1 00:00:00,120 --> 00:00:03,280 Speaker 1: Fontierra. So they're on the road this week to talk 2 00:00:03,279 --> 00:00:05,440 Speaker 1: to the stakeholders about the sale of its consumer brands. 3 00:00:05,440 --> 00:00:07,680 Speaker 1: It's either a trade sailor an IPO. If it sells, 4 00:00:07,720 --> 00:00:10,119 Speaker 1: it involves names like Anchor and Mainland. Of course, as 5 00:00:10,119 --> 00:00:12,119 Speaker 1: I mentioned earlier, comes off the back of the golden 6 00:00:12,200 --> 00:00:14,720 Speaker 1: days and these big payouts for farmers. The Fontier boss, 7 00:00:15,040 --> 00:00:16,880 Speaker 1: Myles hurls back with us, good morning. 8 00:00:16,840 --> 00:00:17,239 Speaker 2: Good morning. 9 00:00:17,320 --> 00:00:20,280 Speaker 1: You make on very broad issues. You must be congratulated. 10 00:00:20,320 --> 00:00:22,640 Speaker 1: Does it feel at the moment as good as it looks? 11 00:00:24,000 --> 00:00:24,400 Speaker 2: Yeah? It does. 12 00:00:24,400 --> 00:00:26,320 Speaker 3: I mean we're out on farm this week, right across 13 00:00:26,320 --> 00:00:28,480 Speaker 3: the country, both senior management and the board and out 14 00:00:28,520 --> 00:00:30,880 Speaker 3: talking to farmers, and you know that they recognize where 15 00:00:30,880 --> 00:00:32,800 Speaker 3: we've come from. And to be standing out there talking 16 00:00:32,800 --> 00:00:35,480 Speaker 3: about their results for the six months. It does feel good, 17 00:00:35,479 --> 00:00:37,600 Speaker 3: so good to be acknowledged in that way for a 18 00:00:37,600 --> 00:00:38,400 Speaker 3: cross our team. 19 00:00:38,320 --> 00:00:41,960 Speaker 1: And with the forecast two seasons, two good seasons coming 20 00:00:41,960 --> 00:00:45,239 Speaker 1: and that's unusual. Is there anything weird out there that's 21 00:00:45,240 --> 00:00:47,120 Speaker 1: happening or is this these just golden days? 22 00:00:48,200 --> 00:00:51,400 Speaker 3: Well, well, certainly nothing that hasn't been communicated already. I mean, 23 00:00:51,400 --> 00:00:53,400 Speaker 3: you see that some of the geopolitics at play and 24 00:00:53,440 --> 00:00:55,640 Speaker 3: what's going on in Ukraine and Ghasa or An everywhere 25 00:00:55,640 --> 00:00:57,680 Speaker 3: else around the world, and so these things are worrias 26 00:00:57,680 --> 00:01:00,000 Speaker 3: are on the back of our minds. A city, today's 27 00:01:00,000 --> 00:01:02,560 Speaker 3: supply demand is in pretty good shape, and so we 28 00:01:02,600 --> 00:01:04,120 Speaker 3: take that in terms of the forecast we have for 29 00:01:04,160 --> 00:01:04,800 Speaker 3: the season ahead. 30 00:01:04,840 --> 00:01:06,399 Speaker 2: But we also need to be mindful and our. 31 00:01:06,280 --> 00:01:08,520 Speaker 3: Farmers have been through this business a number of years 32 00:01:08,520 --> 00:01:10,759 Speaker 3: and we'll be watching it closely at the same time 33 00:01:10,760 --> 00:01:11,000 Speaker 3: we do. 34 00:01:11,240 --> 00:01:13,759 Speaker 1: Right, So to the consumer side of the equation, how 35 00:01:13,800 --> 00:01:16,840 Speaker 1: exercised and energized? Is this discussion among you a lot? 36 00:01:18,160 --> 00:01:20,360 Speaker 3: Yes, there's a lot of clarification questions that are coming 37 00:01:20,400 --> 00:01:22,440 Speaker 3: from the floor, as you'd expect. I mean, it is 38 00:01:22,440 --> 00:01:24,679 Speaker 3: a big decision that ultimately our farmers will make. So yeah, 39 00:01:24,720 --> 00:01:26,800 Speaker 3: a lot, a lot of conversation, but it's really around 40 00:01:26,840 --> 00:01:29,280 Speaker 3: the why. Let to understand the why and what does 41 00:01:29,280 --> 00:01:31,640 Speaker 3: the cop look like into the future. So that's where 42 00:01:31,640 --> 00:01:33,399 Speaker 3: the vast already questions are coming from. And it's been 43 00:01:33,440 --> 00:01:34,080 Speaker 3: a good conversation. 