FMCG giant Mars has welcomed veteran Bill Heague back to the Australian division to take up the role of general manager of Mars Food Australia.
Heague first joined Mars in 2008 as a sales manager for Mars Food Australia, before departing to take up a position with the company in Europe after five years.
He worked as market director, Multisales, for Mars in the Czech Republic and Slovakia and since 2018 has managed Mars’ Irish Multisales business.
Heague said he is thrilled to be returning home to Sydney to take up the new role which commences from today, Friday November 1.
“I’m a foodie at heart and very excited about the major advances and significant challenges we are seeing in the food industry, both in Australia and around the world, and the innovation that our business can bring to the table,” Heague said.
Mars Food Australia manufactures popular food brands such as
Uncle Bens, Masterfoods, Dolmio at its Wyong plant and is responsible for the Seeds of Change accelerator program.
New Blackmores chief executive Alastair Symington has warned that higher raw material and ingredient costs are a handbrake on the business, which is also grappling with extra costs as it takes control of a $53 million tablet-making factory in Melbourne.
Mr Symington, who took the helm in mid-September from interim chief executive and major shareholder Marcus Blackmore, said profits for the first half of 2019-2020 were likely to be at similar levels to the June half of 2018-19.
He said there was a global shortage of glucosamine, used in many anti-arthritis and joint pain products, which had pushed up prices by 25 per cent. "It's one of the big hitters in the category,'' he said after Thursday's annual meeting.
Mr Symington also announced on Thursday a host of management changes, including hiring Ayumi Uyeda as managing director of Australia and New Zealand.
Ms Uyeda is currently working with pharmaceuticals giant Bayer in New York as a global head of a division selling Aspirin. The position has been vacant since the departure in May of David Fenlon, who became chief executive of skincare products group BWX.
Blackmores is also making changes in the boardroom, with chairman Brent Wallace signalling on Thursday that he would be bowing out as chairman and stepping off the board after 14 years as a director.
Marcus Blackmore, who owns 23 per cent of the company, will be staying on as a director but relinquishing all of his day-to-day executive duties.
Mr Blackmore added significantly to his executive workload in February when he stepped up to run the business day-to-day as interim chief executive after Blackmores' previous chief executive, Richard Henry, departed in February after a profit slide.
Mr Symington said one of his main priorities was to lift the performance of the Australian business, because consumers in China aspired to buy the top Australian brands. The Australian vitamins market had been flat overall for about five years.
"I don't think there's been anything really innovative in the past two years,'' he said. Blackmores wanted to be on the front foot in driving category growth.
There would be more emphasis in Blackmore's marketing on sustainability and environment. "My intention is to really set sharper targets on sustainability''.
He also said Blackmores needed to expand its in-country reach in China through a multi-channel consumer-based offering for mainland China. He said it was important to have a set of strategic partnerships because of China's ''unique digital ecosystem'' and complex regulatory environment.
Too many 'low-value projects'
Mr Symington also said Blackmores needed to regain its entrepreneurial spirit and become a growth company again.
But there were too many ''low-value projects'' on the drawing-board, and they needed to be cut back so that investment was put behind those capable of making a big splash.
"We've got more than 200 projects in the pipe around innovation,'' he said. "We need to find the right ones.''
Blackmores' overall sales to consumers in China were down 14 per cent for 2018-19 because of changes to e-commerce regulations and smaller daigou traders abandoning their previous robust business model of buying vitamins in Australia from retailers and selling them online in China.
China represents a large chunk of Blackmores' annual sales of $600 million-plus.
Mr Symington said on Thursday that short-term challenges still remained, with the first-half performance expected to be below the same period a year ago. Blackmores had warned that would be the case in August.
He said increased ingredient and raw material costs, along with short-term phasing of transition costs associated with the Catalent transaction would hurt gross margins in the first half of 2019-2020.
Blackmores last week took full control of the Catalent tablet and soft gel capsule factory in the Melbourne suburb of Braeside. It will supply about 50 per cent of Blackmores' total production.
Mr Symington, who grew up in Melbourne, had been based in Dubai with global cosmetics group Coty, which owns brands such as Max Factor and Cover Girl, before taking the Blackmores role.
China was a pot of gold for Blackmores in the heyday of 2015 and 2016 when its share price soared to a record $220 as unprecedented demand from Chinese consumers fuelled an annual profit of $100 million.
Blackmores shares gained 1.8 per cent to $82 by early afternoon on Thursday, but have fallen 33 per cent since the start of January.
