Bega Groups says following a 12-month review, the lack of a buyer and ongoing annual operating losses of $5-10 million are behind its decision to wind down and close peanut processing business, Peanut Company of Australia (PGA). Bega acquired the company in 2017.
There will be a phased shut-down of its Kingaroy and Tolga processing facilities over the next 18 months, which currently employ 150 people. Bega CEO said one off cash shutdown costs will primarily relate to redundancies and were in the range of $5-10 million.
Its processing facilities at Crestmead and Malanda will continue operating.
The company said PGA had been under sustained financial pressure prior to its acquisition and despite upgrades to site safety and initiatives to boost production, it hadn’t been able to develop a sustainable business model.
“Continued financial losses and industry challenges led to the need for the review and ultimately the conclusion that the business would be better served by a change to more local and focused ownership or in the absence of that being achieved, unfortunately a closure.
“We announced the strategic review over 12 months ago and we have pursued several options to sell the business. Unfortunately, we’ve been unable to secure a buyer that could sustain a long-term future for employees and growers,” Findlay said.
The peanut industry in Australia is facing a combination of headwinds including increased competition from imports, stronger returns for growers from other crops, high input costs and declining production.
Bega is the market leader in the Spreads category, which includes Vegemite, Bega Peanut Butter, Bega Simply Nuts, and B Honey. In 2021, its peanut butter portfolio accounted for almost 60 per cent of Australia’s peanut butter market.
