Fruit and vegetable supplier Addamo collapses as packaging billionaire Anthony Pratt warns on food manufacturing
The collapse comes as Anthony Pratt, executive chairman of packaging giant Visy Industries whose major customers are in the food and beverage sector, called for industry and government action to "do what it takes" to quadruple Australian food manufacturing.
Rodgers Reidy associate director Shane Cremin says his company was appointed liquidators at the start of the month at the request of Addamo's solicitors.
Banks are due about $3 million and suppliers more than $2 million. The Australian Taxation Office is also a creditor, Cremin says.
Several offers have already been filed for the business, whose revenue could have been as high as $20 million. The major supermarkets – Woolworths, Coles and Aldi – account for between 80 and 90% of patronage.
Cremin says several elements led to the collapse: the increasing price of buying from farms due to the floods earlier this year, the "general economy", and a decision by a key customer to reduce its operations. That decision sliced about $4 million in earnings over a 12-month period, he says.
Reidy says although he's not come across many recent cases involving fresh produce suppliers, "pain is being felt" and insolvency work more generally has been picking up.
Addamo Fresh – which trades under Addamo Packers and Cockatoo Farms – was once a family business, although it now has corporate shareholders. The business has been operating for more than 35 years, Cremin says.
A creditors' meeting was held yesterday. Offers for the sale of plant and equipment, truck and vehicle fleet, packaging stock and materials, business names and trademarks, workforce and existing premises will close on November 23.
In a speech to a national conference on food security in Victoria this week, Anthony Pratt said Australia "has what it takes to feed 200 million people", but has taken its eye off food manufacturing. He recommends:
- Accelerating depreciation of new manufacturing investments in food.
- Transferring R&D funding to companies such as SPC rather than Government agencies.
- Enacting the Opposition's policy on anti-dumping that shifts the burden of proof to the imported.
- Suspending payroll tax for food manufacturers.
- Allowing for consolidation of food companies.
"The country has witnessed the closure of many food manufacturing plants in recent decades, from regional abattoirs, to fruit processing, flour milling and the many industries that supported them. Recently, Heinz and SPC voted with their feet," Pratt said, according to a transcript published in The Age.
"The loss of much of our food manufacturing capacity has gone largely unnoticed because it happens in small increments."
"The irony is that we have a competitive advantage because of the quality of our food."
Separately, Pact Group – the packaging business controlled by the daughter and son-in-law of the late Visy founder Richard Pratt – has lifted its stake in the listed packaging company, Pro-Pac Packaging. Raphael Geminder, the son-in-law of Pratt, told The Australian the 48% stake was driven by a desire to boost Pro-Pac's sales to $1 billion within five years.