Blackmores' 2018-19 net profit after tax suffered a 23.6 per cent slide to $53.4 million, and it cut its final dividend payout to 70¢, from $1.55 a year earlier.
New China boss
Mr Symington also announced on Thursday that Kitty Liu had been appointed Blackmores managing director of China, starting on December 1. She has worked in executive roles in consumer goods companies including General Mills, Reckitt Benckiser and Unilever.
The company’s previous head of China, Sophia Tseng, departed from her role in July to return to family in Taiwan after just a few months in the job.
27 Nov, 2018
Why Halo Top, YoPro and Messy Monkeys are Australia's fastest growing groceries
When Los Angeles-based ice cream maker Halo Top Creamery first entered Australia in 2016 fans who had tried its high-protein, low-calorie desserts in the US petitioned their local supermarkets to stock the brand.
"We've seen an incredible response since launching in Australia," said Doug Bouton, Halo Top's president and chief operating officer.
"We didn't even need a sales team in the beginning because so many of our fans were requesting Halo Top from their local store managers," Mr Bouton said.
Ruth Butler, e-commerce development partner at IRI: "We're relatively health-conscious but when we do indulge we're doing it with more premium products." Janie Barrett
"Traditionally, Aussies may have viewed ice cream as a treat that should only be indulged in occasionally, or as something that should only be consumed if you were going to spend some extra time at the gym to make up for it.
"But that's changed with Halo Top [an entire tub has 20 grams of protein and no more than 360 calories]. It's something that you can treat yourself with on a regular basis and actually feel good about it."
Indulgence foods with a healthy twist were the stars of the $63 billion packaged groceries market in 2018 as consumers sought to reward themselves without ruining the diet.
According to a report by consumer insights and data analytics firm IRI, Halo Top was one of the 10 fastest growing products last year, helping to lift ice cream sales by a healthy 4 per cent, exceeding the 3.3 per cent average growth (or 1.9 per cent excluding tobacco) across the packaged groceries sector.
Other "healthy indulgence" products that grew faster than the market included Danone's YoPro, a high-protein, low-sugar yoghurt, which grew sales $30 million, Ajitas' Vege Chips, which grew sales $15 million, and Messy Monkeys children's snacks, made by Sydney-based health food company Freedom Foods.
An 'overarching trend'
IRI's e-commerce development partner Ruth Butler said the surge in demand for products such as Halo Top, YoPro and Messy Monkeys reflected several consumer trends including indulgence, globalisation and premiumisation.
"There's an overarching trend we are seeing across channels," Ms Butler told The Australian Financial Review.
"There's a lot of blurring going on whether it's the globalisation piece – Halo Top making it big here in Australia and crossing those geographical borders and Australian brands such as Messy Monkey making that trip across the waters to the US and launching there," she said.
"The second is health vs indulgence – products doing really well have that health focus and brands are focused on playing that up [but] when [consumers] indulge they're really going for it.
"That leads to the next trend, premiumisation. A lot of categories within supermarkets are focusing on price deflation and making sure they offer value in their category but we're seeing premiumisation in categories such as ice cream and liquor.
"We're relatively health-conscious but when we do indulge we're doing it with more premium products."
Another common factor across the fastest growing brands is a strong presence online and on social media, including facebook, Instagram and Youtube.
"Two out of three Australian are learning about products online," said Ms Butler. "They might not necessarily buy them online but they're furthering their knowledge online and through social media.
"The brands themselves are taking to social media to promote their products, particularly with Millennials," she said, citing Halo Top, which doesn't use traditional media agencies, and Chobani Flip, which posts videos on facebook and Instagram.
Consumers develop brand awareness online and demand retailers stock the product, reversing the previous order where retailers determined which brand to put on their shelves.
Newly listed Coles is hoping to reinvigorate December-quarter sales by relaunching its hugely successful Little Shop miniature groceries promotion, countering Woolworths' latest collectables campaign.
Little Shop, which helped Coles deliver its strongest same-store food sales growth in almost three years in the September quarter, will relaunch on December 7 and run up to Christmas, with five new festive-season collectables including miniature plastic mince pies, bon bons and gingerbread biscuits.
Coles customers will receive one free Christmas mini collectable for every $30 they spend in store while stocks last. There will also be a limited number of special-edition Christmas stocking collector cases available for purchase for $4.
The Little Shop relaunch comes just two weeks after Woolworths launched Christmas Pop-Outs – cardboard self-assembled Christmas-themed characters including Santas, elves, reindeer and snowmen. WOOLWORTHS
"We were blown away with customer feedback to Little Shop when it launched in July this year so we wanted to bring customers a little extra as a surprise this Christmas," a Coles spokesman said on Monday.
