Goodman Fielder Ltd. History

Company Perspectives:

Vision. Having a clear vision is critical, because without it, no company or individual can improve, grow and prosper. Our vision is simple: "The best retail, branded food business in Australasia and the Pacific." Good Food Guaranteed. Our vision will be achieved through Good Food Guaranteed, the unifying force behind all of our many diverse businesses. Living up to such a vision is a tall order for any company. It requires dynamic management and people with the energy and passion to make things happen. It means embracing new ideas, working together and setting higher standards. It means reducing costs, increasing returns and providing a level of customer service that's second to none in the world. In short, it means rolling up our sleeves and doing the hard, exciting work of achieving what we set out to do.

Key Dates:

1968:

Patrick Goodman leads eight New Zealand bakeries in the creation of the Quality Bakers cooperative.

1972:

Quality Bakers extends its membership to 18 member bakeries.

1973:

Goodman joins with A.S. Paterson & Co. and begins acquiring Quality Bakers member bakeries.

1976:

Goodman takes control of the Paterson group.

1979:

The company name is changed to the Goodman Group.

1982:

The Goodman Group acquires all but five of the remaining Quality Bakers members and creates a new bakery division, Quality Bakers New Zealand.

1986:

The Goodman Group merges with Australia's Fielder Gillespie Davis to form Goodman Fielder.

1987:

The company acquires Australia's Wattie Industries as part of its international expansion and product diversification drive.

1992:

The company sells off the Wattie foods group to H.J. Heinz; the Uncle Tobys brand is acquired.

1996:

The company begins restructuring, including a pull-out from the European market and a reduction of its presence in Asian markets.

1999:

The company acquires Ernest Adams Ltd., a leading baked goods company in New Zealand.

2001:

The company begins to sell off its ingredients division and reorients its strategy toward branded food products.

2002:

The company announces plans to spend up to A$500 million to boost its branded foods operations.

Company History:

Goodman Fielder Ltd. is the largest food products producer in Australia and New Zealand. The company holds an extensive portfolio of leading food brands, including Uncle Tobys, Pampas, Meadow Lea, Buttercup, and Bluebird, as well as selected licensed brands, such as Newman's Own, Crisco, and others. Goodman Fielder has structured its operations into five primary divisions. Milling Australia, the leading flour milling company in Australia, produces flours, grains, rice and specialty cereals, cake, bread and other pastry premixes, bread crumbs, dry yeast, and related bakery items. Baking Australia is the number one manufacturer of bread in Australia and includes the Pampas pastry baking products group. GF Consumer Foods contains many of Goodman Fielder's top consumer foods brands; with annual sales of more than A$900 million, this division ranks in the top three in the Australian prepared foods industry. This division also contains the GF Food Services division, which produces edible oils, mayonnaise, and other products for the foodservice market. GF International contains the company's operations in more than 30 countries outside of Australia and New Zealand, with an emphasis on the Asian Pacific and other Asian markets, as well as the Middle East. Last, GF New Zealand represents the merger of much of Goodman Fielder's New Zealand operations, including Bluebird, Quality Bakers, Champion, and Meadow Lea Foods, as the company has begun a drive to redefine itself as a branded products group for the new century. As part of that strategy, Goodman Fielder has been shedding its GF Ingredients division, which included gelatin giant Leiner Davis. Goodman Fielder, which posted revenues of nearly A$3 billion in 2002, is listed on the Australian stock exchange and is led by CEO Tom Park, formerly of Southcorp.

Merging Trans-Tasman Food Groups in the 1980s

Goodman Fielder represented the amalgamation of large portions of the New Zealand and Australian baking and food production industries as a wave of consolidation swept through those industries in the 1970s and 1980s. The resulting flurry of mergers among many small, formerly family-owned businesses produced a small number of large-scale food products groups, with Goodman Fielder itself emerging as the leading player in both countries.

