Tegel loses KFC contract

By NZPA

Tuesday 17th December 2002

Tegel has lost a $40 million contract with KFC to its competitor Ingham , the Dominion Post reported today.

Restaurant Brands, which has been buying Tegel chicken for its KFC brand for 30 years, said that from June 2004 it would buy its chicken from Ingham.

Restaurant Brands chief executive Jim Collier said the change was not related to quality problems KFC had with Tegel last month, which led to a promotion being canned.

This caused a subsequent 4.4 percent drop in KFC sales in the third quarter. Restaurant Brands is seeking compensation for the loss.

Mr Collier said Ingham would help reduce its costs by $5 million each year, on top of the $1.5 million Restaurant Brands was saving this year after a significant drop in cheese costs.

The decision to switch to Ingham followed a competitive tender.

"Ingham will provide advanced technology and product innovation, which will benefit Restaurant Brands by improving the quality of our chicken," Mr Collier said.

The new contract would see Ingham expand business in Mt Maunganui, Te Aroha and Cambridge, creating more jobs in these areas.

Tegel managing director Bruce Scott said yesterday that KFC was a big customer, but not its biggest. Natural growth in the industry would absorb the impact of the lost contract.

"We have had some fairly aggressive growth in a lot of our branded business."

No jobs would be lost and no facilities would be closed.

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