44 00:01:34,319 --> 00:01:35,959 Speaker 1: Are you having to change minds? 45 00:01:37,440 --> 00:01:38,320 Speaker 2: No, not generally. 46 00:01:38,360 --> 00:01:40,280 Speaker 3: I think people are walking in with just that that 47 00:01:40,560 --> 00:01:43,520 Speaker 3: those questions around you know where we're going as a corporative. 48 00:01:43,560 --> 00:01:44,360 Speaker 2: We know we've come from. 49 00:01:44,440 --> 00:01:46,720 Speaker 3: It's pretty clear we're in a pretty good space as 50 00:01:46,720 --> 00:01:48,680 Speaker 3: we stand here, but what does the future look like? 51 00:01:48,800 --> 00:01:51,520 Speaker 3: So a lot of conversations around that, but but not 52 00:01:51,520 --> 00:01:55,640 Speaker 3: not not not changing minds per SAE, but just as clarification. 53 00:01:55,440 --> 00:01:58,080 Speaker 1: Why don't you see a future with the consumer side 54 00:01:58,080 --> 00:01:58,640 Speaker 1: of the equation. 55 00:02:00,320 --> 00:02:02,440 Speaker 3: We're like any good business and it starts with a 56 00:02:02,440 --> 00:02:04,200 Speaker 3: good strategy, know and where you are good at. And 57 00:02:04,200 --> 00:02:06,880 Speaker 3: the returns for many years act you an ingredients business 58 00:02:06,920 --> 00:02:08,880 Speaker 3: have been stellar right across the board. We have some 59 00:02:08,960 --> 00:02:11,000 Speaker 3: ups and downs on the way that buying large returns 60 00:02:11,000 --> 00:02:13,640 Speaker 3: are very good. Food service of the past of the five, six, 61 00:02:13,720 --> 00:02:16,480 Speaker 3: seven years have done very very well, and we continue 62 00:02:16,480 --> 00:02:19,280 Speaker 3: to see growth in that in that business. When you 63 00:02:19,320 --> 00:02:21,040 Speaker 3: look at the consumer business and I heard you're opening 64 00:02:21,120 --> 00:02:22,919 Speaker 3: this morning, one hundred and seventy three million at a 65 00:02:22,960 --> 00:02:25,680 Speaker 3: headline level looks okay. But what people lose sight of 66 00:02:25,720 --> 00:02:28,160 Speaker 3: it's three point four billion dollars of our farmer's capital 67 00:02:28,160 --> 00:02:30,880 Speaker 3: tied up in that business. And so that the effectively 68 00:02:31,000 --> 00:02:33,480 Speaker 3: roads value day by day because it's not getting the 69 00:02:33,560 --> 00:02:37,280 Speaker 3: return on capital that our farmers have ultimately are seeking. 70 00:02:37,320 --> 00:02:40,440 Speaker 3: So we can invest that business that cash back into 71 00:02:40,440 --> 00:02:44,000 Speaker 3: construt into ingredients, back into food service, where we believe 72 00:02:44,040 --> 00:02:45,240 Speaker 3: you get higher returns. 73 00:02:45,400 --> 00:02:48,120 Speaker 1: Given that you're a good company, why can't you do 74 00:02:48,240 --> 00:02:50,280 Speaker 1: what you would assume somebody else would do if they 75 00:02:50,280 --> 00:02:50,880 Speaker 1: bought it off you. 76 00:02:52,120 --> 00:02:53,959 Speaker 3: Yeah, and look, you go to the supermarket here in 77 00:02:53,960 --> 00:02:56,200 Speaker 3: New Zone and we have a very good presence. You 78 00:02:56,240 --> 00:02:58,080 Speaker 3: look at the chillis space here and even on the 79 00:02:58,120 --> 00:03:00,480 Speaker 3: dry shelf, we have a very good presence. But it's 80 00:03:00,480 --> 00:03:02,600 Speaker 3: sort of misunderstood that you get the international market, we 81 00:03:02,880 --> 00:03:05,240 Speaker 3: don't have that sort of presence. You know, we have 82 00:03:05,680 --> 00:03:09,639 Speaker 3: very strong category control in certain areas, but they're quite 83 00:03:09,720 --> 00:03:12,400 Speaker 3: narrow categories. So if we wanted to really go in 84 00:03:12,440 --> 00:03:15,840 Speaker 3: as scale and actually look at sort of spreading costs 85 00:03:15,840 --> 00:03:18,200 Speaker 3: across a wider business, you probably need to go beyond Deary. 