Goodman Fielder strengthens consumer brands focus, fats and oils business on market

Posted by Daniel Palmer on 6th May 2009

Australia’s largest food group has announced that it will be shifting their strategic direction to increase focus on consumer brands. The changes will see Goodman Fielder look for suitable buyers of their commercial fats and oils business – which includes the Crisco brand.

“As a consequence of our decision to focus on our consumer brand portfolio, we will be exploring options for the divestment of our Commercial edible fats and oils business,” Managing Director, Peter Margin, said this morning.

Focused investment on consumer brands

Goodman Fielder advised they will focus on strengthening its current portfolio of core brands through enhanced product innovation, brand support and acquisitions. Consolidation of its portfolio is also likely to continue via sales of ‘non-core brands’.

“We believe that strong brands provide an effective insulation against commodity cost volatility and that innovation and marketing support are the keys to maintaining and enhancing the strength of our brands,” Mr Margin explained.

Divestment of Commercial fats and oils business

“Our Commercial fats and oils business processes edible fats and oils and supplies food manufacturers and wholesalers in Australia and New Zealand,” Mr Margin noted. “As a commercial industrial business we have concluded that it does not fit comfortably with our major strategic focus, unlike the rest of our portfolio which is predominantly retail focussed.”

“Accordingly we feel that the funds employed in this business would be better directed elsewhere.”

Goodman Fielder said they will now sound out offers for the business, which is estimated by analysts to be worth upwards of $250m. Cargill has previously been identified as one potential bidder.

Enhancing efficiency

The owner of Meadow Lea, Helga’s and White Wings reported “considerable progress over the past few years” in improving manufacturing efficiency through plant consolidation and investment in new plant and equipment. With competitive pressures high and input costs volatile, this would remain a key focus for the business over coming years.

“The company will continue to focus on the goal of achieving competitive advantage by being the lowest cost manufacturer, developing the most efficient daily fresh distribution network and further enhancing our information platform, including developing our e-commerce capabilities with our major trading partners,” Mr Margin concluded.