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Coca-Cola Amatil seeks support for rotten fruit business

Coca-Cola Amatil (ASX: CCA) issued a statement (link opens in PDF) last week outlining its plans to reinvigorate SPC Ardmona, its failing fruit business. According to Peter Kelly, SPC Ardmona Managing Director, unfair competition is at the root of the company’s rotten revenue.

“We are not competing on a level playing field against the overseas sourced private label products,” said Kelly in a statement. “We are competing against products from countries that have considerably lower labour and production costs and arguably lower quality standards than we have in Australia.”

Kelly also noted that a 50% appreciation in the Australian dollar over the past four years has increased imports’ competitiveness, regardless of labour prices or product quality. According to SPC Ardmona, its market share of private label canned fruit has declined to 33%, while exports have plummeted 90% in the past five years.

CCA’s 2012 annual report tells a similar story for the fruit company’s lacklustre finances last year. As part of a three-year turnaround initiative, SPC Ardmona hopes to grow demand for locally-sourced fruit, apply for a WTO safeguards submission to temporarily subsidize its market, and investigate potential anti-dumping actions against importers.

Looking ahead, the company will meet with all impacted fruit growers over the next few weeks to discuss further and assess strategies for moving forward.

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The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, 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.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Justin Loiseau has no position in any stocks mentioned in this article. You can follow him on Twitter @TMFJLo.

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