News

Australian baby formula startup Sprout Organic has expanded internationally into Saudi Arabia and Malaysia.

Selasi Berdie, founder and CEO of Sprout Organic, said the company’s growth has been “phenomenal” and added: “With zero tariffs, high-income levels and high birth rates, Saudi is a gateway to penetrate the whole GCC region and opens several other opportunities including the UAE.”

According to market research company Euromonitor, Saudi Arabia is the fourth largest infant formula market in the world with a market size value of US$883 million, and Malaysia is in sixth place.

“With high birth rates and a population of over 30 million people, Malaysia has one of the highest forecast infant category growth rates at 9.34 per cent and suits our current stage of business prior to taking on larger Asian markets,” said Berdie.

The company is currently seeking private funding to facilitate further international expansion opportunities.

The brand’s infant formulas are certified organic and made with ingredients such as rice, peas and coconut. It is also free from allergens such as dairy, soy, eggs, wheat, fish and peanuts and sold in more than 1500 locations throughout Australia and New Zealand.

The boss of Penfolds owner Treasury Wine Estates will travel to China next month to reconnect with customers, local staff and business partners, as the $10 billion winemaker forges ahead with its strategy of deepening its presence in the US and other Asian markets.

Speaking to this masthead after announcing double-digit profit growth, Tim Ford said even if Beijing lifted its punitive trade sanctions on Australian exports today, it would still take the business several years to fully rebuild the volume of wine – 600,000 cases – it was once selling into the previously lucrative Chinese market.

“For our higher end luxury wines, it would take three years because we have to go and source more grapes,” Ford said.

“So if you make it this year, you don’t sell it for another three years. It would certainly take us time to increase the makes of those wines ... because we’ve done such a good job of reallocating what was going to China a couple of years ago.”

As other winemakers and Australian exporters keenly await further improvement in relationships between Canberra and Beijing, Ford said there were “plans and strategies in place” if restrictions were removed quickly, but insisted the company was sticking to business as usual.

Ford, who has not visited China due to years of border closures from the pandemic, revealed he would be travelling there next month.

“I intend to be in there in March,” he told this masthead. “Still finalising all my plans.”

Treasury Wine has spent the last two years rebuilding its business by growing its presence in other markets, particularly the US through a partnership with rapper Snoop Dogg and the acquisition of a Californian vineyard, and other Asian countries, finding success with India, Hong Kong, Singapore, and Thailand and more. It has also circumvented tariffs by growing grapes in China and launching a new line called One by Penfolds that sources grapes from China’s Ningxia province, Bordeaux and California.

Treasury Wine on Wednesday reported a 72 per cent jump in net profit to $188.2 million for the first half of the 2023 financial year as it successfully passed on price increases to consumers, many who kept reaching for luxury and premium wine over the festive season.

Net sales revenue for the December half was up 1.4 per cent to $1.28 billion, while earnings before interest and tax (EBIT) for the period rose 17.2 per cent. Net sales revenue per case rose by 13.5 per cent compared to the same period in 2021.

However, the numbers fell short of market expectations, sending Treasury Wine shares down 7 per cent to $13.34.

“We would expect modest downgrades (1-2 per cent) to 2023 financial year consensus forecasts,” wrote E&P Financial consumer research executive director Phillip Kimber in a note.

The company will pay a fully franked interim dividend of 18 cents per share.

Queensland-based XXXX brewery’s parent Lion has signed a Power Purchase Agreement (PPA) to procure 176 MW of renewable electricity from Woolooga Solar Farm.

The solar farm is located near Gympie in southeast Queensland and was established through a joint venture between oil conglomerate BP and UK solar company, Lightsource.

As a result, the brewery will now use 100 per cent renewable electricity at its Milton site. The company also wants to achieve a net-zero value chain by 2050.

Justin Merrell, Lion’s sustainability director, said the Milton site is a historic Brisbane landmark and this latest announcement proves the brewery is “capable of moving with the times”.

“All of our beer produced here – up to 250 million litres annually – is now made using 100 per cent renewable electricity.

