Fresh produce rivals in different expansion plans

Posted by AFN Staff Writers on 12th December 2016

Giant fresh produce producer, Costa, is expanding its avocado business, acquiring the Avocado Ridge orchards and packaging operations from the Carney family. At the same time, its competitor Perfection Fresh, is expanding by undergoing a rebranding (see next story).

Acquisition by Costa of avocado orchard

Avocado Ridge is located in the Childers and Krumbia regions of central Queensland. Its total plantings cover 300 hectares.

The acquisition has been entered into in conjunction with Macquarie Agricultural Funds Management (MAFM). MAFM will purchase the farms and enter into a 20-year lease with Costa to operate them. This is the first acquisition under a recently announced arrangement between the two parties to jointly consider merger and acquisition projects.

Costa Chief Executive Officer, Harry Debney, said the acquisition was the first major step in Costa’s strategy to realise vertical integration in its avocado category.

“It will add significant growing capacity to our existing plantings, and ripening and marketing functions.  Avocados will become a truly vertically integrated fifth pillar complementing our existing core produce categories of berries, mushrooms, citrus and glasshouse tomatoes.” said Debney.

Our focus is to be number one in the categories that we operate in where there are opportunities for us to create a genuine market difference and to ultimately achieve a 52-week production situation.  We believe avocados is a very strong growth area that fits these criteria”, said Mr Debney.

The Carney family will remain with the business to perform key management and operational roles, utilising their extensive experience and knowledge of successful avocado production as well as the local growing climate.

“Costa has been exploring opportunities to expand our core produce categories and we identified the Carney family and their proven operation as being an excellent fit with our business model.  The Avocado Ridge farms network is largely comprised of young trees which provide a strong growth trajectory into the future,” said Debney

With the current circa 100 hectares of avocados Costa has in the South Australian Riverland, this acquisition would bring the Company’s total plantings to circa 400 hectares.

The acquisition is expected be completed in January 2017. The acquisition price is not being disclosed.

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