Patties Foods celebrates its 50th birthday and looks to the future

IAN ROYALL,
August 2, 2016
Herald Sun
A COMPANY that started as a Lakes Entrance cake shop in 1966 and grew into an Australian food production giant faces two major milestones this month. Patties Foods celebrates its 50th birthday on August 18, just eight days before a vote is taken on a $232 million takeover bid for the publicly listed company.
The Bairnsdale-based food producer is recovering from a horror 2015 when an outbreak of hepatitis A linked to packets of Nanna’s frozen mixed berries forced a product recall.
Part of the revival that has made the business a takeover target comes down to a cooking technique more likely seen on a TV cooking show than on a production line.
Patties chief executive Steven Chaur says sous vide has opened up opportunities to improve the quality of traditional pie products, rather than them being just pastry, mince, gravy and onion.
“Consumers are a lot more educated these days around what good food looks like and their expectations are certainly being raised by MasterChef and My Kitchen Rules and Poh’s Kitchen and the like,’’ Mr Chaur says.
“We invested about 18 months ago in a sous vide machine — the size of a domestic bedroom — and within 12 months we’re buying a second unit because consumers have responded so well to it.’’
Patties wants to improve pie contents for a market beyond just beef or beef and bacon pies, he says.
The company has also introduced the cheeseburger party pie, signalling its intention to tackle new ideas and test flavours.
Mr Chaur says Patties is looking at food trends such as “dude food”, and is considering spicier and non-meat flavours for Asian and Muslim tastes. Not yet on the menu but in the ideas factory are goat pies and kangaroo pies.
“We’re looking at not only sticking to our core of meat pies that we are so well known for but also look at the elasticity of the brand and seeing where else we can take it and make it relevant to today’s younger consumer,” he says. “A lot of younger people haven’t grown up with Four’N Twenty pies and regard it as ‘Dads’ food’.’’
Patties took over the Four’N Twenty brand in 2003, three years before listing on the stock exchange.
Dutch migrants Peter and Annie Rijs started the Patties story in 1966. Their six sons all worked in the business and were major shareholders after the float. Now the 50-year mark looms and the company has launched a new logo, packaging and new products.
A party for the company’s 600 staff will be held in Bairnsdale on August 18. The company is the town’s second biggest employer after the local hospital. The group’s other signature brands are Herbert Adams, Chefs Pride and Nanna’s.
Mr Chaur believes it is in good shape regardless of the shareholder vote on August 26. All directors have supported the bid from Pacific Equity Partners.
At $1.65 a share, the buyout offer values the company at $231.8 million.
That price is a far cry from the stock’s $1.05 nadir at the time of the product recall, although it stabilised just under the $1.20 mark in the months before the buyout offer was made in late May.
“From where Patties Foods sits today, we’re in a good place regardless of what happens,’’ Mr Chaur says.
“The company’s growing, we’re celebrating 50 years and we have great product innovation and we’re leading the market.’’
There was doubt among the workforce when the takeover bid was announced, he says.
“As time goes on, a lot of the employees are becoming a lot more settled and indeed a lot more optimistic about the future.
“A new owner brings new energy. It could lead to more capital investment and more expansion of the organisation.’’
This year’s full-year results will be announced on August 24. Last year, Patties’ annual profit was a slim $2.1 million, down $14.6m on the previous year because of the recall of the berries that were imported from China. The berries were stripped from supermarket shelves. Even so, it was never proved that the hepatitis A outbreak was linked to the berries.
Patties has since exited the frozen berries business, ceasing to sell berries under the Nanna’s brand and selling its Creative Gourmet range to private company Entyce Food in December.