AVI biscuits: 30’000 tons per annum

Johannesburg / ZA. (avi) The «Bakers», «Pyotts» and «Baumann´s» brands are an iconic part of South Africa´s biscuit history. Combined with the full snack portfolio under «Willards», AVI Limited offers a full range of sweet and savoury biscuits, baked and fried snacks to the snacking consumer with a higher income. Now the company sets its sights also on the lower end of biscuit market:

The Johannesburg-based baker said it was likely to extend its biscuit-making capacity by half to target a lower-income market it does not sell to yet. AVI will decide by June whether to go ahead with construction of a 15’000-ton-plant, CEO Simon Crutchley said in a press meeting, introducing the results for the six months ended 31 December 2009. «We recognise the un-banked opportunity of producing a product in the appropriate format and price form for lower-income consumers», Crutchley said. «We have been working on it for about twelve months. We are getting to the point when we will make a decision to do it or not. I am reasonably confident about doing it».

About a quarter of AVI´s turnover comes from biscuits. It produces 30’000 tons of sweet biscuits, about 65 percent of total market share. In addition to selling to a wider customer base, a move along the spectrum would boost sales in what many food producers say is likely to be a protracted downturn. Many middle-income consumers have traded down to cheaper alternatives in the recession that has seen disposable household income shrink for five successive quarters.

Such a move would also continue the practice of spreading risk across different areas that has served AVI well during a tough six months: Total sales ticked up 1,1 percent to 4,05 billion South African Rand (ZAR), as turnover from units such as seafood producer I+J fell but was offset by gains in the tea and coffee business. Operating profit fell 52 percent to 59,87 million ZAR at I+J as a strong rand and weaker European demand hit profit. At the same time, operating profit rose 35,2 percent to 167,8 million ZAR in the fashion brands business.

Info: AVI´s complete press release «Results for the six months ended December 31, 2009» (PDF, 20 pages, 237 KB) is available for download on its company server.