What's next for Rosella tomato sauce?

Maker of iconic sauce placed in receivership

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The maker of iconic Australian tomato sauce brand, Rosella, has been placed in receivership, following the appointment of administrators late last week.

Creditors for Gourmet Food Holdings had been unsuccessful in finding a buyer for the group's businesses, including Rosella, organic soups maker, Pitango, based in New Zealand and biscuits maker Waterwheel, based in Victoria.

Related: Supermarkets abandon local farmers

The failure of Gourmet Food follows the recent high profile collapse of chocolate maker, Darrell Lea in September, and shows the impact of the major supermarkets focus on home brands – known in the trade as private label products – at the expense of brand name products. Both Woolworths Limited (ASX: WOW) and Coles – owned by Wesfarmers Limited (ASX: WES) have been expanding their private label brands range in stores, with 'branded' goods being pushed into smaller displays or off the shelf altogether.

Both companies have been aggressively focused on reducing costs, as competition has pushed prices down over the past 18 months or so. Australian suppliers are being squeezed, and increasingly, products are being sourced from cheaper overseas producers. Goodman Fielder Limited (ASX: GFF) has seen its margins slashed as the big two (Woolworths and Coles) force the company to cut its prices, and even Coca-Cola Amatil Limited (ASX: CCL) has been forced to renegotiate its contracts.

For Australian producers, higher labour and supply chain costs mean they struggle to compete with their international competitors, and are losing out when it comes to supplying supermarkets. We could yet see more local producers forced to the wall, unless they can find a way to sell their products profitably.

Some suppliers have even decided that they can't compete with private-label brands and have moved to selling their products through other channels, such as online only stores like groceryrun.com.au. Without the expense of retail stores, like rent and staff, the online stores hope their lower costs will enable them to compete effectively against the major supermarket retailers.

The Foolish bottom line

Retailing is a tough business at the best of times. Rosella sauce lovers will be hoping Gourmet Food can be revitalised, but the company may need to change its business model.

In the market for high yielding ASX shares? Get three "Rock-Solid Dividend Stocks" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

Motley Fool writer/analyst Mike King owns shares in Woolworths. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »