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Growth surge for food manufacturer

Media Statement 31 October 2007

Growth surge for food manufacturer

Product development is putting one of New Zealand’s leading exporters into a new growth phase that will help it on its way to becoming a major international player.

Food manufacturer Old Fashioned Foods is about to launch its new margarine-type spread, made from rice bran oil, internationally.

Marketed under the Alfa One brand, the spread is considered a world first because it contains a low saturated fat level and no hydrogenated fats, and therefore no trans fats which are linked to low density lipoprotein (LDL) or so-called ‘bad’ cholesterol’ that causes narrowing and hardening of arteries. The spread is currently being tested to scientifically validate health benefits including reducing the absorption of cholesterol in the body, antioxidant properties and high levels of vitamin E.

Old Fashioned Foods spotted a market niche based on the popularity of rice bran oil and decided to use it as the basis for a spread.

“A key factor in its success is developing an alternative to butter that melts and cooks like butter but without artificial additives,” says Old Fashioned Foods CEO Ross MacKenzie.

The new spread gives Old Fashioned Foods entry into a crowded segment of the market dominated by major international companies. Mr MacKenzie says the company expects to earn $3 million turnover from New Zealand and Australia sales this year, with the potential to more than triple that in the next three years. It is now preparing to launch into the United Kingdom and other overseas markets.

As a result of the spread success, Old Fashioned Foods is already researching another product – a functional beverage - that has the potential to grow the company to the billion dollar turnover mark.

“We want to be a significant size in the global food industry and the creation of new products is helping us reach that target,” says Mr MacKenzie.

The Alfa One spread is a high value product, one of the most expensive on a per gram basis.

“But that’s where we need to be to break into the category – not competing with cheaper brands,” he says.

The Foundation for Research, Science and Technology provided investment of $190,000 through its Technology for Business Growth scheme to help Old Fashioned Foods develop the spread.

“Old Fashioned Foods has a vision to drive growth and become a global player and is an example to others, particularly in the food sector, of how research and development can be successfully integrated into a company’s structure,” says Foundation Business Manager Stephen Flint.

“This investment shows what companies can achieve when they have a clear long term strategy and focus, and an ability to develop products that provide future leverage potential into new markets,” he says.

For Old Fashioned Foods, the government investment in its innovation was important.

“The development costs were substantial. Receiving that investment possibly made the difference between going ahead with the project and it certainly made the decision at a board level easier.

“The government is trying to encourage R&D and, in our case, there is a financial benefit to the company but tax on profits generated from the new product more than cover the TBG investment, giving a significant pay back to the government,” says Mr MacKenzie.

Two additional shifts, each of five staff, have been created at Old Fashioned Foods Auckland manufacturing facilities.

Old Fashioned Foods has grown from a cottage industry and three staff to a significant food marketing operation with subsidiaries in Australia and the United Kingdom, and staff of around 380. The company has built its reputation on the Aunt Betty pudding range and has the capacity to produce 200,000 puddings daily for worldwide supply.

For further information contact
www.frst.govt.nz
www.oldfashionedfoods.com

Note to Editors: The Foundation for Research, Science and Technology invests over $460 million a year on behalf of the New Zealand Government, in research, science and technology. These investments are made to enhance the wealth and well being of New Zealanders. Through its Technology New Zealand suite of schemes, the Foundation assists companies to undertake research and development projects that result in new, export-focused products, processes or services.

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