SunRice booms on selling Aussie rice to the world
SunRice is well along the path of cracking more than $2bn and becoming one of Australia’s biggest food exporters - and investors have been piling in.
SunRice is well along the path of cracking more than $2bn in annual sales, as the agribusiness major pushes deeper into global markets through its branded products aimed at tapping into consumer convenience.
The move marks a transformation of the 75-year-old former co-operative as it attempts to reduce its reliance on selling rice in bulk and battling against private labels to becoming a one of Australia’s biggest food exporters.
SunRice is now selling into nearly 50 markets around the world, exporting flagship Australian rice and specialist products including rice cakes, flavoured rice and flour into Japan and the Middle East and Europe.
The shift helps limit SunRice’s exposure to swings in global rice markets, with prices starting to pull back over the past year with growing giant India resuming export sales.
SunRice not only sells Australian rice, but has become a global marketer of rice grown in Vietnam and even from California. But its move into rice-related food product that is starting to pay dividends.
SunRice’s chief executive Paul Serra tells The Australian it is no longer about putting “rice in a bag” and shipping it around the world.
“That’s something that we’ve been focused on now for the last 18 months with more volume into branded products, more volume into differentiated products,” he said.
Indeed, SunRice has been developing new products for local export markets as it continues to push up the value chain, including rice in a microwave cup and protein chips. More recently, it has moved into up-market pet food through the acquisition of SavourLife. It’s not all new territory for SunRice, for years it has operated feedstock business with rice a key ingredient.
Serra’s comments as SunRice this month posted a 4.5 per cent increase in profit to $31.9m for the six months to end-October. The result was struck on sales of $912m for the half. Last year’s sales came in at $1.88bn.
Underlying earnings were up 7 per cent as fast-paced growth in high-margin branded sales offset a dip in bulk rice sales as prices continued to pull back as global supplies recovered.
SunRice’s ASX-listed shares had a stellar year, surging almost 60 per cent.
SunRice sources around 25 per cent of its rice from Australian farmers, which is almost all medium grain rice, which is better known for its use in sushi and related products. The rest is sourced from SunRice’s mills in Vietnam, California, as well as countries from Thailand to India.
Serra said prices for long grain are pulling back quickly after shooting up as much as 50 per cent following India putting in place its export bans. These have since come off, which has seen prices return to more historical normal levels. At the same time, political tensions in the Middle East in impacting shipping and sales.
Serra joined SunRice at the end of 2023, from global food ingredients giant Olam, where he ran the US business. He has previously worked with Arnott’s Biscuits, at the time owned by the Campbells Soup Company.
SunRice was founded by farmers in NSW’s Riverina district nearly 75 years ago with the aim of providing a sales and marketing pool for growers. The company has a market value of nearly $700m and operates under a dual class structure with ASX listed B-class shares, and A-class shares are held by growers.
SunRice has just come off a bumper harvest year for its Australian rice, with around 618,000 tonnes. Plantings are slight down on this year, although volumes should remain steady.
Earnings in the current financial year are expected to lift moderately on improved profit margins.
The industry is preparing for a shift in coming months, with NSW Parliament approving a plan that officially bringing an end to a single-desk export system for growers. SunRice has endorsed the shake-up, Serra has argued it offers more flexibility for growers to match demand and offers SunRice more consistent supply.
Despite cost of living pressures hitting consumers, Serra said convenience is holding up and shoppers are prepared to pay up for it.
“There’s certainly the private label pressures on every category, and we’ve seen that trend continue to play out with the cost of pressure, with the cost of living pressures, but that convenience is holding up really well, particularly if you’re offering something that’s unique or something they’re really valuing”.
Originally published as SunRice booms on selling Aussie rice to the world
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