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Friday 03 December 2021

Speirs signals “challenging” demand and supply dynamics

25th November 2021 By Bridget O'Connell | | @foodtickernz

Supermarket salad supplier Speirs Foods faces another challenging year as it tries to improve profitability while balancing increased costs and changing consumer habits, says group chair Derek Walker.

Spiers has conducted a review of margins to ensure products provided an acceptable return.

In his address at Speirs Group’s annual general meeting this week, Walker said the business environment remained impacted by the Covid­-19 pandemic, following a rough 2021 financial year when trading profit at its food processing division fell 74% to $317,000.

“The current year will continue to be a challenging one for Speirs Foods as it responds to both the demand side and supply side impacts from Covid­-19,” Walker said.

“In the current 2022 financial year sales have been impacted by Covid­-19 outbreaks in Auckland and restrictions in other parts of the country. For example, when supermarkets are closed due to being locations of interest, we see reduced sales into these locations.”

He added that the Marton-based food company, which principally supplied New Zealand’s two major supermarket chains with packaged and bulk salads for the delicatessen section, was also grappling with increased cost pressures.

“A number of suppliers have notified significant price increases, some due to increased operating and supply chain costs arising out of Covid requirements,” Walker said.

“Where possible we will recover these costs through our pricing but still have to maintain our competitive position in the market.”

Walker set out a number of steps the business had taken to address the issues that hit its FY21 profitability, such as a move by consumers from bulk to pre-packaged products and higher input, shipping and labour costs that it had to absorb.

These included significant capital investment in new plant to improve the efficiency of producing pre­pack products. It also invested into work to improve product flow and efficiency, as well as into the plant to increase productivity and labour efficiency.

On product, it had conducted a review of margins to ensure products provided an acceptable return on their costs to produce and NPD to support The Whole Mix brand, which included “wholesome bulk salads in line with consumer trends, on­-the­-go delicious salads/meal solutions with protein and tasty salad kits for our customers’ home brands”.

Walkes said the benefits of the measures taken were showing returns, but cost pressures remained.

“The business will need to keep innovating, investing and improving processes to maintain a reasonable return on the assets employed in the business.”



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