Coles has offered struggling processor Simplot a contract offer to supply it with more frozen vegetables and potato as part of a move to boost its private label offerings in this category.
Coles already sources private label products from Simplot, but the five-year offer would see Coles increase its branded frozen vegetable and potato volume by over 12 per cent as part of a new local sourcing commitment by the retailer.
Coles also said its Smart Buy frozen vegetables and potato products will be 100 per cent Australian grown by early 2014.
According to the retailer, 100 per cent of its Coles Brand frozen vegetable and potato products are already sourced from Tasmania and New South Wales.
Coles has said that its new offer will increase the total annual volume of produce sourced from Australia to over 19 million kilograms, an increase of around 2.4 million kilograms.
Simplot, which makes brands like Birds Eye, Leggo's, Edgell, John West and Lean Cuisine, recently advised employees that its vegetable processing plants in Bathurst in NSW and Devonport in Tasmania were under threat of closure.
The company pointed to unsatisfactory financial returns arising from a very competitive food industry environment and unsustainably high costs associated with manufacturing in Australia. Simplot has also sought government funding and tax concessions to help secure its future.
Simplot joins CCA's canned fruit manufacturer, SPC Ardmona, in battling with local conditions. SPC Ardmona is seeking temporary tariff protection against imports after falling sales led it to cancel contracts with 60 fruit growers earlier this year. The company has since signed a $7 million privatel label deal with Woolworths to provide the retailer with canned fruit.
Coles said the new contract would deliver long-term certainty to both Simplot and hundreds of Australian vegetable growers by delivering increased volumes in both private label and proprietary brands.
“Simplot has been a valued supplier of Coles for over 15 years and together we have launched great products, such as 100 per cent Australian grown Coles Brand frozen vegetables,” said John Durkan, Coles chief operating officer.
“This new offer, including the sourcing of Smart Buy frozen vegetables from Australia, is a further demonstration of our commitment to Simplot, local growers and to delivering a quality product for the value-conscious customer.”
Simplot chief Terry O'Brien is currently in America where decisions on the future of the company's Devonport, Tasmania and Bathurst, NSW vegetable plants is being decided at board level.
AUSVEG spokesperson, Andrew White said it was encouraging to see the retail sector working closely with the food processing industry which is important for the viability of Australian vegetable and potato growers.
“With $908 million of vegetable imports flooding our shores in 2011-12, it is imperative that processing operations like Simplot’s in Australia are kept afloat for the sake of Australia’s food security.”
The new Coles offer could help Edgell manufacturer, Simplot, which has said that its vegetable processing plants in Bathurst in NSW and Devonport in Tasmania are under threat of closure.
