Woolworths has walked away from opportunities to partner with well-performed Australian value-adding and further-processing companies to form a joint venture with a UK-based beef industry giant in a new joint venture in Western Australia.
In January, UK further-processing firm Hilton Food Group announced a joint venture with Woolworths, called Woolworths Meat Co, which is jointly owned by a new Hilton subsidiary, Hilton Foods Asia Pacific, and Australia’s largest supermarket group.
The business will operate out of Woolworths’ Bunbury meat centre in WA, preparing and packaging a range of fresh meat and value-added products including beef, lamb and pork, for retail sale across Woolworths’ WA operations.
A statement issued by Hilton in January said the company’s board believed “good opportunities existed for further collaboration with Woolworths in Australia through the joint venture.”
A UK-based financial analyst said the new business was a “very significant move for Hilton, representing its first expansion outside of Europe, and the establishment of its first presence in the Asia Pacific region.”
The analyst predicted the new WA facility would see investment made during the course of 2013 to elevate it at a similar standard as Hilton’s modern, large-scale facilities across Europe.
Hilton turned a pre-tax profit of A$36 million in 2011. Its 2011 sales of A$1.4 billion were based across operations in the UK, Ireland and western and northern Europe.
Hilton’s business was established in 1994 to set up and operate a beef and lamb central meat packing facility in Huntingdon, England. The business has grown rapidly over the past 18 years, and now includes further processing beef, lamb and pork facilities from Denmark to the Netherlands, Ireland, Sweden, Poland, France and elsewhere.
Mirroring the business arrangement with Woolworths in WA, each of Hilton’s central meat packing plants in Europe is operated on a dedicated basis for Hilton customers, mostly global and large regional supermarket retailers. Hilton’s website says its business model has been adapted to meet local requirements with customers in each country.
The company has a reputation in the European marketplace for driving a hard bargain on raw material pricing, based on volume. Its website says Hilton Food Group has a “simple, clear and well-defined strategy” focussing on four key elements:
- Maintaining an ‘uncompromising’ focus on unit costs, quality and product development
- Building volumes with, and extending product ranges for existing customers
- Partnering with existing customers in new territories
- Gaining new customers in new territories.
Hilton says it has relationships with suppliers of quality meat around the world, sourcing product from more than 40 different suppliers. This gave Hilton a “high degree of flexibility and our customers the knowledge that Hilton can secure supply at competitive rates,” its website says.
Woolworths opened its new $31 million expanded Bunbury Meat Centre in WA last year.
The facility is attached to a beef and lamb abattoir owned and operated by V&V Walsh, which has been a long-term processor for Woolworths. Unlike operations on the East coast, having a meat further-processing facility beside a dual-species abattoir makes the Bunbury operation unique in Australia.
Woolworths Bunbury meat centre includes a cold storage warehouse with capacity for 2000+ pallets of chilled meat and a new meat production facility that consolidates the company’s WA meat processing/preparation operations under one roof.
Is the East Coast next?
What are the prospects for the Woolworths/Hilton Food Group JV to expand operations on Australia’s east coast? What does Hilton offer Woolworths that similar Australian companies working in the Australian market do not?
Beef Central’s inquiries to senior Woolworths management on these and other topics were referred to the company’s public affairs department. Woolworths’ public affairs department has failed to provide responses to these and other questions regarding the company’s JV with Hilton, provided by Beef Central in written form at the company’s request. That’s despite repeated verbal and written assurances over a lengthy period that it would do so.
Talk around the industry over the past 12 months is that Woolworths is looking at establishing another large packing, processing and value-adding facility somewhere in south-eastern Australia. A site on Melbourne’s fringes has been suggested as one possible location for a JV similar to that which has been struck with Hilton in WA.
Beef Central will report back to readers if Woolworths decides to break its silence.