Bidvest
The Bidvest Group Limited
Annual report 2008
 
 
Review of operations  
 
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BIDVEST NEW ZEALAND

High interest rates, low GDP growth and low business and consumer confidence characterise an increasingly challenging market. Concern is growing that government has overdone the inflation-fighting “medicine’’ and consumer demand has been choked to such an extent that the economy has stalled.

Industry factors

Fragmentation remains the industry norm, creating long-term growth opportunities for the only industry player to offer one-stop solutions. Our modern, progressive image sets us apart and is reinforced by the continued success of our internet-based FindFoodFast offering. B to B sales were up about 50%.

Many competitors have struggled to cope with lower demand and growing preference for value options. In relative terms, we have thrived in this environment thanks to the strength of the Bidvest brand and the growing appeal of a convenient, multi-range offering at quality levels the customer can trust.

Standardisation of codes and systems helps us meet and anticipate customer demands while supplying complementary ranges and exploiting cross-merchandising opportunities. A year ago, this level of proactive service was a novelty. It has now become the yardstick by which a growing customer-base measures all suppliers. We’ve raised expectations and increased our competitive edge in the process.

Operational factors

All three divisions (Crean Foodservice, Fresh Foodservice and Bidvest Logistics) performed ahead of budget. Stable, well-motivated management teams delivered solid gains by maintaining the momentum that developed last year.

Our fresh produce wholesaling operation has quickly become the most extensive network of its kind in the country. Enhanced scale delivered the envisaged efficiencies and synergies. The ability to back our extensive foodservice range with a high quality fresh produce offering led to solid gains in market share.

Innovations/investments

New distribution centres were built and commissioned for Crean Wellington (in August 2007) and Crean Palmerston North (March 2008). Improved design will result in operational efficiencies and the increased capacity will ensure ongoing growth of these businesses.



The Fresh Auckland business relocated in to a custom-designed, temperature-controlled distribution centre that sets a new standard for wholesale produce businesses throughout New Zealand. The new facility has improved productivity and through the careful management of the cool chain the produce quality has improved.

Previously rented premises of our Christchurch operation have been bought and neighbouring land acquired to enable us to develop the site as the hub of our logistics business in the South Island.

The investment in new or improved facilities was approximately NZ$18 million.

Risks

Risks are similar to the Australian business; though credit risk may be a little more acute in view of New Zealand’s less robust economy.

Sustainability factors

Like its Australian counterpart, the New Zealand business operates in a well-regulated environment demanding high standards of hygiene, housekeeping and energy-efficient design. The business engages in similar initiatives to its sister-company to promote energy efficiency, combat global warming and support local communities. Training investment continues to rise and we remain focused on retaining our experienced, high-calibre staff.

Cultural factors

Pride in our own brand is strongly evident and parallels similar developments in Australia. Management is hands-on and structures are flat.

The future

In 2009, Crean First for Foodservice will be rebranded as Bidvest First for Foodservice. Implementation of national systems and strong focus on operational synergies have bred a strong sense that we are one business. Our brand strength and national proposition are sources of competitive advantage and will be reinforced as we seek continued growth.

We do not expect opportunistic gains on trading activities to recur on the same scale as 2008. However, unless macro-economic factors worsen and we head into a downturn, we are confident that satisfactory profit levels can be maintained.

 
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