In Australia, Goodman Fielder stretched back to the founding of the Geo. Fielder Co. in 1909. By 1973 that company had taken on the name of Fielders Ltd., before merging with another Australian food group, Gillespie Bros, in 1978. The enlarged group, now named Fielder Gillespie, grew again through a new merger with Davis Consolidated Industries Ltd. in 1983. Fielder Gillespie Davis, as the company then came to be called, became one of Australia's largest food producers, with leading positions in the flour milling and bread baking industries, as well as a significant position in food ingredients, especially food-grade gelatin products. In 1986, Fielder Gillespie Davis looked across the Tasman Sea and proposed a merger with New Zealand's fast-growing flour, baking, and food company, the Goodman Group.

That company had been a small family-owned baking business in Motueka, at the northern end of New Zealand's South Island, when the owners' son Patrick Goodman, who had trained as an accountant, joined the business in the 1950s. Goodman quickly showed his ambitions for expanding the company and began promoting the bakery's products to area grocers. Taking the approach a step further, Goodman convinced a number of grocers to invest in the bakery, collecting the equivalent of A$2,000 from each investor--by the mid-1990s, these initial investments were each worth more than A$1 million. Goodman also began expanding the business through acquisition, buying up a number of bakeries and expanding into the Nelson area.

The New Zealand baking and milling industry remained highly fragmented and heavily regulated, although by the 1960s the industries had begun to see the beginnings of the later consolidation movement. The looming prospect of deregulation, including the opening of the New Zealand market to foreign competition--and notably Australian foods giant Weston--encouraged bakers and millers to begin seeking partnerships. Goodman led eight other of the Central Region's largest bakers in the formation of a baking cooperative, called Quality Bakers, in 1968.

Quality Bakers gave Goodman and partners a larger sales base from which to launch television advertising and other promotional campaigns, and to begin marketing a single packaged, sliced bread brand, Home Style. The buying strength of the cooperative enabled members to reduce their ingredients' costs; at the same time, members, chosen in part because they operated in different towns, avoided competition among themselves by creating individual sales districts. By 1972, Quality Bakers had extended its membership, reaching 18 member bakeries. Although a number of the cooperative's members, including Goodman, began buying up or merging with other bakeries, Quality Bakers also began purchasing a number of smaller bakeries outright.

Patrick Goodman's ambitions for Quality Bakers went beyond the simple cooperative. Instead, Goodman saw the group as representing a step toward the creation of a larger, vertically integrated baking and foods group that could at once lead the restructuring of New Zealand's baking industry and head off foreign competition. Yet the structure of Quality Bakers, coupled with the independent-mindedness of most of its members, led Goodman to seek a different vehicle to achieve his aims.

At the beginning of the 1970s, Goodman joined his own company to A.S. Paterson & Co., which at the time was one of New Zealand's top three flour milling companies, and used that company to build a larger milling and bakery group. Goodman and Paterson's Alex Paterson shared the leadership of the new, larger business, AS Paterson. By 1973, five of the original Quality Bakers members agreed to sell out to AS Paterson, forming the nucleus of the company's Goodman bakery division. The owners of the bakeries stayed on as managers, and the bakeries themselves maintained their membership in Quality Bakers. AS Paterson continued to add other Quality Bakers members to its bakery division through the 1970s.

A rift between Patrick Goodman and Alex Paterson led to the latter's ouster in 1976. Goodman took over the company, renaming it the Goodman Group in 1979. The bakery division was then renamed New Zealand Bakeries. The company continued buying up the Quality Bakers members, as well as making a series of acquisitions of nonmember bakeries. Goodman also continued to pursue growth in the milling industry, notably the purchase of a sizable stake in Wattie Industries' Cropper-NRM, then the largest miller in New Zealand (Goodman Group itself ranked second), in 1980. Goodman and Wattie also became partners in a large bakery in Auckland.

By 1982, Goodman had taken over all but five members of the Quality Bakers cooperative and renamed the company's bakery division as Quality Bakers New Zealand. The remaining Quality Bakers members then became franchise holders, with the rights to the Quality Bakers brand name and recipes; two of the company's franchisees eventually sold out to other bakery groups in the mid-1980s.

