An acquisition that will be one to watch in 2025 is the union of The Original Juice Company (OJC), SPC Global, and Nature One Dairy (NOD), that was announced in October. If you wanted to see two more feisty business operators behind one table, you would be hard-pressed to find two better candidates than OJC chair Jeff Kennett and SPC chair Hussein Rifai. It is probably fortuitous Kennett is resigning once the deal is completed because as the line goes, “there can be only one” (chair). The new entity, SPC Global, will list on the ASX with OJC’s code changing to SPG.
If Rifai’s dogged determination to see SPC become the Nestlé of Australia (as he told Food & Drink Business in 2020) wasn’t already clear, this year the company also took on Italy and the EU over alleged dumping of tinned tomatoes into the Australian market at reduced and subsidised prices. The Australian Anti-Dumping Commission found there were reasonable grounds to support SPC’s claims and is currently investigating the situation.
Dairy Drama
Saputo Dairy Australia (SDA) announced the closure of King Island Dairy after failing to find a buyer, ending the brand’s 132-year history, and its Canadian parent company, Saputo Inc, registered a $197 million non-cash goodwill impairment against SDA – the total value of goodwill for the business. But, the sale of two of its fresh milk processing plants to Coles Group was finalised in June and in November, and a 20-week strike by its Tasmanian employees ended when Saputo agreed to pay them the same wage as their mainland counterparts, (a 21.7 per cent pay increase).
Dairy processor, Beston Global Food Company (BGF), entered VA after Japanese dairy company, Megmilk Snow Brand Co, pulled out of a deal to acquire the company. In November, voluntary administrator KPMG announced the company would be wound down and cease operations on 6 December.
BGF said it had been a “perfect storm of adverse events” that began with little debt at the start of Covid, a lot by the end, then rising interest rates, high operating costs – particularly for energy, and high farmgate prices making Australian milk uncompetitive on the world market.
As 2025 starts coming into view, expect another year of highs, lows, surprises, and challenges. It’s what the industry is made of.
This article first appeared in the December/January 2025 edition of Food & Drink Business magazine.
