Coca-Cola Amatil considers sale of its struggling Australian cannery business, SPC

ASIA – Asia-Pacific’s soft drink giant Coca-Cola Amatil (CCA) has begun a strategic review of its Australian fruit and vegetable processor, SPC potentially through a sale or merger in a way to grow the struggling business.

The review involves ways to grow the business through a change in ownership or a merger.

Sunday Morning Herald has reported that the move follows the US$100 million injection into the 100-year old cannery from both CCA and Victorian government to save it from collapse.

According to Group managing director of Coca-Cola Amatil, Alison Watkins, the investment under this agreement was completed in June 2018.

“As we said at the time, without this investment the future of Australia’s best-loved packaged fruit and vegetable brands were in question,” Watkins said.

“With this investment we kept SPC operating, invested in modernising the plant and created new business opportunities.

These included new tomato and high-speed snack lines, a new aseptic fruit processing system and new export opportunities including China, all of which will support ongoing growth.

“The co-investment is complete, and now is the right time to consider options for the business.

We believe there are many opportunities for growth in SPC, including new products and markets, further efficiency improvements, and technology and intellectual property.

The review will look at how this growth could be unlocked, potentially through a change in ownership, alliances or mergers.”

Loss making portfolio

In CCA’s recently released financial results, SPC made a “modest” loss in the six months to June 29 with the company’s food and services division that contains SPC running at a US$1.7 million loss for the half-year.

With brands including Goulburn Valley, IXL, Henry Jones, Taylor’s and Perfect Fruit, SPC sales during the period fell due to it exit of a number of private label manufacturing contracts.

While its Ardmona brand tomatoes and SPC baked beans and spaghetti had increased market share, total sales of those categories had declined during the half, and its canned fruit and spreads products were also under pressure.

Ms Watkins however, said that there were no plans to close SPC and that the company saw a positive future for the division.