During that same period, Goodman faced growing competition from foreign firms, including Weston and Allied Foods, which had gained a strong presence in northern New Zealand through its Allied Mills division, and Defiance Mills, a leading Australian food products group. Goodman countered the presence of the foreign groups with its merger with Fielder Gillespie Davis. The newly created Goodman Fielder now spanned two countries, with extensive holdings in baking, milling, and food ingredients. The larger group was quickly joined by Allied Mills, which added its cake mix and margarine operations to the Goodman Fielder group. Allied also added its successful Pampa's pastry division, which it had acquired in 1985.

Overly Ambitious in the 1990s

Led by Patrick Goodman, the Goodman Fielder company began an ambitious expansion program meant not only to solidify its leadership positions in its home markets, but to establish itself internationally as well. In 1986 the company paid A$2.5 billion to acquire 51 percent control of Commercial Products-Fielders Pty. and acquired an initial stake of nearly 15 percent in the Ranks Hovis McDougall group, one of the largest milling and bakery companies in the United Kingdom. The following year, Goodman Fielder took over with Wattie, becoming Goodman Fielder Wattie, as part of its drive to become a leading food products group not only in the Australia-New Zealand market, but in Europe as well. In addition to its own flour and milling operations, which gave the combined group control of more than half of the New Zealand flour and bakery market, Wattie brought Goodman Fielder a diversified food products assortment, including leading positions in New Zealand's frozen, canned, snack, and convenience food segments.

The company made a strong start in its European plans with the purchase, in 1988, of Meneba NV, based in The Netherlands. In that year, also, Goodman Fielder Wattie attempted a hostile takeover of Ranks Hovis McDougall, boosting its holding to nearly 30 percent. That move, however, was blocked by the Australian Monopolies and Mergers Commission. Instead, Ranks Hovis McDougall turned the tables on Goodman Fielder Wattie in 1989, when it launched its own hostile takeover attempt. Yet the company's shareholders rejected the $2.4 billion offer.

Goodman Fielder Wattie had meanwhile continued its acquisition spree, buying up the Australian companies Allflex Holdings, Gelatin Development Corp., Goldstar Bakery, Heidenreich Flour Mills, William Jackett & Son, Moranez, and United Bakeries. The company also extended into Portugal with the purchase of Somone Divergel that year. More acquisitions followed in 1989, as the company took control of Steggles Holdings, and The Netherlands companies Hocker Holdings, Brood-en-Banketbakkerij Ten Hoopen, and WL Voeders. Another important acquisition came in 1992, when the company acquired Uncle Tobys, one of the most recognized brands in the Australian and New Zealand markets.

By then, however, Goodman Fielder Wattie was beginning to strain under its ambitious expansion effort--which even included a foray into hosiery products. The company's attempt to move beyond bakery and milling and into meats, which came with the purchase of 28 percent of the New Zealand meat processing giant Waitaki, was particularly costly for Goodman Fielder, as Waitaki stumbled at the end of the decade and nearly went bankrupt. Goodman Fielder sold off that holding in 1989.

Meanwhile, the removal of many of the trade barriers designed to protect the New Zealand food industry exposed Wattie's fragility, as the company rapidly lost ground to a new wave of foreign competitors. By 1992, the company was forced to sell off Wattie as well, to the H.J. Heinz Co., and the company's name reverted to Goodman Fielder. Patrick Goodman himself faced the consequences of the company's overly ambitious expansion drive, losing his chief executive's position in 1990, then being forced to resign as chairman in 1992.

Goodman's departure led to a period of management uncertainty in which the company went through three chief executives in as many years, before settling on David Hearn in 1995. Hearn led the company on the first of a series of restructuring drives, cutting out most of the company's noncore operations. In 1996, the company merged its milling and baking operations in Australia and New Zealand into a new unit, Milling and Baking Australasia, and combined its overseas operations into Goodman Fielder International, creating a new Cereal and Snacks division. The company sold off most of its European operations in 1997 and also reduced its presence in the Asian markets as it turned its focus to solidifying its leadership status at home.

