Australia’s biggest horticulture company, Costa Group, is poised...

Australia’s biggest horticulture company, Costa Group, is poised to add a fifth pillar to its burgeoning produce business by moving into the farming of avocados to capitalise on soaring consumer demand for the fruit.
The listed Costa Group, which is partly owned by former Geelong Football Club president Frank Costa and his brothers and US private equity firm Paine & Partners, has transformed the way fruit and vegetables are farmed by growing them in glasshouses and galvanised steel tunnels.
It also grows its produce in numerous growing locations across the country, reducing disease and weather risks and allowing the company to supply all year round.
Costa is making millions of dollars from its booming crops of blueberries, raspberries, strawberries and mushrooms. It also produces tomatoes and citrus products. But chief executive Harry Debney said the group was actively looking to use its strong balance sheet to establish a fifth pillar.
“We are happy to say we are actively looking at the avocado sector as that fifth pillar. Avocados to us are very attractive. Our portfolio is at the healthy end of the eating spectrum and we think avocados fit well within that,’’ he told The Australian.
“Second to berries, Avocados sit right up there as a very strong growth area and we think we can — if we go into a multi-region program — get a 52-week supply. Costas is already a very large ripener and marketer of avocados. We want to build a vertical. We already have elements of that established in the sales, marketing and ripening sector. So it is logical we integrate backwards into farming.’’
The Australian avocado farming market is highly fragmented and run by largely family-based businesses, with the biggest players being in Bundaberg in central Queensland and Western Australia.
Mr Debney declined to comment further on the strategy but Costa is expected to look to acquire businesses and supplement those acquisitions with fresh plantings. It already runs a small avocado crop in Renmark in South Australia.
Costa’s blueberry, raspberry and summer strawberry production is commanding price premiums in supermarkets compared to products such as apples, tomatoes and bananas.
‘’We intentionally scaled back on bananas and grapes and some of these more commoditised categories some years ago. In most of our categories we have significant advantages — not just high market share but intellectual property protection,’’ Mr Debney said after Costa lifted its profits by 500 per cent in its first year as a listed company.
In February this year Costa announced $80 million of capital projects for its berry division over the next four years. Costa is also looking to sell its berries overseas and earlier this year launched a Chinese production company with giant US berry producer Driscoll’s.
In mushrooms, Costa is value-adding to its products by delivering sliced and pre-packaged produce to the supermarkets, which are attracting superior prices.
“In the case of mushrooms, we do a lot of value-add with consumer packaging and pre-packing,’’ Mr Debney said.
The group’s South Australian-based orange crop is also protected as 60 per cent of its production goes to export.