News

Superannuation giant Aware Super and a syndicate of elite Australian athletes have backed Mexican food chain Guzman y Gomez in a share sale which values the company at $1.5 billion.

Guzman y Gomez founder Steven Marks said the investments were a testament of the group’s recent past performance and plans for the future. “We’re well positioned to build and bring even more [Guzman y Gomez eateries] to life here in Australia and globally,” he said.

The investors have not disclosed the value of the secondary share sale, but the investment was led by Aware Super, which has $150 billion worth of Australians’ retirement savings under management.

The deal values the Guzman y Gomez at a fully diluted market capitalisation of $1.5 billion.

Athletic Ventures, the investment syndicate founded by recently retired Greater Western Sydney Giants player Matt de Boer, also made its third consecutive investment in Guzman y Gomez as part of the sale.

The group, which boasts 100 members including Test cricketer Mitchell Starc and Wallabies captain Michael Hooper, has been on the lookout for high-growth start-up businesses.

De Boer said the athlete group’s belief in the Guzman y Gomez business “grows stronger by the day”.

“Most importantly as an athlete community, we understand deeply what high-performance looks like, and continue to be blown away by the quality of the management team and their continued execution,” he said.

The United Nations food agency’s world price index fell for a sixth month in a row in September, receding from all-time highs posted earlier this year after Russia invaded Ukraine.

The Food and Agriculture Organization (FAO) said on Friday that its price index, which tracks the most globally traded food commodities, averaged 136.3 points last month versus a revised 137.9 for August.

The August figure was previously put at 138.0.

The index has fallen from a record of 159.7 in March. The September reading was, however, 5.5 per cent higher than a year earlier.

The latest drop was driven by a 6.6 per cent month-on-month fall in vegetable oil prices, with increased supplies and lower crude oil prices contributing to the decline.

Sugar, dairy and meat prices all slipped by less than one percentage point, relieving inflationary pressures.

By contrast, FAO’s cereal price index rose 1.5 per cent month-on-month in September, with wheat prices climbing 2.2 per cent because of concerns over dry crop conditions in Argentina and the United States, strong EU exports and heightened uncertainty over access to Ukrainian Black Sea ports beyond November.

Rice prices rose 2.2 per cent, partly because of worries over the impact of recent severe flooding in Pakistan.

In separate cereal supply and demand estimates, FAO lowered its forecast for global cereal production in 2022 to 2.768 billion tonnes from a previous 2.774 billion tonnes.

That is 1.7 per cent below the estimated output for 2021.

“A lower global coarse grain production forecast makes up the bulk of this month’s overall cutback, as adverse weather continued to curb yield prospects in major producing countries,” FAO said.

World cereal use in 2022/23 is expected to surpass production at 2.784 million tonnes, leading to a projected 1.6 per cent fall in global stocks compared with 2021/22 to 848 million tonnes.

That would represent a stocks-to-use ratio of 29.7 per cent, down from 31.0 per cent in 2021/22 but still relatively high historically, FAO said.

Cereal and snack company Carman’s has made its first-ever acquisition – of Adelaide-based snack brand Fruit Wise. Details of the purchase have not been disclosed.

Carman’s founder Carolyn Creswell said the purchase marked an exciting venture for the company as it brings together two like-minded businesses with a passion for delicious food.

“My kids have loved Fruit Wise fruit straps for over 15 years, so much so they were the number one school lunchbox request,” said Creswell.

“Given how much we all loved the product, I decided to pick up the phone to see if there was any opportunity to work together.” 

After a year of discussions, Creswell said the parallel similarities and outlook on healthy snacking helped finalise the deal. 

“It’s truly a moment that I’m so proud of, and I just can’t wait to watch Carman’s continue to grow,” she added.

Creswell explained she holds the Australian-owned brand close to her heart, which is why Fruit Wise will remain in its location at Adelaide Hills.

“With so much uncertainty in the world over the last two years, locally made products are becoming increasingly important to Aussie families,” she added. 

 “That’s why I place so much pride in the fact we’re 100 per cent Australian-owned and manufactured.” 

Bridget Beal, MD at Fruit Wise, said being family-owned for 15 years, the brand wanted to ensure it was in good hands before “passing over the reins”.

“After speaking with Carolyn, we knew straight away that this was the right move for Fruit Wise,” proclaimed Beal. “We can’t wait to watch Fruit Wise grow under the care of Carman’s!” 

Liquor retailer Endeavour Group says Australians are rushing to book in a pub lunch for Christmas as the company’s buoyant hotels business offsets the predicted slowdown in retail sales.

