28 February, 2017
Courtesy of the Australian
Dick Smith says Coles and Woolworths are threatening to take some of his products off the shelves because they cannot compete with a French rival, and high power prices are stopping him from cutting production costs to compete.
Mr Smith’s range of fruit spreads and OzEmite are made by Adelaide family-owned company Spring Gully, which has seen power prices double from $85,000 to $150,000 this year.
Mr Smith said it was ironic his French rival St Dalfour made spreads in France using Australian uranium to power its factories when South Australian manufacturers powered by renewables and coal were battling to produce competitive products.
“I think their power is about half the cost of ours because it’s about 70 per cent nuclear,” he said. “Their labour rates are quite similar, and the only reason I can see why we can’t compete with France is the very high power costs in South Australia.”
Dropping the spreads from supermarket shelves would be a crushing blow for Spring Gully, which has spent the past four years paying back creditors after going into voluntary administration in 2013.
Managing director Kevin Webb said there was little margin for wearing higher power costs and “it’s not going to get any better.]
“With Port Augusta closing down last year, the reliability is just not there and with renewables the model isn’t working.”
He said Spring Gully would have to consider installing solar power and batteries or other options to cut power costs.
“You look at your cost imports and you may have to pass some of that on, and that’s hard because everybody’s feeling it,” Mr Webb said.