The Little Shop relaunch comes just two weeks after Woolworths launched Christmas Pop-Outs – cardboard self-assembled Christmas-themed characters including Santas, elves, reindeer and snowmen.
Woolworths said last week Christmas Pop Outs had been well received by customers but declined to say whether they had boosted sales. Woolworths' same-store sales slowed to 1.8 per cent in the September quarter, the lowest rate of growth since the September quarter two years ago, as customers shifted to Coles.
While Woolworths' same-store supermarket sales growth is believed to have recovered to more than 2 per cent this quarter, analysts believe Coles' same-store food sales growth has slowed, to around 1.8 per cent.
Asked at Coles' listing ceremony last week if he had any new tricks up his sleeve to boost pre-Christmas sales, Coles managing director Steven Cain mentioned 150 new products and a little bit of "Santa's secret magic".
Coles shares started trading on the Australian Securities Exchange on Wednesday at $12.49 after a $20 billion demerger from Westfarmers. The stock gained 2.1 per cent on Monday to close at $13.11.
21 Nov, 2018
Woolworths cuts back on capex to lower prices, reward shareholders
Woolworths is planning to cut back on capital spending, freeing up funds so it can drop prices and reduce household food bills while also returning money to shareholders.
Speaking to media after Woolworths' annual meeting on Wednesday, chairman Gordon Cairns and chief executive Brad Banducci said the supermarket group had been "playing catch-up" on capex in recent years, stepping up investment on store refurbishments and supply chain improvements after a period of under-investment.
However, as it came closer to completing the final phase of the program – rolling out new software in distribution centres – net capex would start to fall and there was scope to invest in prices while returning funds to shareholders.
"We've gone through a period of catch-up," Mr Cairns said. "As we move forward we'd like to see the capex program come back to a more normalised level."
"It's not as if we need to spend the money on capital – we have an effective store replenishment program, we have invested significantly in WooliesX – maybe the time now is to reward shareholders."
Analysts and investors have been expecting competitive pressures in supermarkets to ease after Woolworths' $1 billion investment in price in 2016 and 2017 and following Coles' demerger from Wesfarmers.
However, Mr Banducci suggested Woolworths had no plans to take its foot off the pricing pedal and said Coles' listing "doesn't change anything ... unless they materially alter their strategy".
"There's a lot of pressure out in the community right now – the fuel price has come off somewhat but there's a lot of pressures with interest rates and paying principal on your home [loan]," he said.
"We have to all continue to deliver value so I don't think we're less focused on value."
Mr Cairns, the chairman of Origin Energy, said rising energy costs and subdued wages growth had added to the strain on household budgets.
"Our role is to make sure our products are more affordable for our customers," he said, "so the one thing they don't have to cut back on is their budget on food."
"We haven't decided what we're going to do and it will be nice to get the proceeds," Mr Cairns said.
"We have $2.3 billion of franking credits and clearly we want to use up some of those," he said.
"You can reward shareholders in terms of earnings per share and return on capital employed and total shareholder returns and there's a way you can also get franking credits to them – it's just a question of saying where is the balance."
Mr Cairns confirmed Woolworths would review options for Big W once it had returned to profit but would not be drawn on rumours the retailer was looking at selling its 75 per cent stake in pubs and clubs group ALH and its Endeavour Drinks business.
"Once [Big W] is fixed up we've got optionality. Having lost $100 million last year we have some ways to go before it's fixed up," he said.
Mr Banducci told shareholders there were "enormous opportunities" to improve the business this year, while Mr Cairns, who was re-elected at the meeting, used his address to emphasise the retailer's "community credentials".
"At a time when the community is losing trust in big business, I think it is important that Woolworths speaks up, and proudly displays its credentials," he said, citing the removal of single-use plastic bags and reducing carbon emissions by 10 per cent from 2015 levels.
The company is the largest owner of poker machines in the country. Mr Cairns said the company was committed to "harm minimisation" and was making a number of changes to its business following two external reviews.
21 Nov, 2018
Offshore buyer wants to see Trade Me under the hammer
ASX-listed online market place company Trade Me has attracted the interest of a cashed-up offshore buyer.
Proving the apple doesn't fall far from the tree, Street Talk understands the former Fairfax Media-owned online business has received an indicative offer from an offshore financial investor, which is keen to take the company off the ASX and NZX boards.
Sources said Trade Me is quietly dealing with the proposal which was made in the past week.