Boss Steve Donohue said Endeavour’s hotels segment had benefitted from bigger groups of diners making bookings in the first weeks of the new financial year, while Christmas reservations were well up on last year.

“We are seeing larger groups coming together - a 10 per cent increase over the size of the booking,” he said.

“We expect to serve around 44,000 Christmas covers - so Christmas lunches, Christmas dinners - and at the moment our forward bookings are double what they were at the same time a year ago. We have demand for about a third of the seating capacity that we’ll have for Christmas already.” Those figures put the business in a strong position into the end of the calendar year, he said.

Endeavour, which operates the Dan Murphy’s and BWS chains, generated just over $3 billion in sales for the first quarter of the 2023 financial year, with sales from its hotels up 90.8 per cent to $538 million compared to the COVID-hit first quarter of 2022 as customers spend up on food and accommodation.

Asked about cost of living pressures, Donohue acknowledged that families were looking for better value, and the affordability of the pub experience could be a factor in increased interest in hotels.

“A trade down out of fine dining, well, that is potentially a factor at play out there.”

As expected, sales across the company’s retail drinks business have slowed, however, with sales down 6.2 per cent compared with the same time last year as the incredible demand seen throughout COVID lockdowns continues to wane.

The retail business generated $2.5 billion in sales during the third quarter, which still represents a three-year compound annual growth rate of 4.4 per cent.

Donohue was still upbeat about retail sales, however, noting that the festive season rush had always been a core part of the company’s annual sales.

Last year’s Christmas trading period was marked by supply chain disruptions across the business, but the business has worked hard to ensure it has enough stock over the next couple of months.

“It worked out ok [last year], but we don’t want those sorts of challenges this year. We are pulling forward some of our inventories in store a bit earlier.”

Endeavour shares jumped over 2 per cent on the update and closed the session at $6.97.

UBS analysts noted that while the slowdown in retail sales had been predicted there were some bright spots for Endeavour, including the growth of its specialist wine, beer and spirits business, Pinnacle.

“Reopening leverage is evident in the strong Hotels result as the consumer socialises,” Shaun Cousins said in a note to clients.

Australia’s largest fresh food producer has downgraded the earnings guidance for its citrus business after excessive rainfall and lower temperatures damaged its orange and mandarin crops.

ASX-listed Costa Group’s citrus is grown in three regions: roughly 40 per cent in the Riverland area (South Australia), 40 per cent in Sunraysia (straddling the NSW-Victoria border) and 20 per cent in central Queensland.

The company said on Monday that adverse weather conditions had taken a heavy toll on its citrus crop across the country.

“The weather impact has been pretty consistent run across the whole country, which is very unusual – normally you have a north-south divide – but this year, La Nina and other influences have had an effect right across the country,” said Costa interim CEO Harry Debney.

The ASX company had flagged earlier this year that excessive rain would result in poorer quality citrus. Those conditions have continued, leading to higher labour, pest and disease control costs.

Costa Group’s Queensland citrus crop has been harvested and packed, while its southern crops in the Riverland and Sunraysia regions are about 80 per cent through the harvest, with late navels and some mandarins still to be packed.

The lower quality crop had resulted in “considerably lower” volumes, down “at least 20 per cent” on expectations, Debney said. This is expected to affect the bottom line of Costa’s citrus business.

“The net outcome to date plus the forecast for the balance of the citrus season is expected to translate into full year EBITDA-S for the Citrus category that is considerably lower than previously forecast.”

The revised earnings guidance was poorly received by the market, with investors sending Costa Group’s shares down 13.4 per cent to $2. The company’s stock has slid 35.4 per cent this year.Costa’s other businesses, including berries, tomatoes and mushrooms, are not expected to be as badly affected by the rain as these crops are grown undercover in glass houses, unlike citruses which is grown in fields.

However, reduced sunlight will have some impact, Debney said. “They are affected a little bit by low light, but nowhere near the same extent as the citrus crop.”

Costa’s avocado business has suffered for a number of years thanks to a national oversupply that has pushed down retail prices.

Overall, the company’s full-year earnings for the 2023 financial year are expected to be “marginally ahead” of the previous financial year. Costa is predicting more normal weather conditions, though Debney acknowledged the business could be taken by surprise again.

“Who knows? The Bureau of Meteorology is calling for more moderating influences from November, and let’s hope they’re right.”

Despite the lower packing volumes, citrus prices are not expected to increase significantly, although there will be some rise.

