Business Sours as Beston Global Food Enters Administration: Two Dairy Factories and 159 Jobs at Stake After Acquisition Offer Falls Through.
The company has been grappling with financial challenges for some time, recently divesting its meat processing subsidiary, Provincial Food Group, for $4 million in July, while actively seeking buyers for its dairy facilities in Murray Bridge and Jervois.
Beston reported receiving several non-binding indicative offers regarding refinancing and equity solutions, including an approach from Japanese firm Megmilk Snow Brands for the acquisition of its Jervois facility. However, on the same day KPMG was appointed, Megmilk withdrew its offer following extensive due diligence.
In light of these developments, the Board of Directors determined that voluntary administration was necessary to explore options for the company’s future. Beston currently employs 159 staff, including 29 casual workers.
CEO Fabrizio Jorge expressed disappointment over the failed Megmilk offer, which he believed would have preserved jobs at the Jervois facility and increased milk processing demand. He emphasized that the acquisition would have benefited not only the workforce and local dairy farmers but also the broader South Australian economy, given the Jervois plant's role in producing premium dairy products.
This is not Beston's first setback in pursuing international deals; a proposed long-term agreement with Thailand's KCG Corporation was also shelved due to unresolved issues.
The company has faced adverse market conditions, including declining dairy prices and rising operational costs, following a record sales year in 2023, which totaled approximately $170 million alongside a substantial loss of $48.85 million. Beston has absorbed around $28 million in additional costs, including a 300% spike in energy prices, amid increasing competition from cheaper dairy imports flooding the Australian market.
Furthermore, the Australian Dairy Code, implemented in 2019, has been criticized for failing to reflect the volatile nature of global dairy markets, inhibiting effective price signals that correspond to supply and demand dynamics. This regulatory framework has reportedly contributed to the closure of 11 dairy processing businesses in Australia over the past 18 months.
As of 2023, Beston was one of 45 accredited dairy processors in South Australia, a decrease from 47 the previous year.