Should the company reject the proposal, it's bound to be on high alert in case the tyrekicker returns. They know that it is rare for a financial type to walk away after a first rejection.
Investment bank Goldman Sachs is around the situation, lender sources said.
Trade Me is a New Zealand online marketplace business with $NZ250 million revenue and $NZ164 million EBITDA in the 2018 financial year.
The company's shares trade on both sides of the Tasman and it has about a $2 billion market capitalisation. Its biggest shareholders include Australian fund managers Hyperion Asset Management, Investors Mutual and entities linked to the Commonwealth Bank of Australia.
Trade Me was formerly owned by takeover target Fairfax Media, which is publisher of The Australian Financial Review.
Fairfax Media spun the business off in December 2011, before selling out completely one year later in deals where the proceeds were used to pay down head company level debt.
The business is chaired by former Fairfax chief executive and former All Black David Kirk.
Trade Me has two major operating segments, its general items marketplace as well as its classifieds business, which includes jobs, cars and property. Its shares are not cheap - they trade at 19-times forward profit and 11.6-times forward EBITDA, according to S&P Capital IQ.
Nagarajah started his career at the Australian Securities and Investments Commission and also worked at the Takeovers Panel between 2008 and 2010. After just under a year at Mallesons, Nagarajah joined G+T in 2011.
Coles Group is expected to trade at about a 10 per cent discount to rival supermarket giant Woolworths when it hits the ASX-boards on Wednesday.
As fund managers and sell-side analysts place bets on what shapes as the biggest game in equity capital markets this year, the smart money is on a $13 to $14 share price for Coles which would imply about an $18 billion market capitalisation and about 18-times forward profit.
The other question is how much Coles stock will trade when it lists on Wednesday, given the likely retail-heavy share register. Brokers reckon funds are likely to add or trim their stakes depending on their growth/value slant, but past deals shows retail investors will largely sit on their new Coles shares.
Where Coles' share price lands will depend on who is buying and who is selling on Wednesday.
Funds have had their retail analysts trying to value the business over the past month, to come up with trading strategies to enact this week. The key valuation yardstick is already-listed Woolworths, which trades at 20-times 2020 financial year profit, on Citi's numbers.
Consensus is Coles will trade at a discount to Woolworths given outlook for its grocery and other businesses, although fundies have differing views on whether that discount should be 5 per cent, 10 per cent or more.
There'll be plenty of fundies, traders and corporate types watching Coles trading on Wednesday morning. Unlike an initial public offering or secondary market ECM deal, the demerger structure means it's 100 per cent up to the market to find the matching price.
Brokers Goldman Sachs and Macquarie Capital will no doubt be working hard to sell the deal. The two investment banks have been embedded in the Wesfarmers/Coles camp all year, and introduced Coles' new management team to fund managers over the past month.
Fundies reckon they'll also keep a close eye on Woolworths' share price, which could also jump around while Coles finds its feet and offer trading opportunities. Meanwhile the Coles camp will be watching out for tricks from its arch rival, in case it seeks to spoil the big listing day.
As for sell-side analysts, Citi reckons Coles is worth $14.20 a share, Morgan Stanley has a wide range with a midpoint at $11.09, CLSA is also at $14.20 and Deutsche Bank's team is at $13.
The other question is how much Wesfarmers' shares drop. All things being equal, they should drop by 85 per cent of the value of Coles, given the conglomerate its maintaining a 15 per cent stake.
20 Nov, 2018
Beef supply boost bites Australian Agricultural Company profit
First-half earnings for beef producer Australian Agricultural Company have been hit by a decline in the market value of livestock, due to an increase in global beef supply.
For the six months through to September, the company (AAC) booked a net loss after tax of $68.4 million, compared to a loss of $37.7m the prior period.
AACo also booked negative statutory earnings before interest, tax, depreciation and amortisation, posting a first half loss of $82.9m, from a $36.5m loss the prior year.
“The statutory earnings before interest, tax, depreciation and amortisation loss was a result of an overall decline in market value of livestock, including a decline in the lower value composite cattle numbers,” chief executive Hugh Killen said.
“However we have seen a 16 per cent increase in our highest value wagyu herd numbers.”
He added: “The increase in global beef supply, which is likely to extend into 2019, has led to competitive pressure on pricing. However our wagyu revenue for the half was up, driven by increased sales volumes.”
The company said challenging conditions that have impacted operating costs during the period look set to continue into the near term.
Station operating expenses increased due to deteriorating seasonal conditions during the period, resulting in increased feed, supplement and freight costs.
“Our financial performance over the past six months has been impacted by a range of factors including weather and macro trends, yet we continue to deliver against our strategy,” Mr Killen said.
