Beston Global Food Company Enters Voluntary Administration Amid Rising Costs and Market Challenges

Beston, known for its dairy products under brands like Edwards Crossing and Mabel, announced the appointment of KPMG Australia's Tim Mableson, James Dampney, Gayle Dickerson, and David Kidman as voluntary administrators. The administration will affect two of Beston's key entities—Beston Global Food Company and Beston Pure Dairies—which operate production facilities in regional South Australia. These facilities specialize in butter, milk, mozzarella, and lactoferrin extraction, the latter used in infant formula.

The administrators have assumed operational control and plan to continue trading while conducting a comprehensive review of the business. "Our immediate focus will be on stabilizing operations and working closely with stakeholders, including farmers and partners, to achieve the best possible outcome," stated Tim Mableson, turnaround and restructuring partner at KPMG Australia.

The administrators are exploring options for either a recapitalization or sale of the business, highlighting the value of Beston’s dairy processing assets, established supply chains, and strong relationships with dairy farmers across South Australia and western Victoria.

Despite recent challenges, Beston has reported positive cash flow in the fourth quarter of FY24, driven by record milk inflows and mozzarella sales. However, escalating costs, particularly energy prices, continue to weigh heavily on the company’s financial performance. In FY23 alone, Beston absorbed an additional $28 million in expenses, primarily due to a 300% increase in energy costs.

Earlier this year, Beston sold its meat processing subsidiary, Provincial Food Group, for $4 million, utilizing the proceeds to reduce debt. However, attempts to secure a deal with Japan’s Megmilk Snow Brands Co. for the acquisition of Beston’s cheese and lactoferrin facility in Jervois fell through, contributing to the decision to enter voluntary administration.

The company also pointed to the broader industry challenges exacerbated by the Australian Dairy Code, which has kept farmgate milk prices high and disconnected from global dairy commodity markets. These factors, combined with rising energy costs and increased competition from cheaper dairy imports, have severely impacted Beston's profitability and liquidity.

Beston’s first creditors' meeting is scheduled for October 2, 2024.

Image by Beston Global Food Company Facebook