Australia’s dairy sector faces a significant setback as Beston Global Food Co. announces its wind-down due to unsuccessful efforts to secure a buyer for the distressed company.
In an official announcement on November 26, the company’s administrator, KPMG, confirmed the unfortunate news. According to local media, this decision will impact 159 employees and 22 dairy farmers associated with Beston.
KPMG stated that although several potential buyers showed initial interest, “ultimately, the sales process has failed to secure a buyer in the time frame required given the trading losses being incurred.” The administrator further highlighted that due to the considerable weekly trading losses, funding for the business could only extend until November 30, 2024, leaving them with no choice but to initiate an orderly asset liquidation.
Back in September, KPMG was appointed as administrator following the collapse of a potential deal that could have salvaged the Australian dairy business.
In the midst of these developments, KPMG also mentioned a previously proposed “non-binding” transaction with Japan’s Megmilk Snow Brand Co. for Beston’s cheese and lactoferrin production facilities in Jervois, South Australia. However, this deal was terminated due to unresolved terms among parties involved.
Effective December 6, all milk production operations will cease, which will also encompass Beston Pure Dairies, a wholly-owned subsidiary. Nevertheless, KPMG assured that current operations would continue on a ‘business as usual’ basis until the completion of the existing production cycle within the next two weeks.
A secondary meeting of creditors is expected to take place in late January or early February to discuss potential liquidation or alternative arrangements for the company. KPMG committed to providing detailed updates regarding the company’s affairs to creditors as part of the standard administration process.
As for the necessary infrastructure at Beston’s Jervois and Murray Bridge plants, plans are in motion for an auction. Beston previously disclosed several factors contributing to its financial decline. These include overwhelming debt pressure, rising interest rates, squeezed profit margins, surging energy costs, and a surge of affordable dairy imports from regions such as New Zealand, Europe, and the U.S.
Group CEO Fabrizio Jorge remarked that the proposed Megmilk transaction “would have enabled all of the jobs at Jervois to be preserved and would have led to an increase in demand for milk for processing at the Jervois factory over time.” However, Megmilk withdrew from the deal on September 20, citing an inability to reach agreeable terms.
In conclusion, Beston Global’s decline serves as a stark reminder of the challenges within the food and beverage industry, particularly in the face of ongoing economic pressures and shifting consumer trends in the food and drink business. Stakeholders will be keenly watching how this situation unfolds, particularly as it relates to adaptations in food and drink consumer trends moving forward.