“This agreement will stop around 138,000 tonnes of carbon emissions from entering the atmosphere. That’s the equivalent of taking 45,000 cars off the road.”

Prior to initiating the PPA with BP, about 25 per cent of the electricity used by Lion breweries was renewable.

The existing 2200 solar panels installed on the roof of Milton brewery will continue to contribute to XXXX’s sustainability targets.

McDonald’s McDelivery service has finally made it Down Under, six years after it was launched overseas.

But the fast-food giant’s latest initiative comes at a cost for consumers: According to news.com.au customers will pay $3.99 for delivery and a 5 per cent customer service fee for orders over $12. Orders under $12 will cost an extra $2.

Initially, this new delivery service is available only in selected NSW locations. Customers can order their meals for delivery on the MyMacca’s app where they can also earn and redeem loyalty points.

Delivery customers can also use the app to track the order’s progress.

Direct-to-consumer food company Marley Spoon has appointed Mark Richardson as its new chief marketing and commercial officer in Australia. He will replace Kate Whitney from February 13.

With extensive experience in marketing and commercial roles across retail, finance, and tech, the company said Richardson would be an asset to the business and brand portfolio, which includes Marley Spoon, Dinnerly, Chefgood, and Bezzle.

Rolf Weber, CEO (Australia) and COO at Marley Spoon, said Richardson’s solid knowledge of the industry and his experience in creating disruptor brands will be invaluable as the company continues to enhance its offerings to customers.

In his most recent position as CMO at Aldi Australia for six years, Richardson was said to have played a key role in elevating the brand’s unique personality and prepositions.

“Moving into an adjacent category opens so many exciting opportunities,” added Richardson. 

“I’m dedicated and focused on exploring new commercial avenues and revenue streams and growing the Marley Spoon portfolio customer base.”

Amazon.com, the online retailer long feared to disrupt the grocery sector, believes it has fallen short.

The company has paused expansion of its Fresh supermarkets and cashier-less convenience stores until it finds the right recipe for success, Chief Executive Andy Jassy said on Thursday, in a rare appearance on the company’s quarterly results call.

What the company needs is a distinctive store format that’s doing well financially before embarking on a major expansion, a formula Amazon hopes to find this year, he said.

The remarks show how Amazon, which just a year ago said it would close its bookstores to focus on grocery, has yet to dominate brick-and-mortar retail since its closely watched acquisition of Whole Foods Market in 2017. Amazon has long viewed grocery as a key to unlock more consumer spending. remain fearsome competition. Despite Amazon’s large business from packaged food and other goods, it has yet to win significant market share in perishables, Jassy said.

Michael Pachter, an analyst with Wedbush Securities, said Amazon has itself to blame, having drawn consumers to online shopping decades ago.

“Retail is a tough business,” he said. “They are flushing money down a toilet pursuing Amazon Fresh stores” and thinking “they can brand a new concept and capture share from retailers who have been successful for decades.”

Jassy said the future of grocery was both online and offline, or omnichannel.

He said Whole Foods is growing and remains on top for premium, organic grocery, but Amazon’s mass-appeal offering needed work.

The company has a few dozen Amazon Fresh stores so far, Jassy said. It has also experimented with technology that bills shoppers for what they take from a store without having to pass by a cash register.

Amazon.com, the online retailer long feared to disrupt the grocery sector, believes it has fallen short.

The company has paused expansion of its Fresh supermarkets and cashier-less convenience stores until it finds the right recipe for success, Chief Executive Andy Jassy said on Thursday, in a rare appearance on the company’s quarterly results call.

What the company needs is a distinctive store format that’s doing well financially before embarking on a major expansion, a formula Amazon hopes to find this year, he said.

The remarks show how Amazon, which just a year ago said it would close its bookstores to focus on grocery, has yet to dominate brick-and-mortar retail since its closely watched acquisition of Whole Foods Market in 2017. Amazon has long viewed grocery as a key to unlock more consumer spending.

