Coca-Cola Amatil contemplates SPC fruit & vegetable canning unit sale

Soft drink giant Coca-Cola Amatil is reportedly planning to sell its SPC fruit and vegetable unit, claiming that a change in ownership may gear up the underperforming business.  The company recently announced that it is incepting a strategic review of the 100-year-old cannery to understand how business can be developed, preferably through a merger, partnership, or sale.

Alison Watkins, Managing Director of CCA stated that SPS holds many opportunities for growth, inclusive of new products and markets, technology and intellectual property. She further added that there are no plans to shut SPC, however, several parties have approached with ideas and opportunities for growing and capitalizing on the position CCA has created.

CCA’s half-yearly report depicts SPC’s loss after having performed quite positively in the previous half. One of the primary factors that led to a loss during that period was SPC’s exit from numerous private label manufacturing contracts.

According to an article by the Sydney Morning Herald, the move aligns with the conclusion of SPC’s four-year investments comprising of $78 million by CCA and an additional $22 million investment from the Victorian Government. The $100 million investment secured in 2014 ensured that SPC’s manufacturing plant continued operations through a time when its future was uncertain. It also helped SPC develop  new processing lines and set up export networks with China, claimed sources.

Though some products like Ardmona brand tomatoes and SPC baked beans helped hike its market share, the overall sales of those categories slumped during the half year. As a result, CCA’s food and beverage division encountered a loss of $1.7 million during those six months.

Although CCA’s earning from the Australian beverages business fell by 3.6% on account of increased marketing costs and price-cuts to boost sales, its coffee and alcohol business have reported a 12.8% half-yearly profit with excellent performance in New Zealand and Fiji.

Post the announcement, the shares of CCA rose 2.1% up to $9.72.