In a significant move poised to reshape the landscape of Australia’s food industry, SPC, a company with a storied history dating back to its origins as the Shepparton Preserving Company, is set to merge with Original Juice Co. and acquire Nature One Dairy. This merger, which will see SPC relist on the Australian Stock Exchange (ASX) under the new ticker code SPG, marks a strategic effort to reclaim a competitive edge in a market increasingly threatened by low-cost imports and shifting consumer preferences.
### A Legacy of Transformation
SPC’s journey began as a farmer co-operative in regional Victoria, evolving into a powerhouse valued at $750 million following its acquisition by Coca-Cola Amatil in 2005. However, after delisting and a subsequent buyout by private equity in 2019 for a mere $40 million, the company found itself navigating turbulent waters. Today, its major stakeholders include the boutique investment house Perma Funds Management and the meat industry superannuation fund, alongside the billionaire Shahin family, who recently sold their fuel station business for a staggering $1.2 billion.
Despite these solid backing figures, SPC has faced daunting challenges. The company reported revenues of $271 million for the 2024 financial year, yet sales have stagnated since the last takeover. This stagnation is largely attributed to rising cost-of-living pressures that have prompted consumers to turn towards cheaper, imported processed foods. The competitive landscape is further complicated by the emergence of companies that can offer similar products at lower prices, putting pressure on local entities like SPC.
### Strategic Acquisitions to Drive Growth
The acquisition of Original Juice Co., which specializes in chilled fruit and vegetable juices and reported revenues of $49 million last year, alongside Nature One Dairy, known for its infant formula and milk powder products generating $46 million in revenue, is a calculated effort to diversify SPC’s product offerings and bolster its market position. The estimated cost for these acquisitions stands at around $53 million and $50 million, respectively.
SPC’s leadership envisions the merged entity, aptly named SPC Global, will generate over $400 million in revenue and more than $29 million in EBITDA during the 2025 financial year. This ambitious projection underscores a belief in the synergies that can be realized through the consolidation of manufacturing facilities and product lines, especially given the seasonal production window of fruit in the Goulburn Valley, which lasts just 12 weeks from February to April. As SPC Chairman Hussein Rifai noted, “The bigger you are, the more voice you’ve got around the table,” indicating that scale is of paramount importance in today’s food industry.
### Future Outlook and Challenges Ahead
Under the leadership of Robert Iervasi, former CEO of Asahi Beverages Group, the newly formed SPC Global will operate across three divisions corresponding to its three main business lines. However, the merger is not without its hurdles. Approval from Original Juice Co. shareholders is still pending, with a crucial meeting scheduled for November.
The food industry is notoriously volatile, influenced by consumer trends and economic conditions. Analysts and experts suggest that for SPC Global to thrive, it must not only leverage its expanded portfolio but also adapt to changing consumer behaviors that increasingly favor health-conscious and locally sourced products. According to a recent study by the Australian Institute of Food Science and Technology, consumers are becoming more discerning, often prioritizing quality over quantity.
In conclusion, SPC’s strategic merger and acquisitions aim to not just survive but thrive in a competitive food market. By diversifying its offerings and increasing its bargaining power with major retailers like Coles and Woolworths, SPC Global seeks to tap into a broader consumer base while addressing the challenges posed by an increasingly globalized and price-sensitive market. The journey ahead will undoubtedly be complex, but with a clear strategy and strong leadership, SPC Global could well be on the path to revitalization and growth.
