Heinz closure a blow when sourcing sauce

Last week's offical closure of Heinz's tomato processing factory wreaks havoc on the tomato sauce supply chain

Heinz closure a blow when sourcing sauce
Heinz closure a blow when sourcing sauce

By Rebecca Byfield
| January 13, 2012

Last week's official closure
of Heinz's Girgarre tomato processing factory in Victoria’s Goulburn Valley will wreak havoc on the Australian supply chain for its iconic sauce.

As the company gets set to move the plant to New Zealand, Heinz CFO and Executive Vice President Arthur Winkleback told US analysts that the demise can be attributed to the supermarket war, saying "they have created an inhospitable environment for local manufacturers."

Then Executive Chairman, CEO and President, William Johnston took aim, telling investors the company had to overhaul its business strategy in Australia to deal with the supermarket dominance of Coles and Woolworths.

"The cost of making the factory competitive was too high," says Heinz Australia Supply Chain Director, Mike Robinson. "Girgarre requires millions of dollars of investment just to keep the plant going, with no likelihood of making it competitive in the future."

Media attention has been focussed on job losses, with 150 people losing their jobs in the weeks following Christmas.

But talk is now turning to where Heinz will source the tomato paste used to make their iconic sauce.

"It’s a misconception that tomato paste will be produced in New Zealand," says Australian Manufacturing Workers Union(AMWU) delegate, Ken Covington. "They won’t be doing that at all. They’re going to import it from South-East Asia, South America and the United States."

Covington believes that Australia produces the best paste in the world. "We use the world’s best practices and have the best farmers," he says.

But Heinz-Watties spokeman, Paul Hemsley refutes the claim, saying the company would source most of its tomatoes from Hawkes Bay.

He did, however, add that demand for tomato paste would exceed the company’s ability to find the product locally, so some of it would have to be imported.

"The important thing is that the seeds from which these tomatoes grow in other countries are Heinz seeds," he says.

It is not yet known whether the move will impact supplies of Heinz sauce in Australia but one thing is certain; if the sauce isn’t up to scratch, Australia might just have the last laugh.

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