News

Saputo chasing milk

By Dairy News

WITH SEVEN new companies acquired in the past two years, Canadian dairy company entrepreneur Lino Saputo could be accused of being in an acquisitive mood.

Whether that translates to the Australian corporate landscape, is yet to be seen.

The Saputo family acquired the former Murray Goulburn Co-operative last year in a billion-dollar deal, and is also in the process of buying Lion’s cheesemaking business with factories in Burnie, Tasmania and King Island.

Asked about what further acquisitions were on the cards, Mr Saputo would only say that he was always looking for opportunities that would benefit the business.

Mr Saputo spent two weeks in Australia recently and caught up with suppliers in Victoria, NSW, Tasmania and South Australia.

He re-assured the Tasmanians over the new investment and told farmers he wants future products to be targeted at the premium end of the market and was not interested in chasing low-cost, bottom-of-the-market deals.

Asked about the transformation of the former Murray Goulburn Co-operative to the Saputo culture, Mr Saputo said it was going very well.

However, the supply volume is a major worry for the international company, with output from farms falling right across the board due to cost pressures and seasonal pressures, and with the biggest reductions in northern Victoria and the southern Riverina.

The company is trying to build its milk supply over the next two to three years and Mr Saputo said he was optimistic the company could find bigger volumes, l

despite the average fall of 10 per cent in output.

The company has announced an opening price of $6.80/kg of milk solids for the southern region, which Mr Saputo said was a price intended to both hold existing suppliers and encourage new ones.

He acknowledged the company had a responsibility to offer the best price it could to suppliers, while being responsible to its balance sheet.

Price reviews were made on a quarterly basis.

As for the recently announced deal to process milk on behalf of Coles, Mr Saputo disclosed that the deal enabled Saputo to leverage a better outcome in its long-term relationship with the supermarket giant.

Some suppliers have been wary of the Coles announcement that it was going to engage directly with farmers and have Saputo process the milk.

Saputo has inherited a long-term deal made between Murray Goulburn and Coles for the processing of cheaper, home-brand milk and cheese.

Mr Saputo said the new deal brought benefits for both his company and for suppliers who now had a choice, with another competitor in the market.

Mr Saputo said the company was continuing its plans to sell the former Murray Goulburn factory site at Rochester.

However, the equipment on the site will be dismantled so that it will not be able to be used for milk processing.