Australian food company Burns Philp is examining the flour supply agreement between its Australian baking subsidiary and Allied Mills as it attempts to further cut costs at newly acquired Goodman Fielder.
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Burns Philp’s Baking Australia has a five-year deal with Allied Mills, the milling business sold by Goodman Fielder to joint venture partners GraIncorp and Cargill only months before Burns Philp launched its takeover bid for Goodman, reported the Australian Financial Review.
The contract to supply flour and flour-based products to Goodman’s bakeries is likely to be watertight but by scrutinising the contract Burns Philp could put pressure on Allied Mills to improve any uncompetitive elements in order to increase its chances of extending the contract with Goodman beyond its expiry date.
Burns Philp has achieved annualised cost savings of A$25m (US$16.7m) at Goodman Fielder since gaining control in March and aims to double this amount by the end of the financial year.
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By GlobalData
