Coca-Cola Amatil (CCA) dropped a bombshell yesterday at the 2016 full-year results conference, revealing the company would close and sell the Adelaide bottling plant in 2019.
The closure will result in the loss of around 180 jobs from the Thebarton plant, with the first round of redundancies expected within months.
Adelaide’s loss, however, is Brisbane’s gain, with $90 million worth of new investment planned over the next three years for a new glass production line and new dairy and juice production capacity at the Richlands plant.
Last year CCA announced $75 million worth of investment in Richlands.
CCA plans to close the 80 year-old South Australian plant and sell the 2.5 hectare site, and use the capital to offset costs in other areas of the business.
The company expects to save $20 million annually from the closure, and will move other manufacturing operations to Kewdale (WA), Moorabbin (Vic) and Northmead (NSW).
At yesterday’s conference CCA group managing director Alison Watkins told C&I Week that the company had determined the plant to be too old for further upgrades.
“It’s certainly not a decision we’ve taken lightly,” she said.
“It’s the result of a fairly extensive analysis to look at where we need to invest in our Australian supply chain, and also looking at how we can optimize the overall cost structure.
So a lot of inputs around logistics costs, where product gets consumed… the South Australian facility produces quite a number of products that are consumed outside of South Australia at the moment.
“It’s an old site, it’s not a site that is suitable for future investment, so what we need to do is invest in new categories.
“Clearly the beverages landscape is changing, we now want to invest in dairy and juice, and it makes most sense from a national point of view for that investment to go into a site that has quite a lot of flexibility. And our Richmond site is the most logical from a cost point of view, so we had to make that tough decision.
“The site won’t close until 2019, and we’ll obviously be working very closely with all of our stakeholders in South Australia to handle the impact of that in the best way we possibly can.”
In other Coke news, CCA’s chairman of 16 years, David Gonski, will step down from the role and be replaced by Ilana Atlas.
“The 2016 financial results demonstrate the strong position I am leaving the company in, with good growth and excellent cash flows,” he said.
“I have enormous respect for my successor Ilana Atlas, who understands Amatil’s business operations and has the necessary skills to be an excellent chairman.”
CCA has also appointed Paul O’Sullivan as a non-executive director, effective March 1. Mr O’Sullivan is a former CEO of Optus and present chairman of the telco provider.