86 00:03:18,280 --> 00:03:20,560 Speaker 2: You probably need to go alot beyond New Zealand Airy. 87 00:03:21,120 --> 00:03:23,800 Speaker 3: You probably need to start thinking about confectionery and maybe 88 00:03:23,880 --> 00:03:26,760 Speaker 3: chocolate and potentially back into ice cream to start to 89 00:03:26,760 --> 00:03:30,480 Speaker 3: become a real consumer goods company in those markets. And 90 00:03:30,520 --> 00:03:32,600 Speaker 3: we truly believe that's not part of our expertise. We've 91 00:03:32,639 --> 00:03:35,240 Speaker 3: been there before. We tried to get into some businesses 92 00:03:35,320 --> 00:03:38,160 Speaker 3: were outside of our expertise in international markets and it 93 00:03:38,240 --> 00:03:40,280 Speaker 3: took a number of years to try and turn that around. So, 94 00:03:40,760 --> 00:03:42,480 Speaker 3: you know, focusing on what you're good at, looking at 95 00:03:42,480 --> 00:03:44,720 Speaker 3: the cash can you recycle and the things you're good at, 96 00:03:44,920 --> 00:03:47,240 Speaker 3: and we truly believe in those ingredients and food service, 97 00:03:47,280 --> 00:03:50,240 Speaker 3: which is you know, by far better returning businesses over 98 00:03:50,280 --> 00:03:52,839 Speaker 3: the long term. That for us is about value add 99 00:03:52,840 --> 00:03:53,800 Speaker 3: and so that's where we're. 100 00:03:53,720 --> 00:03:55,760 Speaker 1: Going to go and not just potentially a sale, but 101 00:03:55,800 --> 00:03:58,480 Speaker 1: how you sell IPO or trade? Is that angsty as well. 102 00:03:58,400 --> 00:04:00,440 Speaker 2: Or not angsty? 103 00:04:00,520 --> 00:04:02,560 Speaker 3: But again, you know they're wanting, they want in clarity 104 00:04:02,600 --> 00:04:04,360 Speaker 3: now which way we're going. But you know from ours 105 00:04:04,680 --> 00:04:06,680 Speaker 3: we need to try both those channels and see where 106 00:04:06,680 --> 00:04:09,280 Speaker 3: the best returns come from. So yeah, we're going hard 107 00:04:09,280 --> 00:04:12,160 Speaker 3: on that and we'd expect an update the next few 108 00:04:12,160 --> 00:04:14,360 Speaker 3: months out to our shoeholders. But you're going hard on 109 00:04:14,400 --> 00:04:17,839 Speaker 3: both those venues. Both are very expensive to operate, but 110 00:04:17,880 --> 00:04:19,280 Speaker 3: at the same time we think it's the right thing 111 00:04:19,279 --> 00:04:19,520 Speaker 3: to do. 112 00:04:19,800 --> 00:04:23,040 Speaker 1: Is there any value you're placing as a company. And 113 00:04:23,120 --> 00:04:25,479 Speaker 1: the I p O side of the equation about patriotism 114 00:04:25,560 --> 00:04:27,960 Speaker 1: New Zealanders participating any of that or you're just looking 115 00:04:27,960 --> 00:04:28,400 Speaker 1: for the dollar. 116 00:04:29,200 --> 00:04:31,359 Speaker 2: No, certainly it does come into play. 117 00:04:31,880 --> 00:04:33,359 Speaker 3: But at the same time, and it has been a 118 00:04:33,400 --> 00:04:35,640 Speaker 3: question from the floor around you know, social license and 119 00:04:35,680 --> 00:04:37,800 Speaker 3: all that sort of sort of thing. But you know 120 00:04:37,800 --> 00:04:40,239 Speaker 3: it's no secret and again you mentioned it in you're opening. 121 00:04:40,279 --> 00:04:41,800 Speaker 3: You know, the team have done a pretty good job 122 00:04:42,440 --> 00:04:44,880 Speaker 3: in getting New Zealand to to where we are economically. 123 00:04:44,920 --> 00:04:47,839 Speaker 3: We've done our fearsue of lifting as farms, and so 124 00:04:47,880 --> 00:04:50,000 Speaker 3: when it comes to you know, do we have a 125 00:04:50,520 --> 00:04:52,600 Speaker 3: social license? I mean, it's not the questions I get 126 00:04:52,839 --> 00:04:54,600 Speaker 3: in the weekends. Most of they go through the price 127 00:04:54,640 --> 00:04:57,880 Speaker 3: of butter and things that are outside of our control. 