In the late 1990s, Goodman Fielder made a new diversification attempt, this time into food ingredients. The company acquired the edible gelatin business form Hormel Foods Corporation in 1998, becoming a world leader in that ingredient segment through subsidiary Leiner Davis. By 2001, however, Goodman Fielder had decided to exit the food ingredients segment, and by 2002 had sold off most of that division.

More successful for the company was its 1999 acquisition of family-owned Ernest Adams Ltd., the leading baked goods company in the New Zealand market. By then, the company also had shored up its position with the addition, in 1997, of the New Zealand milling and baking operations of Australia's Bunge-Defiance. In 1999, as well, the company rolled out a new branded line, Top Nosh, a line of chilled ready meals.

With its losses mounting to A$78 million, Goodman Fielder restructured again in 2001, creating five new key operating divisions: Milling Australia, Baking Australia, GF New Zealand, GF Consumer Products, and GF International. Goodman Fielder also initiated a drive to refocus the company around its high-margin branded products. At the end of 2001, however, the company, confronted with sagging share prices, also brought on a new management team, headed by former Southcorp executive Tom Park.

By the end of its 2002 fiscal year in September 2002, Goodman Fielder's latest restructuring appeared to be a success, as the company's profits soared to A$164 million on sales of nearly A$3 billion. The company then announced its intention to return to external growth, announcing its plans to spend up to A$500 million on a new round of acquisitions to boost the company's new branded foods strategy. From a single family-owned bakery, Goodman Fielder had become Australasia's leading food products group.

Principal Subsidiaries: Fielder Gillespie Davis Finance Pty Limited; GF Australia Limited; Goodman Fielder Mills Limited; GF International (NZ) Limited; Great Southern Roller Flour Mills Ltd; William Jackett & Son Proprietary Limited; Goodman Fielder Superannuation Fund Pty Ltd; Mowbray Industries Limited; Goodman Fielder Food Services Limited; Goodman Fielder International Limited; Goodman Fielder International; Goodman Fielder International Sdn Bhd (Malaysia); Goodman Fielder International (China) Ltd (Hong Kong); NZ Margarine Holdings Limited; Meadow Lea Foods Limited (NZ); Goodman Fielder (Shanghai) Co Ltd (China); M.L. (W.A.) Export Pty Ltd; The Uncle Tobys Company Limited; G Wood Son and Company Pty Ltd; Anchor Foods Pty Ltd; Quality Bakers Australia Limited; Stuart Bakery Pty Ltd; Wakely Bros. Pty Limited; Ernest Adams Australia Pty Ltd; GF Defiance Pty Limited; GFD Australia Pty Limited; GF Albury Mills Limited; GF Narrandera Mills Limited; Sirius Biotechnology Limited; Sirius Biotechnology International Pty.

Principal Divisions: Milling Australia; Baking Australia; GF Consumer Foods; GF International; GF New Zealand.

Principal Competitors: Coca-Cola Amatil Ltd; Foster's Brewing Group Ltd.; BAT Australasia; Philip Morris Companies Inc.; Nestlé Australia; ConAgra Inc.; George Weston Ltd.; Lion Nathan Ltd.; Dairy Farmers Group.

Further Reading:

• "Australia's Goodman Fielder Told to Wipe Out Restructuring Debts," AsiaPulse News, April 23, 2001.
• "Goodman Fielder Poised to Deliver Solid Net Profit Growth," AsiaPulse News, March 8, 2002.
• McNabb, Denise, "Goodman Fielder Review Aims to Cheer Investors," Dominion, November 22, 2000, p. 30.
• "Nosh Push," Grocer, August 21, 1999, p. 15.
• Tait, Victoria, "G. Fielder Overhaul Starts to Gel," Reuters Business Report, February 14, 2001.

Source: International Directory of Company Histories, Vol. 52. St. James Press, 2003.