Debney stepped back into the CEO role in late September after former chief Sean Hallahan suddenly resigned from the position, sparking investor concerns.

Before Hallahan, Debney was Costa’s long-time chief, having spent more than a decade in the role.

Australians have been warned to brace for another hit to the cost of living as the floods devastating parts of Victoria and NSW drive up food prices, and require billions of dollars to be spent on assistance to those affected, Treasurer Jim Chalmers has warned.

Speaking ahead of his first budget, to be handed down next Tuesday, Dr Chalmers also opened the door to a longer-term root and branch look at the National Disability Insurance Scheme, which is spiralling in cost and is now one of the top five demands on the budget.

The NDIS, which was originally forecast to cost no more than $25 billion a year and grow at 4 per cent, now costs $29 billion a year, is growing at more than 12 per cent, and is forecast to hit $60 billion a year by 2030.

“We believe in the NDIS, and we want to make sure it’s delivering for people with a disability in this country,” Dr Chalmers said.

“Part of that means making sure that the money that’s spent on that, really quite extraordinary sums of money ... is doing the job that it’s supposed to do.

“We don’t have a lot of room in this budget to spray money around unnecessarily. Where we can make programs more efficient, we should.”

However, so-called “tough measures” to tackle the huge structural costs imposed by the NDIS, health, aged care, interest payments on debt and defence will be the focus of subsequent budgets.

Next week’s offering, Dr Chalmers confirmed, will basically be a bread and butter exercise, and will do little more than reconciling Labor’s big election promises on cheaper childcare and prescription drugs, and updating the economic forecasts.

Due to the floods that have hit some of the east coast’s major food production regions, and caused extensive property damage, the forecast deficit for this year is likely to be worse and inflation possibly higher, Dr Chalmers suggested.

“We need to brace ourselves for the impact of these natural disasters on the cost of living,” he said.

“We’re talking here about some of the best growing and producing country in Australia, and it has been seriously impacted – whether it’s the destruction of crops, or the inability to access some of these farmlands, whether it’s livestock and other consequences.

“Australians do need to brace for a cost-of-living impact from these floods. These are likely to push up the cost of living when Australians are already under the pump. It will also have obvious consequences for the budget.”

The treasurer’s office said it was too early to estimate the inflationary and budgetary impact of the floods.

Meanwhile, Prime Minister Anthony Albanese defended the decision to axe billions of dollars in Coalition discretionary grants, saying they lacked probity.

“If you want to know where my government will approach community infrastructure grants, it’ll be by delivering through local government,” he said.

“That is the way that you ensure probity, and the way that you ensure value for money is by asking local communities through their elected local representatives what their priorities are.

“I’m not a big fan of funding one private for-profit corporation, which is in competition with their neighbour next door.

“Whether that be a farm, or whether it be other produce as well, I think that gets you into real difficulty, and probity issues is the polite term to use.”

Vinomofo has admitted to a data breach where the personal information of customers has been stolen.

The online wine retailer sent customers an email about the breach on Monday evening. It revealed that some of the details that may have been stolen include customers’ names, gender, dates of birth, addresses, email addresses and phone numbers.

However, Vinomofo said no financial information was taken in the breach. Vinomofo account passwords are also apparently safe, so in theory no one can look at your order history.

“Vinomofo does not hold identity or financial data such as passports, drivers’ licences or credit cards/bank details,” the company said.

According to the retailer, the customer information was accessed from a testing platform. While it is not connected to the live Vinomofo website, it did contain real information.

“Our investigation established that customers’ and members’ information on our database on this testing platform was unlawfully accessed by a third party,” Vinomofo said in a statement.

“However, our cyber security and forensic specialists have assessed that the risk to our customers and members by this information being accessed is low.”

It’s currently unclear when the incident occurred or how many customers were impacted.  SmartCompany has contacted Vinomofo for comment and clarity.

Vinomofo said it has reported the incident to the Australian Cyber Security Centre (ACSC) and the Office of the Australian Information Commissioner (OAIC). It also said it is now working with cyber security experts, such as IDCARE, to investigate the breach as well as strengthen its security systems.

The customer email goes on to provide customers with information on how to avoid potential scams off the back of the breach, such as fake emails and texts. They also recommend that customers change their Vinomofo account passwords as an extra precaution despite them not being part of the breach.

Major data breaches seem to be on the rise

This is just the latest in a string of data breaches across the country in recent weeks. Optus kicked things off with one of the biggest data breaches in Australian history, which affected customers’ personal and identifying information, including passports and driver’s licences.

