2023 in review: The news makers

The big stories in 2023 had elements of surprise, shock, and sometimes sheer incredulity. Kim Berry reflects on the news that caught your attention.

There were some key themes in 2023 – big investments, changing priorities, sudden movements, and too many voluntary administrations.

The year kicked off with Endeavour Group buying Cape Mentelle Winery in the Margaret River – the first wine story in what turned out to be a tough year for the industry. It seemed few wineries were not carrying out strategic reviews of their operations.

Casella Family Brands (#54 in 2023's Top 100) sold 35 vineyards in late 2022; it fell seven places this year and its revenue dropped 4.56 per cent. Australian Vintage (#77) called in E&P Corporate Advisory to review its operations. While it fell five places, it recorded a 4.94 per cent revenue increase. And Pernod Ricard (#40) has called in Morgan Stanley and JPMorgan to review its Australian assets.

Treasury Wine Estates (TWE) (#10) may have ended the year with two major acquisitions, one costing a breezy $1.6 billion (premium Californian winery, Daou Vineyards), but it too launched an operations review in May, and then acted fast. Within two months TWE had offloaded vineyards in South Australia and New South Wales; sold 4770 megalitres of permanent water licences to Duxton Water for $39 million; and announced the 2024 closure of its commercial winery, Karadoc. As TWE chief supply officer Kerrin Petty said, rightsizing its sourcing footprint meant divesting some assets while looking at others that would grow its premium and luxury portfolio.

Accolade Wines sold Arras in 2023.
Accolade Wines sold Arras in 2023.

Accolade Wines (#49), the country’s second largest wine group behind TWE, started its asset review in late 2022, and since then has sold wineries and vineyards in Western Australia and Victoria. Its revenue dropped 11.65 per cent this year and the company fell seven places in the Top 100.

In a move some questioned – considering the premium and luxury market segments are the only ones showing signs of life – Accolade sold its premium label House of Arras, its Bay of Fires winery, and vineyards to Handpicked Wines for an undisclosed sum.

But Accolade has significant levels of debt, exacerbated by increasing interest rates. In December, it was reported that Samuel Terry Asset Management and Bain Capital had raided Accolade’s debt stack and bought $50 million of it at 38-40 cents in the dollar.

We are family

One of the biggest breaking stories of 2023 was Beam Suntory and Frucor Suntory (#63) announcing they were joining forces to create a $3 billion beverage business.

Oceania Suntory will incorporate alcohol and non-alcohol beverages to become the fourth largest ANZ beverage group in the region, with complete end-to-end control of its portfolio, including manufacturing, sales, and distribution.

Beam Suntory MD Mark Hill and Frucor Suntory CEO Darren Fullerton.
Beam Suntory MD Mark Hill and Frucor Suntory
CEO Darren Fullerton.

Suntory Oceania’s 40 brands include Jim Beam and Maker’s Mark Bourbon, Hibiki Japanese Whisky, Canadian Club Whisky, -196, V Energy, Maximus, and Suntory BOSS Coffee as well as other premium spirits, RTD (ready-to-drink) alcohol beverages, juice, water, soft drinks, coffee, energy, and sports drinks.

At the heart of the deal is the $400 million net zero production facility being built in Ipswich, Queensland. It is going to include beverage processing, packaging, warehousing, and distribution that will be able to produce up to 20 million cases of drinks a year when it opens in mid-2024, with the site designed for significant scaling to more than 50 million cases in the future.

Meanwhile, Asahi (#4) was brewing its own big news, with Asahi Group CEO Oceania, Robert Iervasi, resigning with immediate effect in June. He had been with the company for 16 years and said it was time for a career break. CFO Amanda Sellers stepped into the hot seat as interim CEO.

In October, SPC (#75) announced Iervasi had joined its board. 

Hard times

Asahi caused a ruckus in 2023 when its subsidiary CUB launched Hard Solo, the alcoholic version of soft drink Solo, with branding that had similarities to its non-alcoholic sibling.

Asahi did cause a ruckus when its subsidiary CUB launched Hard Solo, the alcoholic version of soft drink Solo, with branding that had similarities to its non-alcoholic sibling.

Concerns were raised it could appeal to minors and the ABAC Adjudication Panel agreed. It ruled that the Solo name and other branding features would elevate the appeal of Hard Solo and create an illusion of a smooth transition from the non-alcoholic to alcoholic variant of Solo. ABAC said the level of awareness about the brand Solo, meant it could appeal to children. CUB wasn’t that happy about it but accepted the decision. It renamed the drink Hard Rated and was redesigning the packaging.

Interesting sidenote – Solo is in around 1.7 million Australian homes at any one time, we drink almost 60 million litres of it a year, and it turned 50 in 2023.

And speaking of a ruckus, the infant formula industry had quite the year. 

At the backend of 2022, Bubs Australia was riding a high having been awarded Australian Exporter of the Year and its US success with Operation Fly Formula. But lacklustre half yearly financials in early 2023 landed with a thud. Matters moved swiftly with “board changes” in April to the ousting of founder and CEO, Kristy Carr, and her closest ally and board chair, Dennis Lin, in May. Carr and Lin then called for a spill motion, putting forward an alternative leadership team. At the July EGM, the existing board received more than 70 per cent of the vote. With Reg Weine now CEO and a five-point plan to turn the company around, may 2024 be less dramatic.

