Dick Smith Foods forced to close

AUSTRALIA’S iconic business entrepreneur Dick Smith has fought back tears after he announced he had been “forced out of business”, and has had to make the “saddest decision” in his life.

AUSTRALIA’S iconic business entrepreneur Dick Smith has fought back tears after he announced he had been “forced out of business”, and has had to make the “saddest decision” in his life.

Mr Smith is closing his 20-year-old food company, and pointing the finger at ALDI Australia for being the catalyst behind his decision.

Mr Smith’s voice was breaking as he explained the emotional decision. He fought back tears as he admitted: “It’s terrible on a personal level … I failed … the promised people that I would keep your jobs.’”

During his address, he repeatedly referred to being forced out by the “extreme capitalism” of companies like ALDI and Amazon, which sells cheap food imports.

He called time on the business at a press conference today in Sydney, a day after he attacked the “secretive” bargain German supermarket chain.

He sent out a savage, public letter to owners Karl Albrecht Jr and Beate Heister, calling on them to come to Australia.

Dick Smith Foods markets a range of 13 Australian-made products such as tomato sauce, spreads and cereals under a licensing arrangement. All profits go to charity.

Mr Smith is closing the business to avoid bankruptcy.

Entrepreneur Dick Smith has called time on Dick Smith Foods. Picture: Supplied

“At the moment Dick Smith Foods is profitable but it’s obvious in two years it will not be profitable,” he told reporters in Sydney.

Even with putting products on sale and a massive media campaign, he has been unable to get profits back up again.

He said “there’s no way” he was going to end up like other Australian companies that have gone broke.

The closure of Dick Smith Foods will affect three workers and Mr Smith said it will affect “thousands” of others.

In a statement today, ALDI Australia CEO Tom Daunt said they have a different business model to their competitors.

They also said they had no “secret” intentions in Australia.

A woman pushes a shopping trolley in front of Aldi. Picture: AFP

“As a privately owned business we have never sought to ‘maximise’ profits at the cost of something or someone else. Rather, we opt for long term sustainable growth strategies,” he said.

“Our international heritage and global presence is no secret, nor are our intentions in Australia. We want to supply great quality products at affordable prices. We do this by adopting a distinct business model that is different to our competitors.

“We proudly support an Australian first buying policy and have shared our growth with hundreds of Australian manufacturers and thousands of staff who have been direct benefactors of our business growth.”

Dick Smith's peanut butter. Picture: Robert McKell

Dick Smith's Bush Foods breakfast cereal. Picture: Geoff Ward

Mr Daunt also said ALDI does not “abuse” its market power, or try to “artificially accelerate market share”.

“We are not a business trying to artificially accelerate market share and we’re not looking to match the store count of our competitors,” he said.

“We do not cut corners, we do not abuse our market power, we do not mislead our customers. “We do not avoid tax payments, we do not squeeze our suppliers. We keep things simple and we focus our attention on what matters most to consumers.

“We are proud of the reputation we have built and feel strongly that the recognition we have earned as Australia’s most trusted brand is a result of our commitment to openness, honesty and integrity in all our dealings.”

Mr Smith is intending to connect suppliers with Coles and Woolworths to negotiate their ongoing production.

Dick Smith holds a jar of Ozemite. Picture: News Corp Australia

Dick Smith Foods will be wound down over the next year. Its retail sales came to about $480 million and it provided more than $10 million to charity.

“They simply look around the world and buy the absolute lowest cost and make sure they hardly share the wealth in Australia,” he said.

“They hardly have any employees, and it’s worked. Unless Coles and Woolworths (cut staff) I don’t know how they’re going to survive.”

Mr Smith also thanked industry heavyweights for their support in a five-page email.

He told the media that Coles and Woolworths had supported Dick Smith Foods as much as they could.

“It is my melancholy duty to inform you that the decision has been made to close Dick Smith Foods Pty Ltd,” he wrote.

“In recent times, the only way we have been able to achieve sales at an acceptable level (that would allow our products to have shelf space) is by discounting so much that we are often losing money.”

He also thanked Australians for their support of Dick Smith Foods.

He said that if Australians just want the cheapest food, it will come from overseas, and our famers would suffer.

Mr Smith said he was “not complaining about ALDI”, adding “they are brilliant in the global stakes of ‘extreme capitalism’ as most consumers always want the cheapest products and don’t link this with fellow Australians — or perhaps their children and grandchildren having a job”.