Why Australian food giants are in foreign hands

Australia is a global powerhouse when it comes to food exports, but has only a handful of globally significant food or beverage companies. Many companies that appear to be on their way won’t stay in Australia for long. For investors like Brown, this is disappointing.

“Whether we’re talking about a country that actually has a sizable competitive advantage growing animals, seafood, wheat, dairy, etc., investors are going to be on board with this. There are very few ways, industry-wide,” said Brown.

Arnott’s, the company behind Tim Tams, was acquired by US multinational Campbell’s Soup in the Boog

“When we get them, they tend to be hijacked.”

small fish in a big pond

One of the factors behind this dynamic is the fact that food export capacity is primarily in raw form. agricultural products rather than a processed or “value-added” product.

Australia’s small population is another disincentive. Australia has land that can grow food in abundance, but 25 million people is not much compared to neighboring Indonesia, which has over 273 million people.

John Sevier, founder of Airlie Funds Management, said:

John Sevier, founder of Airlie Funds Management, said:credit:Rob Homer

“In terms of processed and branded foods, there are honestly no big brands of global significance here,” Brown said. “We tend not to have economies of scale, obviously because of the size of the domestic market.”

This, combined with its proximity to Asia, makes Australian companies very attractive to global players looking to target the huge Asian market, he added.

It’s important in a “global game” like manufacturing, Sevior says. “I think Australia has brands with intangible value, but companies haven’t built a manufacturing base big enough to compete globally,” he said.


“They really didn’t have the firepower and probably didn’t have the ambition to compete globally…your production costs will never match.”

Should you worry about how many Australian food and beverage companies are in foreign hands?

Mr Sevior said there is probably a patriotism behind these sentiments, and he doesn’t believe foreign ownership is necessarily detrimental to Australia’s economy or markets, he conceded. Food security concernsBut realistically, today’s Australian shopping basket is likely to include more local, smaller ’boutique’ brands in a long-term shift towards health and well-being. .

“At the regional level, the paddock-to-plate movement has allowed people to [are] It’s just much more discriminating,” he said. “The biggest question is how important some of these brands are, how relevant they are to people’s diets, compared to 10 or 20 years ago.

As a result, the Australian food giant may be in a “sort of sunset phase”, although it may have dominated the market and maintained long-standing brand recognition, Sevior said.

“For a long time Australia didn’t have much market capital to invest in large food and beverage companies.”

who’s next?

Currently, only a handful of large Australian food and beverage companies are registered on the ASX200. For example, his poultry business Ingham’s, Bega Cheese, which owns his Vegemite in addition to dairy, and Treasury Wine Estates, owner of Penfolds.

Brown wouldn’t be surprised to see Vega or a Vega takeover offer. United Malt, World’s 4th Largest Barley Malt Supplier to the distillation and brewing industry.

United Malt, an ASX-listed barley malt seller, could be on the acquisition menu.

United Malt, an ASX-listed barley malt seller, could be on the acquisition

“This is a very personal opinion. [United Malt] At first glance, it’s an absolute target, a corporate target,” Brown said. He also said mining tycoon Andrew ‘Twiggy’ Forrest, who saved his boots maker RM Williams, recently Increase stake in Vega.

Meanwhile, Treasury, with a market value of around $10 billion, is one of the few Australian companies to achieve global success. Brown describes the company as “the pinnacle of Australia’s wine industry”, but even the world’s largest listed wine business is not immune to takeover threats.

“Treasury isn’t perfect in terms of acquisitions, but it’s certainly pretty spectacular in the way it recovers from the Chinese embargo. So I don’t think it’s out of scope for an acquisition, but it’s a pretty big bite for everyone. I am sure,” he said.


Treasury itself was a spin-off from Melbourne-born Foster’s Group. CEO Tim Ford seems determined to keep the company in Australia.

“We plan to be the largest fine premium wine business in the world and there is nothing to suggest we cannot achieve that in the long term. I think they will try to buy us out. Ford said Herald When age.

“But at this stage, we are a very strong Australian listed company based in Australia and I think we will continue for a long time to come.”

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Why Australian food giants are in foreign hands

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