Patties Foods exits the frozen berries market after 'Nanna's' Hepatitis A break out

Victorian packing company Patties Foods has sold its Creative Gourmet business, and will be out of the frozen fruit market by early 2016.

Patties Foods has sold its frozen berries business to Entyce Food Ingredients for an undisclosed sum.

The company says the funds from the sale would generate $1.8 million, a sum which is unlikely to affect its fiscal 2016 results.

The sale follows a Hepatitis A outbreak linked to its Nanna’s berries brand earlier this year. More than 30 people were diagnosed with Hep A and government authorities believed at the time the common link was Patties Foods’ frozen berries.

A product recall in February saw thousands of packets of Nanna’s berries pulled from shop shelves, putting a major dent into the company’s full year profit report. Its net profit after tax was down from $16.7 million to just $2.1 million.

At the time of the outbreak, the company’s shares tanked 6.5% to $1.28.

Before the recall, the berries business generated 13% of Patties’ sales.

In November, at the company’s AGM, Patties managing director Stephen Chaur had said the frozen berries food category was still underperforming relative to the year previous.

“It is recovering slowly, but it is going to be a long, slow haul,” he said.

“We’re pretty optimistic that coming into summer – it’s berry season, everyone’s getting fit, everyone’s drinking smoothies – that sales will start to pick up. But really over the last six months, we’ve really just been working with retailers and consumers to get that trust back.”

Once the transaction is completed, expected to be by the end of December, Patties will turn its focus to its savoury and pastry business which represents 90% of the company’s sales and pre-tax earnings.

Shares in Patties Foods were steady at $1.16 following the announcement.

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