Rival grocers like Kroger Co and Walmart Inc remain fearsome competition. Despite Amazon’s large business from packaged food and other goods, it has yet to win significant market share in perishables, Jassy said.

Michael Pachter, an analyst with Wedbush Securities, said Amazon has itself to blame, having drawn consumers to online shopping decades ago.

“Retail is a tough business,” he said. “They are flushing money down a toilet pursuing Amazon Fresh stores” and thinking “they can brand a new concept and capture share from retailers who have been successful for decades.”

Jassy said the future of grocery was both online and offline, or omnichannel.

He said Whole Foods is growing and remains on top for premium, organic grocery, but Amazon’s mass-appeal offering needed work.

The company has a few dozen Amazon Fresh stores so far, Jassy said. It has also experimented with technology that bills shoppers for what they take from a store without having to pass by a cash register.

For the time being, the company has closed some grocery shops and impaired certain assets. It took a $720 million charge from such actions in the fourth quarter, its chief financial officer said.

Coles and Woolworths have been ordered to dump more than 5200 tonnes of soft-plastic waste into landfill from their failed national recycling scheme.

The NSW environment watchdog issued “clean-up orders” to the supermarket giants for 15 warehouses and storage depots around the state where soft plastics have been stockpiled by REDcycle, the Melbourne-based business responsible for running the national recycling scheme.

The removal and disposal of the stockpiled soft plastic is expected to cost the supermarket chains at least $3.5 million.

Coles and Woolworths have six days to contest the notices issued by the NSW Environment Protection Authority.

A Coles spokesperson said the company was disappointed to learn of the notice but would respond within the timeframe. A Woolworths spokesperson said the notice was a surprise, adding it would seek clarity from NSW’s EPA.

The order is a blow for the once-lauded recycling program run on behalf of the supermarkets, which claimed to have diverted more than 5 billion pieces of soft plastic from landfill over the last decade.

“Thousands of customers diligently collected soft plastics and dropped them into their local supermarket’s collection bin because they trusted their waste would be diverted from landfill and recycled,” NSW EPA chief executive Tony Chappel told The Age and The Sydney Morning Herald.

“The extent of soft-plastic waste sitting in warehouses across NSW is very concerning, and I know customers will be disappointed.”

The EPA and Fire Rescue NSW are concerned about the potential threat from fire posed by stockpiles across 11 local government areas that have been classified as “high-risk” but have not indicated where those stockpiles are.

“These stockpiles are stored from the floor to the ceiling, blocking entryways and preventing adequate ventilation with the soft plastic estimated to fill about three and a half Olympic-sized swimming pools,” Chappel said.

“To protect our communities and environment, these materials need to be removed to reduce the risk of a fire.”

The EPA gave the supermarkets three options: to dispose of the waste in landfill; to export it internationally; or to reprocess the plastic.

However, no country will accept the import of contaminated soft plastics and there is no facility anywhere in Australia capable of recycling the quantity of soft plastics stored by REDcycle.

The EPA is working with watchdogs in other parts of Australia to take a coordinated approach to the crisis, paving the way for similar notices to be issued in other states.

It remains unclear whether Coles and Woolworths will seek to recoup any costs of the clean-up from REDcycle, which the chains already paid for collection and recycling of the materials.

New stockpiles of plastic linked to REDcycle continue to be discovered in NSW, Victoria and South Australia after investigations by state environmental regulators.

Four new warehouses filled with soft plastics have been found in Melbourne since last Friday.

REDcycle was claiming these materials had been transformed into new products such as shopping carts, bollards, and garden bed planting kits, or used as additives in asphalt.

Nearly 12,400 tonnes have now been located in 32 locations across the three states. It is the equivalent of more than 1000 semi-trailer truckloads.

There are nearly 3200 tonnes of waste across 14 sites in Victoria, 3900 tonnes in South Australia, and 5200 tonnes in NSW.

The EPA estimates some of the stockpiles in NSW are at least three years old.

REDcycle previously claimed it was recycling up to 7000 tonnes of soft plastics a year that had been collected from nearly 2000 supermarkets around the country. But how much plastic REDcycle has actually recycled remains an open question.

