Success story

Aussie support helps Spring Gully out of its pickle

By RJ Whitehead

- Last updated on GMT

Related tags Australia Management

Aussie support helps Spring Gully out of its pickle
Amid headlines of foreign takeovers and the strong Aussie dollar sending companies into insolvency, there is some good news now for a well-loved company that has finally battled through administration into profitability.

Spring Gully, the fourth-generation family pickles and jams firm from South Australia, announced in April it had gone into voluntary administration with debts of A$3m. Immediately, supermarkets, suppliers and consumers rallied around the company, hailing its strife as a wake-up call for Australia’s food industry to acknowledge these tough times.

But now, Spring Gully’s administrator has handed back the company to the directors under a deed of company arrangement through which creditors will be repaid in full by the now profitable business.

Repayment in full

Under the agreement, they will receive a first payment of 20%, followed by quarterly payment, thereby calling an end to the administration proceedings.

"When we first announced [going into administration] you would not expect to be in a position like we are today​,” said Kevin Webb, Spring Gully’s managing director.

The support from the people of South Australia and Australia has just been outstanding and it is that consumer support by everybody out there in our cities who went out there and bought our product and in made all the difference​."

He added that demand for Spring Gully’s products had gone through the roof as soon as the company’s perilous situation had been made public. By the second month of administration, it was forced to introduce a second shift to produce sufficient quantities.

"This increased level of sales has been maintained and we are confident that together with changes we have made internally, we now have a positive long-term future​."

Austin Taylor, the administrator, said he was pleased to see that the troubled business had returned to profit.

"Any administration that results in creditors getting 100 cents in the dollar and the company being returned to its directors is a good result​," he said.

Tough times

The company had won a Premier’s Food Award in 2011 and last year invested heavily in a warehousing to underwrite a national processing and distribution contract for Dick Smith Foods.

But although everything seemed to be going well for Spring Gully, business tailed off sharply in the first-quarter of this year. At the time, Webb said he couldn’t account for this 60% collapse in sales and called on domestic food firms and consumers to embrace his company’s brands.

"We ask for your support around the country, to buy the Spring Gully, Leabrook Farm, Gardener brands and support Dick Smith in his endeavours to help people like ourselves produce Australian-grown food​," he said.

"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​."

It seems that Webb’s call was answered, and Spring Gully saw three weeks’ of sales occur in just three days following his administration announcement.

Now the company has installed a new operations manager and Webb said an increased focus on marketing will be central to maintaining the level of sales achieved during its voluntary administration.

"We're addressing the factory operations and the marketing to make sure both are as efficient as possible​,'' Mr Webb said.

"We're in discussions with a marketing company to maintain the presence of Spring Gully to ensure sales don't drop​.”

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