Shock $234m peanut butter crunch hits Aus farms
Kraft Heinz had to pay Bega $9.25m after losing a court battle to prevent it from using a distinct yellow lid and labelling.
A $234m battle for dominance is spreading Australian peanut butter producers thin, with a shock 101-year-old operator the latest victim as the competition crunch hits home.
Bega Cheese Limited – hailed as a local industry saviour when it took over US food giant Kraft Heinz’s peanut butter operations in Australia in 2017 – is set to face shareholders Thursday over its financial results, after announcing it is winding down 101-year-old peanut processing properties impacting about 90 growers and 150 workers.
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Bega Cheese spent about $2-3m on infrastructure improvements to the Peanut Company of Australia, including the Kingaroy’s property’s historic silos.
Around 90 peanut farms will be impacted as the Peanut Company of Australia winds down operations.
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The clock is now ticking on an 18-month wind down process for Bega Group’s century-old peanut processing business, Peanut Company of Australia, which has two properties that will now be shuttered – including heritage listed silos in a Kingaroy plant – with a factory site in Tolga expected to be the first to close as soon as this Christmas.
In a devastating blow to around 90 farmers in the area, Bega Group CEO Pete Findlay warned the firm could not make commitments to buy their crop beyond the current season, despite retaining two properties in Queensland with processing facilities – in Crestmead and Malanda – as well as its distribution network.
The firm is yet to announce when the properties themselves are set to come on the market after the business failed to find a new buyer, but the Kingaroy silos alone come with a list of requirements for maintenance given its heritage listing.
former AFL star Nic Naitanui fronted an “Australia’s Favourite” campaign for Bega Peanut Butter as part of a campaign to lift the brand above competitors.
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Mr Findlay said “the peanut industry in Australia is facing a combination of headwinds including increased competition from imports, stronger returns for growers from other crops, high input costs and declining production”.
“We have explored several options to sell the business. Unfortunately, we’ve been unable to find a buyer that could sustain a long-term future for employees and growers.”
Bega is a massive player among Australian operators in the industry, with a host of smaller often niche producers experimenting with reduced-fat and whole foods options including Ambrosia Australia, Scoop Wholefoods, Pepe Saya Butter Co, and Live Life Nutrition according to Claight Expert Market Research.
Keep it Clean founder, Steph Claire Smith is among influencers who backed Bega peanut butter.
Bega Cheese also bought famous yeast extract spread Vegemite from US company Mondelez in a deal worth $480m. Picture: Nathan Edwards
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On supermarket shelves the competition is significantly more fierce with Coles alone selling 76 different types of nut butter products from brands like Bega, Pic’s Mayver’s, 99th Monkey, Nutella, Pana Organic and its own in-house brand.
Mr Findlay, whose firm bought the Kraft peanut butter recipe off global snack giant subsidiary Mondelez Australia in 2017 – warned the Peanut Company of Australia had been losing money for “several years”, running operating losses of $5-10m a year despite measures to boost site safety and production.
Bega Simply Nuts Peanut Butter retails in supermarkets such as Woolworths, appealing to those who want to support Australian farmers.
File image of peanut farmer Peter Howlett with his crop which go in to Bega’s Simply Nuts peanut butter.
“Bega Group has not been able to establish a sustainable business model,” he said. “Continued financial losses and industry challenges led to the need for the review and ultimately the conclusion that the business would be better served by a change to more local and focused ownership or in the absence of that being achieved, unfortunately a closure.”
In 2021, Bega won a $9.25m court payout from Kraft Heinz which had challenged Bega’s use of distinct yellow packaging for its own brand.
The firm intends to continue producing Bega peanut butter in its various forms out of a Port Melbourne factory, and is already supplementing some of its products with peanuts out of Argentina, though it plans to keep producing Simply Nuts off 100 per cent Australian-farmed nuts.
