Page 5 - Food&Drink September 2019

NEWS
Nestlé closes regional Victoria factory
NESTLÉ has announced the closure of its Tongala factory in far northern Victoria.
“People just don’t buy tinned milk like they used to,” GM Andrew McIver said. Cheap imports had also eroded the business.
Over the next 12 to 18 months, all production at the factory will progressively move, mostly to Nestlé factories overseas, with final closure anticipated between late 2020 and mid 2021.
Tongala’s population is roughly 2000, and the plant employed 106 people.
The plant primarily produced tinned milk products. Nestlé said it had tried to improve the viability of the factory through new product ranges, adding Maggi culinary products from 2010, Nestlé Health Science medical nutrition products from 2012 and Milo Ready To Drink since 2017.
“These ranges have supported the factory, but as milk is the bulk of what the factory makes, the newer ranges aren’t enough to maintain manufacturing at the site,” McIver said.
“At the same time, the equipment in this factory is old, and the investment we need to make sure it
can operate reliably in the future means that the factory is no longer viable,” he said.
Following the closure, the site will be vacated and sold. Equipment currently at the site is either owned by Nestlé or leased, and as it will be relocated, will not be part of the sale.
Employees will be supported in finding alternative work, including outplacement services and retraining, the company said.
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BELLAMY’S FY19 was a “challenging period” due to regulatory changes, a lower birth rate and increased competition for Chinese demand. The challenges saw Bellamy’s full-year profit almost halve to $21.7 million in FY19, down from $42.8 million in FY18. Net revenue was $266 million and normalised EBITDA was $47 million (17.6 per cent).
CEO Andrew Cohen said the company would defer its medium-term target of $500 million revenue by 2021 due to the ongoing regulations process. It has been waiting more than a year for State Administration of Markets Regulations (SAMR) registration from Beijing. Its ASX statement said its rebranding will return the business to growth and has been gaining momentum since the March launch.
“Many of these changes required short-term trade-offs impacting the FY19 result, including a one-off write-down of legacy-label inventory and a deeper level of Q3 destocking and trade change-over than originally anticipated. This reset is now complete, and the business enters FY20 with a clean balance sheet, positive consumer momentum and a healthy trade dynamic,” it said.
This, along with “a breakthrough new product pipeline”, a strong balance sheet and cash conversion will support its growth agenda. “The business enters FY20 with a clean balance sheet, positive consumer momentum and a healthy trade dynamic.” The company doubled its marketing investment and its China capability to “better activate the brand and engage consumers”.
www.foodanddrinkbusiness.com.au | September 2019 | Food&Drink business | 5