Coles deal may secure troubled Simplot plant

Posted by AFN Staff Writers on 26th September 2013

Australian supermarket group Coles has offered food manufacturer Simplot Australia a new five-year contract to supply the supermarket group’s own brand frozen vegetable and potato products.

The new contract will see volume for Coles brand frozen vegetable and potato rise by 12 per cent.

Coles said it was also working towards all of the vegetables in one of its house brand products, Smart Buy, coming from Australian-grown product by 2014.

Australian Food News reported in June 2013 that Simplot Australia’s manufacturing plant in Devonport in Tasmania was under threat of closure. At the time, Simplot Australia said the Devonport plant was not competitive in the fact of cheap frozen vegetable imports. Commentators have suggested that the new deal with Coles could help keep the Devonport plant open.

Simplot Australia confirmed that it had received an offer from Coles.

“It is too early to make any comment regarding the implications for Simplot’s operations in Tasmania and New South Wales,” Simplot said in a statement.

AusVeg welcomes Coles deal with Simplot

The announcement of the deal between Coles and Simplot has been welcomed by representative body for Australian vegetable and potato growers, AusVeg.

“Coles’ commitment is welcome news for the hundred of Australian vegetable and potato growers supplying Simplot with quality produce,” said Andrew White, AusVeg spokesperson. “It is 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,” he said.

Moves towards local sourcing

AusVeg said recent consumer studies had shown that 80 per cent of Australians would prefer to buy Australian-grown produce and support local growers. Australian Food News reported in August 2013 that Roy Morgan Research had found that over half (55 per cent) of Australian consumers said ‘buying Australian’ had become more important to them in the last year.

This trend in Australian consumer preferences has not gone unnoticed by the major supermarkets. Australian Food News reported earlier this week that Coles’ rival Woolworths was considering ‘local’ branding, and both Coles and Woolworths have recently signed major supply deals with Australian food manufacturers and producers. Australian Food News reported in August 2013 that Woolworths had signed a $7 million fruit deal with SPC Ardmona, and in April 2013 Coles signed a supply deal with troubled South Australian food manufacturer Spring Gully Foods Pty Ltd.

Both Coles and Woolworths have signed deals in 2013 with Australian dairy farmers and processors for supply of the supermarkets’ private label milk.


Coles has offered Simplot a five-year supply deal