15/03/2005 - 21:00

Larenta, Olea grow closer

15/03/2005 - 21:00

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Newly-appointed chairman of Larenta Olives, Mark Hohnen, is confident a merger between his company and Olea Australis can be effected at the conclusion of the current three-month heads of agreement period.

Larenta, Olea grow closer

Newly-appointed chairman of Larenta Olives, Mark Hohnen, is confident a merger between his company and Olea Australis can be effected at the conclusion of the current three-month heads of agreement period.

A merger between the two Moore River olive companies would bring more than 370,000 olive trees into production with the potential to produce one million litres of olive oil annually.

Mr Hohnen, who has more than 20 years’ experience in the wine industry as co-founder of Margaret River’s Cape Mentelle and Cloudy Bay vineyards, said the move was part of what he saw as a need to restructure and rationalise the business.

“Larenta was set up as a management investment scheme,” he said. “My wife was a grower with some friends in the first scheme, then in June and July last year it became apparent that Larenta needed restructuring.

“A few others and I recapitalised it.”

Mr Hohnen said he was encountering growth and marketing problems in the olive industry similar to those he had found in wine.

Despite this, he said, it was an exciting time for Larenta and Olea.

“If we get together we can produce one million litres of oil. This amount is needed to be a serious player in the oil market.”

Olea and Larenta are now in a three-month period of exclusivity, but Mr Hohnen said he was confident a merger would result.

“It is about scale and overheads, the more trees the better,” he said. “We need to rationalise the olive industry in WA and Larenta and Olea are leading people in that.”

But Chris Perrott, managing director of Olea Australis, which makes Dandaragan Estate, said it was early days.

“The memorandum of understanding is giving us both due diligence on each other,” he said. “First we have to see if there would be savings in management and operation functions.

“A merger has to be beneficial for both parties. If there is a fit then a merger would create economies of scale and you become a bigger player in the world market.”

Mr Hohnen said the domestic cut of olive oil sales in Australia was still small, despite inroads by some players.

“Unlike wine, oil won’t sell three bottles at a time, however when people do buy decent olive oil they won’t turn back,” he said.

“The Australian domestic market is huge, but at the moment it is being served by internationals.

“Even Coles and Woolworths are stocking Australian olive oils. It is all about creating economies of scale, which is what we hope to do with the merger. It is a very exciting industry.”

Mr Hohnen said he was hopeful the rest of the state’s olive industry would follow Larenta’s and Olea’s lead.

Larenta’s first trees were planted in 1999 and although the first crop was ready last year the fruit was not picked because, among other things, of a lack of machinery.

Mr Hohnen said this year would be Larenta’s first economic crop.

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