Coke warns of sour outlook for local fruit growers

Date: 16.04.2013

Victorian fruit suppliers’ livelihoods are at risk if customers don’t start buying Australian-grown product, CCA warns

April 16, 2013

The livelihoods of Goulburn Valley fruit growers could be at risk as Coca-Cola Amatil (CCA) packaged fruit business warns of continued weak demand for canned fruit.

SPC Ardmona (SPCA) has cautioned about 100 growers about
the high Australian dollar resulting in cheap imports and a shrinking export market.

SPCA forcasts
a reduction of up to 50 percent in intake tonnages for some fruit categories for the 2014 season.

The dive in demand is expected to severely
strain the industry, with the company planning to hold face-to-face meetings with affected growers in coming weeks.

SPCA Managing Director Peter Kelly says the company is struggling to compete with private label product sourced from overseas.

"We are competing against products from countries that have considerably lower labour and production costs and arguably lower quality standards than we have in Australia," Kelly says.

According to SPCA, market share of imported private label canned fruit has grown to 58 percent, while SPCA canned fruit share has declined to 33 percent.

SPC Ardmona export market volumes have also declined 90 percent in the past five years.

SPCA is currently half way through a three-year business transformation strategy, addressing issues of efficiency and waste reduction throughout
its business operations.

SPCA
plans to
work with key retailers, and seek temporary protection relief from the Federal Government to assist the fruit processing industry to cope with the strong Australian dollar.

SPCA hopes for protection in the form of a World Trade Organisation (WTO) safeguards submission that will seek temporary tariff protection.

The company also plans to more effectively market its brands to consumers with stronger Australian-grown and Australian-made messages.

The high Australian dollar prompted a writedown in the value of CCA’s packaged fruit business earlier this year.

CCA's net profit fell 22.3 percent in calendar 2012.

The result included writedowns of the SPCA packaged fruit business.

CCA booked more than $110 million in restructuring costs for SPCA in 2011.