Woolworths extends support for SPC Ardmona with $70 million deciduous fruit deal

Posted by AFN Staff Writers on 12th March 2014
Woolworths and SPC Ardmona have announced a new supply deal for the Select brand

Supermarket giant Woolworths has announced a $70 million deal to buy product from Australian fruit processor SPC Ardmona. According to Woolworths the deal to supply its home brand ‘Select’ decidious fruit for the next five years is “a win for farmers, customers and the Australian economy”.

The deal comes shortly after the recent surge in demand for SPC Ardmona’s locally grown products, following a social media campaign driven by consumers on Twitter, using the hashtag #SPC, and the recent support given to the Company by the Victorian Government.

The Woolworths deal may have been a case of ‘take it or leave it’ with SPC Ardmona having little choice as a price-taker. However, the favourable publicity for both Woolworths and SPC Ardmona is sure to reinforce the existing surge in purchases of the Company’s products.

Extension of existing arrangement

The Woolworths arrangement extends an earlier deal announced in August 2013 for SPC Ardmona, which is a subsidiary of Coca-Cola Amatil, to supply tinned apricots, peaches, apples and pears. It also includes additional supply of tinned tomatoes for the Select range.

“Woolworths is delighted to be extending this partnership with SPC to help support the company into the future,” said Tjeerd Jegen, Managing Director of Supermarkets and Petrol for Woolworths. “We have extended the deal on canned fruit and added a new supply deal on tomatoes,” he said.

“We know that our customers want to buy good Australian grown products and this deal will see Woolworths Select brand tinned fruit continue to be grown in Australia by Australians,” Mr Jegen said.

Woolworths said that following its switch in 2013 to SPC Ardmona-supplied canned fruit, sales increased by 48 per cent.

“This is the first time we have seen growth in the canned fruit category for some time,” Mr Jegen said. “This brings certainty to SPC and the farmers who supply our Select brand so they can now invest in their businesses with the confidence of knowing Woolworths will stand beside them for the long-term,” he said.

Woolworths said it would continue to sell SPC Ardmona’s brands, including Goulburn Valley and Ardmona, making SPC Ardmona the supermarket’s largest supplier of tinned fruit.

“Woolworths has really embraced the fact that Aussie consumers are demanding more and more home-grown products,” said Peter Kelly, SPC Ardmona Managing Director. “SPC is so grateful for the unprecedented loyalty being shown for our brands from everyday Australians who really do care where their food comes from,” he said.

SPC Ardmona said the long-term partnership would give growers the certainty needed to start rebuilding their capacity.

Deal welcomed by industry

The five-year deal has been welcomed by the Australian vegetable and potato industry body AusVeg.

“The deal is a huge win for Australian fruit and vegetable growers who have seen vegetable processing plants shutting their doors in droves over the past three years, due to issues which include the dumping of foreign product,” said Hugh Gurney, AusVeg spokesperson.

AusVeg said the partnership between Woolworths and SPC Ardmona will see the tonnage of Australian grown tomatoes supplied to Woolworths by SPC Ardmona triple over five years.

“The equivalent of 86,000 extra fruit trees will be required as a result of the new partnership, which is outstanding, considering only months ago fruit growers were tearing down orchards after their contracts were cut,” Mr Gurney said.

The move follows similar recent contracts between vegetable processor Simplot and major supermarkets Woolworths and Coles, which are now sourcing 100 per cent of their own brand frozen vegetable lines from Australian growers. ALDI also sources its 825g canned fruit range from SPC Ardmona.

“It’s great to see retailers responding to the demands of Australian families to see more locally grown product on their shelves and on their dinner tables,” Mr Gurney said.

The Federal Government’s Anti-Dumping Commission recently found that SPC Ardmona had experienced “considerable damage” as a result of imported Italian canned tomatoes being dumped on Australian shores.

“We hope that initiatives like this deal will help to mitigate the devastating toll that cheaply produced dumped foreign product has taken on our growers and processors,” Mr Gurney said. “AusVeg would urge all Australian retailers to expand the amount of product they source from Australian growers, particularly in processed lines such as canned and frozen fruit and vegetables,” he said.

Woolworth Select Australian canned fruit is now available in Woolworths supermarkets across the country.