Not to be outdone, The a2 Milk Company (a2MC) (#23) and Synlait (#26) were having their own disagreements. In April, Synlait significantly lowered its FY23 guidance, blaming its largest customer for reducing its orders. Not only is a2MC that largest customer, it also owns 20 per cent of Synlait. Awkward.

Then in September, a2MC told Synlait it was cancelling its exclusivity contract to produce its Stages 1-3 a2 Platinum and China label infant formula, but it still valued Synlait as an important supplier. I think that’s the corporate equivalent of a break-up but saying you wanted to be friends. Needless to say, the companies are now in arbitration. 

Expand, build, update

Table of Plenty founders Kate and Tal Weiss.
Just over 18-months since Andrew Loader and Gavin Evans launched Openway Food Co., the health foods company has opened a $10 million factory to bring manufacturing onshore.
Openway Food Co. brand Table of Plenty's
founders Kate and Tal Weiss are bringing manufacturing onshore.

Openway Food Co, launched in 2021 by Andrew Loader and Gavin Evans, with financial backing from Five V Capital, unveiled a new $10 million factory in Melbourne. The build meant one of its companies, Table of Plenty, could bring the manufacturing of its coated Mini Rice Cakes back onshore, creating around 40 jobs in the process, and economic benefits for rice and ingredient suppliers.

Also bringing manufacturing back onshore was Mars. In June, Mars Petcare Australian announced it was investing $112 million in its Wodonga plant, creating 60 news jobs in addition to the onshoring. The project will create two advanced single serve pouch lines to produce Whiskas, Advance, Optimum, Dine, and new product ranges. It will have an annual 25kT capacity, or 290 million pouches.

Australians spent $33.2 billion on their pets and 51 per cent of that ($17 billion) was spent on food. Mars Petcare said that pouch products have the largest share (53 per cent) of the Australian wet cat food market and show significant growth of 19 per cent year-on-year.

One company clearly wanting in on that was Woolworths, which at the end of 2022, acquired 55 per cent of Petspiration Group for $586 million. It’s the parent company of PETstock, which has 276 stores, established eCommerce platforms, a 2.4-million-member loyalty program, and its own brands including Caribu and Glow.

Also seeing potential in an investment was Thomas Foods International (TFI) (up three spots to #6) when it bought the remaining 50 per cent of sheep processor Frew Foods. It has committed to a $100 million staged upgrade of the facility including a new coldstore, protein processing plant, and significant automation.

Also, one leaning into a 2023 upgrade was JBS (#2), specifically the $77 million spend at its Dinmore meat processing plant in Ipswich, Queensland. It is now the largest beef processing plant in the Southern Hemisphere. Lots of automation, a state-of-the-art trim facility, capable of handling higher processing volumes, and employing another 500 people as it brings on a second shift. (There’s more about JBS’ investments in its Top 100 listing.)

While some companies were making investments, some were having them taken away. More than a year after a $113 million Modern Manufacturing Initiative (MMI) grant was awarded to Australian Plant Proteins (by the previous Coalition government), it was taken away (by the current Labor government).

Australian Plant Proteins, Australia’s first commercial plant protein fraction company, had developed a proprietary fractionation process for pulses that retains protein quality during production.

In doing so, APP added a major value-added step for Australia’s legume and pulse supply chain that didn’t previously exist. Australia produces around four per cent of the world’s pulses, which could see it become a major supplier to the growing plant protein industry.

Its work was noticed by global agrifood company, Bunge, which invested $45 million in 2021.

The following year, APP, Thomas Foods International (#6), and pulse and ingredient supplier, AGT Foods Australia, announced an audacious plan to construct three plant protein manufacturing facilities in South Australia to supply global markets. It would quadruple pulse protein production in the state and cost $378 million.

The federal government, two months out from the federal election, allocated the project $113 million via the MMI.

When grilled in Senate Estimates about why the grant had been withdrawn, department secretary Meghan Quinn explained that when millions of dollars are allocated through complex collaborative grants, there are a lot of details that need to be negotiated. In this instance, it had not been done at the initial filtering and application stage before the election, but instead left to the negotiation and execution stage, after the election. And a lot can change at federal and state level in 12 months.

APP co-founder Brendan McKeegan told Food & Drink Business that the decision didn’t change anything for the company and that it was progressing with its plans. What a relief.

And as 2023 was drawing to a close, industry minister Ed Husic announced the National Reconstruction Fund was open and ready for business.

 

Packaging News

Revenues were down by more than 13 per cent in both Flexibles and Speciality Packaging at Pro-Pac for the half year to December 31, in what the company said was a volatile and challenging market.

Visy is launching an Australian-made retail paper bag today, made from thicker paper containing recycled content. The new bags are recyclable through Australian kerbside recycle bins.

Jet Technologies – a leading provider of print, packaging and industrial solutions in Australia and New Zealand – has opened its first distribution centre in Brisbane.