Bega reviews the future of its Queensland peanut factory to possibly sell the site

The near 100-year-old site of the processing factory at Kingaroy in Queensland that makes Bega’s peanut butter is being considered for sale.

Bega’s peanut butter is one of the company’s most recognisable brands. Picture: Tim Hunter

Bega Group, maker of peanut butter and Vegemite, has commenced a strategic review of its peanut processing factory in Queensland.

The likely outcome is expected to be the sale of the site to slim down its manufacturing base and focus more on its brands.

Bega has hired long-term advisory firm Kidder Williams, run by banker David Williams, to advise on the sale of the Peanut Company of Australia, which is based in Kingaroy and which could raise around $20m.

Bega, which three years ago won a case against US food giant Kraft over its use of the yellow lid and yellow label for its peanut butter range believes it would be financially beneficial to divest its Kingaroy operations. It believes this will give the new owners of the factory the opportunity to supply product to Bega but grow the business to supply other food companies and therefore also generate more business for local peanut growers.

The decision to review the future of the manufacturing site is in line with Bega’s strategy of business simplification.

Bega has a 76.4 per cent share of the Australian peanut butter market. Picture: Peter Ristevski

The strategic review will investigate a range of alternatives for its Peanut Company of Australia arm and while there is no certainty that the review will lead to any particular outcome of transaction there is a belief within Bega and its advisers that a divestment – at the right price – makes the best sense.

Bega bought the Peanut Company of Australia in 2017, paying just under $12m.

Mr Williams said a sale would benefit Bega and farmers.

“It could be a very interesting opportunity for a food manufacturer to try to supply one of Australia’s premier brands, Bega’s peanut butter, as well as other food manufacturers,” he said.

It is believed the peanut processor generated sales of about $19m a year. It has four sites, mainly at Kingaroy but also in Gayndah, Inverlaw, and Tolga.

Bega peanut butter is Australia’s most popular peanut butter and has a 76.4 per cent market share.

At its recent interim results Bega posted revenue of $1.73bn, up 3 per cent, as net profit rose 263 per cent to $26.5m.