Operating profit increased over the period after the company suspended operations at the Livingstone Beef processing facility in Darwin and the production of beef in its 1824 brand, as sales of non-Wagyu cattle were brought forward and external purchases of cattle for processing were wound back.
“During the half, we continued to invest in our core assets; our land, our herd, and our people,” Mr Killen said.
“We continued to refine our supply chain and pursue greater operational efficiencies in order to optimise our production base.
“We have also invested in marketing our brands and developing our distribution network.
“This has enabled us to continue successfully executing on our strategy to supply the growing demands of high-end markets, both overseas and in Australia, by producing highest premium branded beef at scale.
19 Nov, 2018
Australian wine industry’s leading females honoured
The 2018 Australian Women in Wine Awards (AWIWA) recognised top women in the wine sector at an Awards Day in Sydney.
The award giving body recognised Kate Goodman, owner of Goodman Wines / Penley Estate, with “Winemaker of the Year”; Nicole Pitman, Kingston Estate owner as “Viticulturist of the Year” and Sarah Marquis, CEO of Mollydooker Wines as “Owner/Operator of the Year”.
“It’s a tremendous honour to be recognised as a valuable contributor to the industry I am so passionate about, and in doing so help the community organisations we support through the success of the business,” Marquis said.
Marquis is the businesswoman behind Mollydooker’s, Lefty, Family and Love series of wines and the Velvet Glove Shiraz with her former husband. In May 2017, she took full ownership of Mollydooker Wines and took the family business to the international wine landscape. Under her leadership, Mollydooker Wines has also won the Business SA 2017 Regional Exporter Award. Currently 80 per cent its production each year is exported around the world.
“I immediately took steps to increase the level of professionalism in management and to realise Mollydooker’s full potential,” said Marquis. “By cultivating a collaborative working environment, introducing accountability and empowering my team we have been able to grow all aspects of the business.”
The award recognises business owners who has made an outstanding contribution to their companies and the Australian wine industry. The Australian Women In Wine Awards is an awards platform for women in wine. In its 4th year, the awards recognises the contributions of women in the Australian wine community, who inspires the new generations of women in wine.
2018 Australian Women in Wine Awards winners:
Winemaker of the Year – sponsored by Tonnellerie Saint Martin
Kate Goodman, Goodman Wines / Penley Estate
Viticulturist of the Year – sponsored by Wine Australia
Nicole Pitman, Kingston Estate
Owner / Operator of the Year – sponsored by WineWorks Australia
Sarah Marquis, Mollydooker Wines
Workplace Champion of Change – sponsored by Winemakers’ Federation of Australia
Lara Simic, Winestate Publishing
Cellar Door Person of the Year – sponsored by Platinum Bags
Janine Carter, Voyager Estate
Researcher / Innovator of the Year – sponsored by Angove Family Winemakers
Dr. Jacqui McRae, Australian Wine Research Institute
Marketer of the Year – sponsored by Denomination
Lynda Schenk – Purple Giraffe
Woman of Inspiration – sponsored by Irvine Wines
Tamara Grischy, Langtons
19 Nov, 2018
Fonterra cuts carbon emissions at Brightwater plant
New Zealand dairy giant Fonterra is cutting carbon emissions at its Brightwater milk processing plant by converting the coal boiler so that it can be co-fired with wood.
Minister of Energy and Resources, Hon Dr Megan Woods, officially switched on the newly converted boiler at the plant today.
The dairy multinational has come under public pressure in recent years to cut the use of coal boilers for drying milk.
The conversion reduces the amount of coal used and cuts carbon emissions at the site by around 2,400 tonnes a year.
Last year Fonterra developed a Road Map to Transition to a Low Emissions Future with the Ministry for the Environment.
Robert Spurway, Fonterra COO global operations, says the conversion is part of a wider plan to reduce emissions across all sites.
“We’ll take what we learn from this conversion and apply it to our longer-term co-firing strategy for other boilers across the country. Brightwater shows what’s possible when it comes to reducing our reliance on fossil fuels.”
“We’re serious about meeting our targets to reduce carbon emissions by 30 per cent by 2030 and net zero by 2050 across all New Zealand operations. Achieving them will involve a combination of energy options and energy efficiency gains,” Spurway said.
Andrew Caseley, EECA’s chief executive, said that the project demonstrates the power of co-firing.
“Co-firing has wide potential for replication with other businesses that use coal boilers, with the ultimate goal of replacing fossil fuels with renewable energy,” Caseley said.
