09/07/2008 - 22:00

Best strategy is to get big or go niche

09/07/2008 - 22:00

Bookmark

Upgrade your subscription to use this feature.

Canning Vale-based food manufacturer Chrystal Foods is one of the latest local food businesses to be bought out by a large national company.

Best strategy is to get big or go niche

Canning Vale-based food manufacturer Chrystal Foods is one of the latest local food businesses to be bought out by a large national company.

The family business, which started in 1953, produced brands including Viva Corn Chips (production of which was stopped 12 months ago) Chrystal Fresh cheese, Bellissimo antipasto products, and Diet Rite Lite salt.

Bought in March by national company Manassen Foods, the business will now concentrate on growing its other business interests.

It's believed Manassen Foods will retain the Chrystal Foods brand, adding it to the group's expansive bakery, biscuit, grocery and confectionary brand portfolio, which includes WA's Margaret River Dairy Company.

Manassen is majority owned by private equity firm CHAMP.

Chrystal and Co managing director Haydn Chrystal said his company was a medium-sized manufacturer and, as such, it was difficult to see a sustained future for the operation and its brands in the current retail environment against competition from large multinational firms.

He believes that, to be competitive in the current marketplace, businesses either have to be a large or multinational company able to stock the majors, or a niche producer supplying the independents.

"We sold our food business absolutely because of how we feel about the direction of the food industry in WA,'' Mr Chrystal said.

''You're beholden to the two major supermarket chains. In the end it will just be the major multinational manufacturers that can stand up to Coles and Woolworths and the little niche manufacturers selling into the independents."

He said the Chrystal Foods business, under the banner of Manassen Foods, would have a greater capacity for growth in the current environment than if it stayed within the family business.

Chrystal and Co will now focus on its two other businesses - Caterlink, which supplies commercial kitchen equipment, and Simply Stainless, its stainless steel manufacturing arm with factories in Indonesia and India.

"We made the decision to put dollars into those businesses, which we're more sustainable, rather than sitting in the food business, with a high level of risk," Mr Chrystal said.

The acquisition follows the exit of several other WA food businesses from the local industry.

Value-added meat products manufacturer Comgroup Supplies, whose parent company is fast-food company Competitive Foods, closed its doors earlier this year.

The company reportedly cited problems with urban encroachment as one of the main reasons for the closure. It now manufactures all of its products from its Queensland facility.

The unprofitable O'Connor facility of cake manufacturer Mills and Ware's closed late last year after being bought by George Weston Foods.

George Weston used the assets from the purchase to upgrade its existing cake operations at Canning Vale and Queensland.

George Weston Foods is a wholly owned subsidiary of Associated British Foods Plc.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options