This was swiftly followed by breaches across Telstra, Woolworths and Medibank, sparking fresh conversations around how customer data is stored by Australian companies, as well as people’s right over their data. It has also resulted in Attorney-General Mark Dreyfus calling for “urgent reforms” to the Privacy Act.

Under the Notifiable Data Breaches scheme, an Australian company must disclose a data breach if its likely to cause “serious harm”. This can include identity theft, impact to credit reports, fraud, physical and psychological harm or impact to reputation.

Grocery retailers say consumers can finally expect better prices as fresh produce flows back into stores, even as growers continue to contend with mounting production costs.

After months of constrained supply, due to extreme flooding along the east coast, supermarket retailers said this week that conditions have at last stabilised and could improve further.

At Coles, an increased supply of strawberries, corn, capsicums and citrus have flowed through for the start of spring, while tomatoes have also rebounded as weather conditions improved along the east cost.

“We now have strong volumes across many lines, although some are still in restricted supply,” the supermarket giant said, noting that chillies continue to be impacted by cooler weather in Queensland.

Woolworths has noted the same trend, flagging that berry suppliers have forecast strong volumes in the lead-up to Christmas.

“Pleasingly, the warmer weather has brought with it a return to lower prices, with a range of produce including lettuce, berries, tomato, broccoli and cucumber back in strong supply,” a spokeswoman said.

An Aldi spokesman said consumers will continue to see an increased range of produce over the coming months, while categories that have been under pressure have now bounced back. “The supply of lettuce, loose-leaf greens and other fresh produce has stabilised as a new yield of crops have been picked and delivered to stores, resulting in a normalisation of prices and availability.”

Third La Nina not expected to dampen availability

But while the days of the $11 a head iceberg lettuce are over for now, produce growers are divided about future pricing and availability, with many reporting they are still facing uncertainties about the weather outlook and rising cost pressures.

Last week the Bureau of Meteorology declared a third consecutive La Niña in Australia, and while conditions aren’t looking as tough as previous years, the threat of more bad weather is hovering over producers.

Spokesman for industry group AusVeg, Shaun Lindhe, said it was hard to predict whether another season of heavy rains would once again impact vegetable growers, but hoped that in cases where one region was impacted, other states could pick up the slack.

“We have a national supply chain and it’s quite resilient,” he said.

While crop output has improved producers were still feeling the weight of increased supply chain costs, ranging from fuel to energy use and fertiliser, Lindhe added.

Other independent fresh produce growers and farmers are optimistic that the upcoming La Niña will be less severe than the previous two periods and won’t result in the same crippling food shortages.

The well-documented lettuce shortages were because Queensland and NSW, which produces 80 per cent of the leafy green vegetables for the entire country during winter, was decimated by flooding during June and July.

“The reverse now occurs in summer, where 80 per cent of produce [like] green leafy veggies, the ones that have been impacted during winter, are actually produced out of Victoria,” said Freshmark chief executive Meegan George. Freshmark represents the entire supply chain of growers, wholesalers, retailers across Flemington’s Sydney Markets and more.

“If we are having a weather prediction of a mild La Niña, it means that produce will not really be in lower supply … there will still be an abundance of availability.”

The milder winter also offers another opportunity for NSW and Queensland growers to plant another crop, she added, which is being sold in stores right now. Meanwhile, Victoria is preparing to harvest their crop in about two weeks.

“So we are going to see this lovely crossover of the three states all producing top-quality in the coming two weeks and for weeks afterwards,” George said.

“What that means for consumers is that they will have a huge abundance of quality, supply, variety and prices will come down as well.”

The only two types of produce that are yet to fully come online are beetroot and cabbage, but supply is expected to increase in the coming weeks.

While farmers have developed resilience to rapidly changing weather conditions, George said it was impossible to put a timeframe on how long good availability of fresh produce would last. “Farmers are incredibly used to the weather being a very capricious sister of theirs.”

Meanwhile, some industry voices are warning consumers to get used to food shortages and ensuing price rises occurring more frequently amid increasingly unpredictable weather patterns.

Catherine Velisha, the managing director of Velisha Farms which supplies vegetables to Aldi stores across Victoria and NSW, is calling for consumers to re-evaluate the value of fresh produce and consider input costs like labour, packaging, fuel and fertiliser that have all increased.“The need is for us to be aware that [shortages are] going to happen, and [to] prepare our mindsets for not having all produce available so readily all the time … We’ve had it very good for a very long time,” she said.

Sean Hallahan, the CEO and MD of listed Australian vegetable grower and marketer Costa Group, has stepped down after five years with the company.

