Simon Evans
March 30, 2017
AFR
The chief executive of Patties Foods said the ready made meal sector in Australia had moved well beyond “TV dinners” and was likely to grow by more than 10 per cent annually to push through the $1 billion mark soon.
Paul Hitchcock said the company, which has just acquired Australian Wholefoods, was on the lookout for more acquisitions. The Australian ready-made sector was starting to catch up to the British market, which had been a pioneer in the area, he said.
Mr Hitchcock said on Thursday that a combination of factors including the busyness of people’s lives, convenience and a shift toward healthy eating were all playing a part, along with the growth in the number of offerings available from a range of players, which also helped expand the sector.
He predicted that category growth rates, which had been nudging 10 per cent, were set to continue for the next few years.
“I think there’s a lot of market value in this category left yet,” he said.
The acquisition by Patties of Australian Wholefoods, which employs about 130 people and runs a large operation in the northern Adelaide suburb of Salisbury, was first revealed by The Australian Financial Review’s Street Talk column on March 28.
Australian Wholefoods produces brands including Clever Cooks, Banquet, Home Chef and late last year expanded further with a new brand called Levodo – a range of grain-based snacks. The company supplies ready made branded and private label meals to supermarkets including Coles, Woolworths and IGA.
Impressive growth
Mr Hitchcock said the growth in the overall category in Australia had been impressive.
“The category is still relatively new. It’s trending toward $1 billion but we’re not there yet,” he said of the sector which is now worth about $900 million annually in Australia.
Australian Wholefoods was producing sales growth in the “double digits” and is set to accelerate further by utilising the existing distribution networks of Patties Foods
“In a way it’s the best of both worlds,” he said.
Patties Foodswas acquired by private equity firm Pacific Equity Partners last year in a deal worth $231 million. Patties Foods also makes Four’ n’ Twenty pies, Herbert Adams and Nanna’s baked goods.
Australian Wholefoods was built up by owners Raymond Khabbaz and Michael Demetriou. The duo has a strong track record of entrepreneurship in the food sector, having founded Copperpot Dips in 2001 before that business was purchased by Goodman Fielder in 2007.
Mr Hitchcock said the freshness of the ready made meal offerings by Australian Wholefoods had been crucial in them snaring a stronger market position.
“We’re all time-poor. I think it’s the freshness and the convenience that people are responding to. It’s not TV dinners,” he said.
A Woolworths spokeswoman said the chilled ready meals category grew by 13 per cent in the past year for the retailer “as customers continue to look for convenient and affordable meal solutions”.
A Coles spokesman said on Thursday the supermarket operator had launched a new Coles brand range in April last year across 54 products including pasta, curries, pizzas, soups and traditional meals such as chilli con carne and chicken teriyaki.
“Busy lifestyles mean consumers are attracted to convenience meals by their relatively low cost, ease of use and variety,” the spokesman said.
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