Patties slowly recovering from berries recall

Patties Foods is still recovering from the recall of its Nanna’s frozen berry products earlier this year, but despite the highly publicised health scare the company continues to maintain a strong hold in the petrol and convenience channel.

At the company’s annual general meeting, Patties Foods reported that even with the significant impact of the frozen berries recall in February 2015, total company revenue for Patties grew by 3.7 per cent, $9.2 million, compared with the previous year. The group expects first half profit to be between $7 million and $7.5 million.

The berry recall in February 2015 was the primary reason for around $14.6 million reduction in net profit after tax compared with the previous year. The recall impacted the company with a reduced margin from lower post-recall sales of frozen fruit and the frozen fruit category continues to have a significant impact upon the company. Despite this, total company revenue grew by $9.2 million or 3.7 per cent to $257 million.

“It is fair to say, that the past 12 months have been very challenging for our trading aspirations, lead largely by the highly publicised frozen berries recall in February, which involved a national recall of selected Nanna’s fruit products, as well as escalating meat prices,” Steven Chaur, MD and CEO of Patties Foods said.

“As anticipated the frozen fruit category continues to have a significant impact into the first half of this financial year versus the first half of the last financial year (FY15) which was before the recall of February 2015,” Chaur said.

“The recall’s significant publicity did affect sales of the total Australian frozen berries market and whilst category sales are now in recovery, progress is slow and there has been a strong sales migration to private labels.”

Following the outbreak, which saw more than 30 people contract Hepatitis A, independent testing did not find any direct scientific link to the outbreak in its Nanna’s or Creative Gourmet brands.

“Every batch of product continues to be sold today on a ‘positive release’ batch test regime to all customers and we continue to have nil detection of Hepatitis A. Patties Foods continues to actively participate in the frozen fruit category and as the Australian market slowly recovers, the company will monitor and review its progress,” Chaur said.

Patties Foods produces a wide range of iconic Australian brands, including Four’N Twenty, Herbert Adams, Nannas, Chefs Pride, Creative River and Snowy River. Core brands grew sales revenue in 2015, versus the previous year, with Four’N Twenty, Patties, Herbert Adams and Nana’s Sweet Pastry products seeing growth rates of 5.1 per cent, 7.6 per cent, 10.5 per cent and 19 per cent respectively.

Petrol and convenience channel holds strong 

In the petrol and convenience channel, which includes 7-Eleven, BP, Coles Express, and Caltex, the market size grew at 3.8 per cent year on year to more than $114 million in retail sales value, with Patties’ growth 10.6 per cent higher compared to the last September quarter. Patties says it remains the branded market leader with a total brand share of 31 per cent – or 53 per cent if customer brand manufactured product is included.

“We continue to drive aggressively into this channel against our competition with new products like Four’N Twenty Real Chunky and ‘Slams’ party pie bites, strong field activation and cross promotions, and tailored business plans with each of our major convenience customers. I am pleased to report that we were also successful in securing a number of key national contract exclusively during 2015,” Chaur said.

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