In November, REDcycle and the supermarket giants halted the high-profile program after The Age and the Herald revealed the soft plastics that were being collected had been secretly diverted to storage instead of being recycled.

The mastheads later revealed the program began to fail in 2018 as it struggled to meet a massive surge in demand after it was rolled out nationwide, but the public was never informed about the problems.

After the program’s suspension, REDcycle issued strident public denials it had been engaged in large-scale, long-term stockpiling, or misleading the public about its operations.

“REDcycle has had to take the unwanted but necessary step of holding stock in warehouse storage facilities temporarily,” a media statement said in early November.

These claims were undermined just weeks later, in early December, when environment regulators uncovered more than 7600 tonnes of plastic hidden in warehouses in three states.

In a statement late on Friday afternoon, REDcycle said it “remains committed to continuing our important work and in reinstating our soft plastics recycling program”.

“We have been in intensive roundtable discussions with our industry stakeholders and funding partners to explore a range of long-term and sustainable solutions following the halting of the program late last year due to supply chain disruptions.”

In Victoria, REDcycle is facing criminal charges for refusing to disclose information about its operations to the EPA.

Meanwhile, in a bid to respond to the crisis, REDcycle has been quietly developing a controversial plan that would permit the company to legally stockpile thousands of tonnes of plastics at a property near the rural Victorian town of Ararat until a recycling solution can be developed.

Sources familiar with the proposal who requested not to be named said that REDcycle wants to store the unprocessed plastic stockpiles inside hundreds of steel shipping containers while it tries to develop a financially viable processing program.

Its former major recycling partner, Close the Loop, lost any ability to process soft plastics into asphalt additives following a fire at its facility in June 2022. While Close the Loop plans to be back in operation in mid-2023, it would only be able to process a small portion of the stockpiles REDcycle has created nationwide.

REDcycle is also facing an existential threat from a lawsuit seeking to have the business declared insolvent over an allegedly unpaid $200,000 debt to a NSW transport firm.

BTG Logistics launched the action in the NSW Supreme Court against RG Programs & Services Pty Ltd, which trades as REDcycle, after it stopped paying for the storage of 660 tonnes of plastic.

“They’ve been given ample warnings to come to the table before this happened and they chose to ignore it,” owner Anthony Chapple said.

“Obviously their stock has no value as it’s rubbish so it will cost me about another $250,000 to dump the stock in landfill.”

An order by the court placing REDcycle into external administration would likely signal the total collapse of its nationwide operations, pushing responsibility for the plastic stockpiles onto logistics and storage companies that were contracted by REDcycle to hold the material.

It could also force state governments to intervene to pay for the clean-up to ensure there is no threat of environmental contamination or risk to public safety from the abandoned stockpiles.

Mars New Zealand has appointed Emily Dowling as its new GM, following the resignation of Pete Simmons, who will depart the company on January 30.

In her new role, Dowling will oversee the growth and development of the brand’s pet care, snacking, and food portfolios, which include the Whiskas, M&M’s, and Masterfoods brands.

“Emily’s blend of commercial creativity and purpose-driven leadership will put her in great stead in New Zealand,” said Deri Watkins, Europe regional president at Mars Petcare. 

Dowling has more than 18 years of experience working in the FMCG sector across Australia and Europe, including Mars PetCare Australia, where she has worked as its marketing director since 2018.

During her tenure, she led the launch of the Temptations brand, developed Mars Australia’s direct-to-consumer (D2C) online store for the Advance brand, and oversaw the first consumer promotion for The Lion’s Share, a global fundraising initiative for the UN Development Program.

“The team here (Mars New Zealand) has always had an outsized impact on Mars’ business globally, particularly on the creative side with groundbreaking campaigns like My Hooman, our pet adoption platform,” said Dowling.

“They’ve also demonstrated best-in-class agility in managing supply chain challenges in recent years, and I’m committed to driving that consistency for our retail partners and consumers.” 

