Battle of Spring Gully should serve as a shot across Oz industry's bow

By RJ Whitehead

- Last updated on GMT

Related tags: Australia

Battle of Spring Gully should serve as a shot across Oz industry's bow
As the distraught head of an iconic family-owned brand looked up to reporters, saying he had no idea why Spring Gully had seen a sudden 60% collapse in sales, many other industry bosses must have shared his feelings of incredulousness.

Only in 2011, Spring Gully, the 65-year-old South Australian producer of spreads, pickles and preserves, had won a Premier’s Food Award, and last year felt robust enough to invest in a new warehousing facility to underwrite a national processing and distribution contract for Dick Smith Foods.

But last week, the company called in the administrators and Kevin Webb, Spring Gully’s managing director, tried to put his finger on what had gone wrong.

"For some reason our sales just fell off four to five weeks ago, and we're still trying to figure out [why]​," he said, adding that the company’s products had remained the same and it had not changed its distribution set-up.

To stave off insolvency—the company will continue to trade while the administrators examine the books—he pleaded for the public to help his family out of its crisis

"We ask for your support around the country, to buy [our] brands and support Dick Smith in his endeavours to help people like ourselves produce Australian-grown food​.

"If we could get that support that would help us trade through. We don't want to have all our food coming in from overseas. This country should keep producing its own food to make sure if something happens to our borders we can still feed ourselves​."

His rhetoric clearly hit a nerve.

Just three days later, following vocal backing from Dick Smith and local and national supermarket brands, Coles, Woolworths, Foodland and IGA stores across South Australia have since reported most of the company’s stock had been sold out.

We are in a process that none of us wanted to be involved in, but the support has overwhelmed us and we are committed to fighting and getting through this battle​," a more positive Webb said after the pick-up.

Moreover, the big two supermarket majors, Woolworths and Coles, have each been been looking at ways to employ special promotions and provide other support for the beleaguered company. Coles had also been working with the administrators while Woolworths says it is considering expanding the company’s range on its shelves.

For some time now, Australia’s food production industry has been changing, and while consumers have not exactly been fiddling as Rome burns, they should shoulder some of the blame for situations like the Spring Gully administration. After all, domestic companies are operating in increasingly difficult times.

A strong Australian dollar and tough retail trading environment are doing nobody any favours. But as all involved slowly try to work out what to do, Australians have been watching more and more small companies and farms either close down or fall prey to overseas investors.

We’ve said it before: Australians can be extremely patriotic when it comes to produce made locally. But they don’t always practice what they preach.

Last September, FoodNavigator-Asia published the results of an Australia-wide survey that gave some cross-eyed results. While almost 90% of those questioned said they preferred locally made or grown food products, they are clearly not buying them, judging by the plight of Spring Gully now and other Aussie icons like Rosella, which collapsed last December. In mitigation, 40% of Australian consumers said they found it difficult to identify whether a product was made locally based on its label.

But their response to last week’s appeal is encouraging, although it is to be seen for how long the charge can be sustained. The supermarkets and co-operatives will also have a big role to play in this regard, and Spring Gully will be buoyed that they have embraced their cause so far.

At this point, it is worth considering another report from September, by Australian consumer advocate Choice, which compared the country of origin of 360 supermarket products across 90 food lines. Of the items, 55% of Coles’ private-label products and just 38% of Woolworths’ own products were locally made or grown. This contrasted with 92% of market leaders in food and grocery items. 

Of course, it is early days in Webb’s fight; he will not know what sort of effect the revitalised sales of his products will have had until later on in the week in the context of debts estimated at more that A$3m. The best he can hope for in the short-term is that the consumer push continues for another three weeks or so, by which time Spring Gully’s main creditors will meet to decide on its future.

At the same time, Australia must also plan how to safeguard the future of its indigenous brands. Confusing labelling, foreign-sourced own brands, a complacent market and ridiculous levels of competition: there is a great deal for all parties to think about and very little time to act.

Have your say: Should Spring Gully ever have come so close to disaster? Do you back Aussie-made? How should the industry repair its current slump? Let us know in the comments below.

Related topics: Business, Oceania

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