128 00:04:57,960 --> 00:04:59,920 Speaker 2: So you know, I'd challenge it a bit. Far. 129 00:05:00,240 --> 00:05:02,480 Speaker 3: Haven't really had the recognition for what they do here 130 00:05:02,480 --> 00:05:03,040 Speaker 3: in New Zealand. 131 00:05:03,320 --> 00:05:04,520 Speaker 2: It's really really is. 132 00:05:04,680 --> 00:05:06,960 Speaker 1: There an education? But just on the butter got me going, 133 00:05:07,920 --> 00:05:10,120 Speaker 1: Can you honestly tell me that most people don't understand 134 00:05:10,120 --> 00:05:11,800 Speaker 1: why they're paying too much for butter as much as 135 00:05:12,200 --> 00:05:14,200 Speaker 1: they hate paying too much. I mean, there's a reason 136 00:05:14,240 --> 00:05:16,599 Speaker 1: for it, and a good one, yeah. 137 00:05:16,400 --> 00:05:16,680 Speaker 2: There is. 138 00:05:16,720 --> 00:05:19,080 Speaker 3: And we're dictated pretty much by the international market and 139 00:05:19,120 --> 00:05:20,640 Speaker 3: then the retailers of news and the will set their 140 00:05:20,640 --> 00:05:22,080 Speaker 3: own prices and now clearly there's a bit in there 141 00:05:22,120 --> 00:05:25,279 Speaker 3: for us in terms of efficiency and manufacturing costs and 142 00:05:25,440 --> 00:05:26,440 Speaker 3: margins and those things. 143 00:05:26,480 --> 00:05:29,160 Speaker 2: But you know it is misunderstood clearly. 144 00:05:29,200 --> 00:05:31,159 Speaker 3: But you know, at the same time it's very hard 145 00:05:31,160 --> 00:05:35,000 Speaker 3: to explain then in a twenty second crossover. So you know, 146 00:05:35,200 --> 00:05:37,320 Speaker 3: we try our best, but it's a non easy conversation. 147 00:05:37,360 --> 00:05:37,919 Speaker 2: It's for sure. 148 00:05:38,000 --> 00:05:39,560 Speaker 1: When are we going to know whether you flick it 149 00:05:39,560 --> 00:05:40,360 Speaker 1: and how you flick it? 150 00:05:41,480 --> 00:05:43,200 Speaker 3: Yeah, So the market guidance we've got out there at 151 00:05:43,240 --> 00:05:45,320 Speaker 3: the moment, which we said in May last year we'd 152 00:05:45,320 --> 00:05:47,479 Speaker 3: be twelve to eighteen month program and so you know 153 00:05:47,480 --> 00:05:49,200 Speaker 3: we're still sticking to that and so but the team 154 00:05:49,200 --> 00:05:49,840 Speaker 3: are running hard. 155 00:05:49,880 --> 00:05:50,760 Speaker 2: We've just had the. 156 00:05:51,360 --> 00:05:54,440 Speaker 3: Non deal road shows throughout as Asia, Paciffolk that they've 157 00:05:54,480 --> 00:05:57,839 Speaker 3: just concluded, and then we're expecting some non binding offers 158 00:05:57,839 --> 00:06:00,280 Speaker 3: to come through on the trade sale side of are 159 00:06:00,279 --> 00:06:02,200 Speaker 3: the next month or so, so you know, sitting with 160 00:06:02,240 --> 00:06:04,239 Speaker 3: the next few months, we'll be in have some clarity 161 00:06:04,560 --> 00:06:05,960 Speaker 3: and then the real week. 162 00:06:06,240 --> 00:06:09,880 Speaker 1: Thanks all right, appreciate you time. Merrels Miles Hurrale Fontira 163 00:06:09,960 --> 00:06:12,479 Speaker 1: CEO and just quickly the fit Farmers a note yesterday 164 00:06:12,520 --> 00:06:14,640 Speaker 1: that they're on board with the government a REMA reform 165 00:06:14,680 --> 00:06:16,520 Speaker 1: announced this week. Chris Bishop with us by the way, 166 00:06:16,600 --> 00:06:18,719 Speaker 1: later on in the program, difficult to get things done. 167 00:06:18,720 --> 00:06:20,960 Speaker 1: The red tape and box sticking has become totally ridiculous. 168 00:06:21,040 --> 00:06:23,440 Speaker 1: Reforms are on the right track, and so say all 169 00:06:23,440 --> 00:06:26,760 Speaker 1: of us. For more from The Mic Asking Breakfast, listen 170 00:06:26,880 --> 00:06:28,000 Speaker 1: live to news talks. 171 00:06:28,000 --> 00:06:31,200 Speaker 3: It'd be from six am weekdays, or follow the podcast 172 00:06:31,240 --> 00:06:32,120 Speaker 3: on iHeartRadio.