SunRice makes a meal of it

A big post-drought product innovation push by the iconic Australian brand has helped drive up SunRice revenue, locally and overseas, as the company targets more value-added earning opportunities.

New packaging, rice product blends and meal packs (55 new product releases in total) have largely transformed its domestic market offering in the past 18 months following the farmer-owned company's rebound from a decade of drought pressure on earnings and capital spending.

Total sales revenue has climbed from $809 million to $1.15 billion since 2010 and is on track to break $1.2 when the trading year ends in May.

Highlighting the brand's momentum in overseas markets have been a recent run of serious sales gains in the Middle East following a social media advertising campaign which spurred Australia's share of the market to new post-drought highs - 30pc better than a year earlier.

Best performers included Kuwait and Jordan, up 36pc and 27pc respectively.

At home last calendar year's core gluten-free white rice product range lifted its retail sales volumes almost nine per cent in a market segment that grew just 3.3pc.

Microwave sachet pack and cup sales increased 12pc and value-added rice cakes, including new mini bites pitched at the school canteen and lunch box market, grew 8pc.

The innovation and marketing push has included more value-added packaging for Asian markets, and across the Pacific and the Middle East where SunRice products enjoy exceptional loyalty and brand recognition rivalling Coca-Cola.

The offshore and local marketing push has contributed to SunRice's annual earnings (after tax) almost trebling to $34m in the past four years.

Its October 31 half-year after-tax profit jumped 39pc on the same period in 2013 to $22.7m.

"We're intent on growing the size and profitability of our market to bring better returns back to our growers and shareholders," said chief executive officer Rob Gordon.

"We've got a trusted product and strong brand equity and heritage, so since coming out of drought we've used that platform to invest in new products and marketing strategies.

"Rice remains very much our core business, but we are extending our experience in convenience meals to be a packaged meal business with other ingredient blends and meals outside rice."

Pasta-based snacks are already part of SunRice's heat-and-eat range, as are lentils, chickpeas and other grain mixes in new "health and wellbeing" lines which Mr Gordon described as "going like a train".

Particularly popular were rice blends with so-called "super foods" quinoa and chia available in heat-and-eat formats or as part of the new re-sealable household pantry packs.

The SunRice offering extends to organic, exotic red and black gourmet rice, and "clever" low glycemic index Doongara white rice (with a GI of 54).

Low GI rice also has strong potential in Asia, where concerns are mounting about a spike in diabetic health problems associated with the population's increasingly westernised diet.

Meanwhile, the growing popularity of gourmet Japanese cuisine in developing Asia was also opening up markets for short and medium grain Australian sushi-style rice.

"Thailand, despite having its own sizeable rice stockpile, is becoming one of those premium markets for us because, like most of Asia, they only really grow long grain," Mr Gordon said.

With 80pc of the the Australian crop exported, SunRice was focusing on beefing up exports of retail packaged and consumer convenience meal lines, rather than relying as heavily on earnings from bulk tender contracts with foreign governments and traders.

Mr Gordon said value-added packaging and convenience lines adapted from products developed for Australian consumers were bolstering overseas revenues, and volumes continued to grow despite the price premiums attached to the SunRice brand.

"We're certainly not without our competitors or market access challenges," he said.

"The US built a strong presence in the Middle East when we were unable to supply Australian rice during the drought, but we've recovered our old volumes and more - and we generally sell at a premium to Californian rice."

However, while Europe and many potential Asian markets remained relatively untouched because of trade barriers and the crop's political sensitivity in regions such as the Indian sub-continent, SunRice was focusing on better servicing existing customers and shaving distribution costs.

"We play a genuine food security role in many of our traditional markets," he said.

"We are blessed with an extraordinary brand reputation, but comes with considerable social responsibility, particularly in the Pacific and PNG."

Brown rice chips are notching up an impressive debut for SunRice in the salty snack food market as the brand takes on traditional name such as Smiths, Doritos and Red Rock Deli.

Since September's launch of the gluten-free healthy snacks, SunRice has been "hard pressed to keep enough on supermarket shelves" according to chief executive officer Rob Gordon.

The 158 gram packs retail at a health food premium price of about $5 each.

SunRice is currently sourcing its chips from the US, but Mr Gordon is keen to explore other local processing options if demand continues to be as robust in the whole food aisles of Coles, Woolworths and IGA supermarkets.

The company is currently cranking up production of mini rice cakes and heat-and-eat meals previously made in Thailand as part of an $8.5 million investment in food processing capacity at its Leeton plant in southern NSW.

The project, employing 20 extra staff at the site, will be fully operational next month and follows another $8.5m investment in the nearby CopRice pet food kibble extrusion plant and its northern Victorian feed mills last year.

SunRice invested about $32 million last financial year on new equipment and efficiency initiatives to help boost its capacity and product range.

"Some of these food lines start off being made in Thailand when we introduce them, but we look to bring more of our sachet and cup meal lines back to Australia," Mr Gordon said.

"The vast majority of what we do is here, creating jobs in regional areas and bringing jobs onshore at a time when others are going offshore.

"We think we're a really good news story for the Australian food sector - we're very proud of what we're achieving."

Since 2010 SunRice had also doubled its investment in marketing to support and invigorate new product packaging changes.