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Bluebird targets brand growth and efficiency

By S V Venkataraman

Friday 1st December 2000

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RON VELA: Pressure on the company's aim to hold prices
TOP BRANDS: New products launched every month

Snack food brand leaders face the same corporate strategy challenges as other companies in a difficult economic environment, in the introduction of new products to keep pace with market demand and in keeping costs under control through greater efficiency.

Bluebird Foods managing director Ron Vela says economic conditions are a cause for concern but not despair.

"We are long-term players in the market and hence take a long-term view; our outlook is positive, we are committed.

"We recently invested $7 million to upgrade our potato chip frying and packing and snack food operations to enhance quality and efficiency. It is a highly competitive market but our business is growing," he said.

Mr Vela pointed out the rising cost of fuel and cooking oil, volatility in exchange rates and other factors continue to put pressure on the company's determination to hold prices.

"We would like to absorb the rising input costs but we had to increase prices recently. We would, however, prefer to grow by volume and by achieving a better distribution network and product range," he said.

Bluebird, a division of Goodman Fielder, has $260 million in sales revenue with manufacturing facilities in Auckland, Christchurch, Timaru and Gore. The company employs about 750 staff and Mr Vela says an open and transparent environment encourages their active involvement in the company's growth.

The strategy is to introduce at least one new product every month. Major brands include Bluebird, Diamond, Edmonds and Uncle Tobys.

Mr Vela said the company's share in the cereal snacks market is 60%, lunch box snacks 54% and potato chips 45%.

"Our objective is to be a part of the fabric of New Zealand. The company has a heritage and a product for every consumption occasion and our aim is to cater to all income and age groups.

"The challenge is to keep Bluebird, as a heritage icon brand, current, contemporary and relevant to consumers in a global market place."

Goodman Fielder made a profit of $A130.9 million in the June year, a 24.2% rise but is considered an under-performer on the sharemarket.

Chairman Jon Peterson cautioned at the annual meeting in November that the overall business conditions in the first quarter of this financial year were subdued, largely as a result of one-off factors.

"We expect the second half to be significantly stronger and this is largely due to much better results from the ingredients business on the back of rapidly rising gelatin prices," he said.

Chief executive David Hearn said: "The profit result highlights the benefits of our restructuring programme, including the acquisition of the Bunge Defiance milling and baking business in Australia and the Ernest Adams baking business in New Zealand, and the sale of the poultry business, Steggles."

As a part of its business strategy, Goodman Fielder is in the process of transferring oat milling from Gore in the South Island to Wahgunyah in Victoria. It will also consolidate North Island flour milling at its Mt Maunganui plant, which will be upgraded and expanded with equipment from its Auckland mill.

The company's state-of-the-art Christchurch mill will continue to handle South Island milling requirements.

Production from the Auckland and Palmerston North mills will be transferred to Mt Maunganui and Christchurch by the end of November and production at the oat mill in Gore will stop early next year.

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