Harry Debney has been appointed interim CEO and Hallahan will stay with the company to support the transition. The company is recruiting a permanent replacement.

Hallahan was the company’s COO until March last year, when we stepped into the role of CEO and MD.

Neil Chatfield, chairman of Costa Group, says Hallahan has played a pivotal role in the company’s development and growth. 

“We understand that the last two years, particularly in Victoria, have taken a large toll on the business and personal lives of individuals,” said Chatfield.

“Despite a challenging period with the Covid-19 pandemic and extreme weather conditions, the company persevered and maintained its strong financial position thanks to Hallahan’s leadership,” he continued.

Hallahan said he is proud to leave the company in a strong position financially and operationally despite the challenges of “an intense couple of years in agriculture” and the overlay of the pandemic.

“It has been a privilege to lead Costa and to have been part of an outstanding team of people for five years,” he added. “I wish Costa and its employees all the best for the future”. 

Interim CEO Debney has been a non-executive director for the company since July last year, prior to which he was CEO from 2010 to 2021 and led the company through its IPO in 2015. 

“Harry has an intimate knowledge of the company and is regarded as one of Australia’s leaders in horticulture,” Chatfield remarked. “He is the right person to assist the company as it transitions to a new CEO”. 

Beer and soft drinks giant Asahi Beverages, which owns the Carlton & United Breweries business which makes Victoria Bitter and Carlton Draught, has acquired premium low-calorie soft drinks and mixers group StrangeLove nine years after it was established.

Asahi Beverages chief executive Robert Iervasi said StrangeLove had been growing fast in a broader category which would largely be immune from an economic downturn as consumers continued to trade up to higher-end products.

“We actually think the premiumisation trend will continue. People still want to treat themselves,” Mr Iervsai said.

“Beverages have been quite resilient to recessionary environments.”

StrangeLove was founded in Byron Bay in 2013 by James Bruce and Stafford Fox. It makes about 55 per cent of its sales in hospitality venues such as restaurants and bars, 35 per cent in retail, and 10 per cent from the online channel.

It has 25 products including Tonic No. 8, Lo-Cal Yuzu, Double Ginger, “Fancy Lemonade” and a range of premium sparkling mineral waters. The company, now based in Melbourne, uses outside contract manufacturers to make its drinks.

Co-founder Mr Bruce said revenue was up 100 per cent in the past two years despite the COVID-19 restrictions in 2021 which hurt the hospitality industry.

The business has expanded its presence in the supermarket channel, and is now stocked in the aisles of about 300 Woolworths supermarkets, along with traditional liquor retailers such as Dan Murphy’s, owned by Endeavour Group, and a range of Coles Group liquor stores such as First Choice.

Mr Bruce said StrangeLove’s Tonic No.8 was the biggest selling product line, but it was relatively even across the range. The company was set up in 2013 amid Byron Bay’s burgeoning “organic food scene”.

“I was having a bit of a mid-life crisis at age 30,” he said. The unique name came about as a reference to people wanting to drink healthier products with lower calories and lower sugar content.

“Originally it was about self-love and taking care of yourself,” he said. It was not a reference to the 1960s black comedy movie Dr Strangelove directed by Stanley Kubrick.

Mr Iervasi said retailers were allocating more shelf space to non-alcoholic premium beverages, while Asahi would also expand StrangeLove’s reach through its existing hospitality venues distribution network.

He declined to comment on the purchase price. “It was an exciting business that we had identified and we had been watching,” he said.

Extra grunt

Asahi Beverages intended to run StrangeLove as a stand-alone business, but use the Asahi distribution clout to bring it to more consumers.

“That helps us maintain the DNA of what it is,” Mr Iervasi said. Asahi already has a large softdrinks business in Australia and is the owner of the Schweppes range.

The Japanese-owned conglomerate bought Carlton & United Breweries for $16 billion in 2020, giving it ownership of beer brands Victoria Bitter, Carlton Draught and Crown Lager. Asahi has also been expanding in other drinks segments, buying Australasian coffee business Allpress in 2021.

CUB in the past few years has bought up several craft beer brands to add extra grunt, as the craft beer segment grows much faster than the mainstream beer category. It acquired Pirate Life, 4Pines and Balter Brewing in quick succession from 2017 to 2019.

StrangeLove’s Mr Bruce said one of the larger competitors in the premium softdrinks and mixers category was Fever-Tree, owned by a British company. “There’s competitive tension there for sure,” he said.

Mr Iervasi said StrangeLove being a home-grown Australian brand should help its penetration in the local market.