Anthony Dean will succeed Dowling as Mars Petcare Australia’s marketing director, relocating back to Australia after serving as the cat portfolio director for Mars Petcare Europe.  

Meanwhile, Simmons departs Mars after 16 years with the company. During the past five, as GM, he led a refocusing of the business on growth priorities, partnering with customers across different channels, and establishing digital commerce in the company – all while leading the business during the pandemic. 

Food prices at the two major supermarket chains of Woolworths and Coles climbed even higher in the December quarter to an average of 9.2 per cent across those three months, accelerating from an average of 8.2 per cent in the September quarter, research by UBS shows.

UBS analyst Shaun Cousins and his team closely tracked the prices of more than 60,000 items and found that food inflation was steepest in the fresh food category, led by dairy and meat. Fresh food inflation was running at 9.6 per cent in the December quarter compared with dry grocery items on the shelves at 9 per cent.

The fresh food inflation in the December quarter of 9.6 per cent ran ahead of the inflation rates experienced in that same category in the September quarter of 9 per cent.

Dry grocery items price rises also advanced in the December quarter compared with the 7.8 per cent inflation rates in the September quarter for that segment. UBS found that in the month of December food inflation reached 9.4 per cent, above the average for the December quarter, as momentum gathered pace in the lead-up to Christmas.

Mr Cousins said feedback from the food industry signalled there were substantial cost pressures for manufacturers and producers, and dry grocery prices would keep rising until at least June.

“Looking forward, food inflation is expected to continue,” Mr Cousins said.

“Trade feedback indicates cost pressures remain and are arguably still rising for dry grocery suppliers with further cost increases expected to support dry grocery inflation for the remainder of 2022-23,” he said.

Inflation was slightly higher at Woolworths in the December quarter at 9.3 per cent, compared with 9.1 per cent at Coles.

UBS also tracks the amount of discounting and promotions at the supermarket chains and found that Coles was being more aggressive. “Coles is maintaining promotional depth and breadth ahead of Woolworths, arguably reflective of it seeking to differentiate on price as per its period of market share gains in the early to mid-2010s and following market share losses in recent years,” Mr Cousins said.

A separate study by UBS on dairy, meat, fruit and vegetables found that in the December quarter, prices across those categories were around 10 per cent higher than the same quarter a year earlier.

That study led by analyst Evan Karatzas found that dairy prices were up 14 per cent in the December quarter compared with a year ago, with cheese leading the advance with a 24 per cent price increase. Butter prices were up 18 per cent and white milk was up 14 per cent.

Mr Karatzas said industry forecasts were for a reduction of up to 7 per cent in Australian milk production in 2022-23, which would put further pressure on prices as processors competed for a shrinking pool of supply.

Meat prices were up 10 per cent in the December quarter compared with a year earlier, and UBS said price tags appeared to be stabilising. Chicken prices were up 6 per cent compared with a year ago. “Chicken continues to present itself as the best value protein,” he said. Pork was up 16 per cent, beef was 8 per cent higher and lamb had notched an increase of 10 per cent.

UBS found fruit and vegetable price changes were mixed through the December quarter as more normal production levels resumed after a bout of extended wet weather. Blueberry prices were up 4 per cent, mushrooms increased 4 per cent, while tomatoes were down 13 per cent.

Global consumer goods company Unilever has appointed Hein Schumacher as its new CEO, effective July 1.

Schumacher is the current CEO of the Dutch dairy and nutrition business Royal Friesland Campina and became a non-executive director of Unilever in October last year. Prior to that, he was with HJ Heinz for a decade in multiple leadership roles.

Unilever chairman, Nils Andersen, described Schumacher as a “dynamic, values-driven business leader” who has an excellent track record in the global consumer goods industry.

“The board looks forward to Hein realising the full potential of Unilever as a winning business that delivers long-term growth and value for all its stakeholders.”

Schumacher said: “I am delighted to have been appointed to lead Unilever. It is a business with an impressive global footprint, a strong brand portfolio, a talented team and an enviable reputation as a leader in sustainability.”

He replaces Alan Jope, who announced his intention to retire in September last year.