Papua New Guinea’s oldest manufacturing company, Paradise Foods, is marking its 80th year of operations this year, after its humble beginnings as a small town bakery in 1933. Behind the quiet celebrations are big expansion plans, Managing Director David Peate tells Business Advantage PNG.

Paradise Foods Limited has come a long way since it started as Morobe Bakery in the gold fields of Bulolo in 1933.

Following a merger  of Morobe Bakery and the Paradise Bakery Group in 1992, Arnotts Biscuits/Campbell Soup Company bought 80% of the company and changed its name to Arnotts Biscuits (PNG) Limited.

In July 2007, Arnotts sold its stake in the company to then local minority shareholders, Nambawan Super Limited and Comrade Trustees Services Limited, which changed its name to Paradise Foods Limited, and appointed the incumbent Arnotts CEO, David Peate, as Managing Director.

Arnotts’ stewardship saw the commissioning of a new manufacturing facility in Port Moresby and  a move into snack foods with the purchase of  the popular Gold Nuggets brand .

It’s now one of PNG’s leading manufacturers, producing brands such as Nambawan, Wopa, Highway and Em Nau.

Pepsi  returns

‘As a 100% Papua New Guinea owned company, it has been our aim to grow the business and we are now also the PepsiCo  bottler and distributor for Papua New Guinea,’ says Peate.

‘We are currently investing in a multi-million kina bottling plant in Lae which will be operational early next year. This further enhances PNG’s manufacturing capability and increases employment .

‘If the market was open slather, I don’t know how many local businesses would survive.’

‘Pepsi was here many years ago, but experienced a hiatus until Paradise Foods officially reintroduced the brand in 2012. Pepsi is well known here and we’re quite pleased with what we’re getting in sales at the moment.’

‘We’ve never looked on Coke as an opposition,’ says Peate. ‘It’s more another player in a market that’s growing.”

New chocolate plant

Part of the company’s strategy is to help develop PNG’s agricultural and downstream processing sector. The company has invested in a pilot plant to produce chocolate using PNG premium cocoa beans under the name “The Queen Emma Chocolate Company”.

As we reported in March, state-of-the-art technology is used, allowing Paradise Foods to ‘use the whole bean without any additional cocoa butter, resulting in a very pure rich taste’.

The chocolate is currently only on sale in the duty free shops at Jacksons Airport.

‘My only regret with the chocolate is that it is still at the pilot plant stage, and that our two existing retail customers can’t get enough product to meet demand,’ says Peate.

‘The cocoa itself is very good. However, the processing is not to the consistent standard that we require. We’re working with a number of different agencies to help educate growers to improve in this area.’

Peate is expecting board approval this year to commission a commercial-scale chocolate processing plant, with the range expected to be on sale, mainly as a premium export product, in early 2015.

High local costs

Peate says Paradise faces a number of challenges as a PNG manufacturer.

‘Doing business in PNG is expensive. For example, we have expensive and unreliable utilities, which force companies to provide their own backup systems and security cost are high. In addition to this, ingredients and input cost are high.

‘We’re large secondary user of ingredients and packaging processed in Papua New Guinea. These local manufacturers are of a relatively small size which means that local production runs don’t leverage the scale available in other nearby countries such as Australia and those in Asia. This drives up the cost of local manufacture.

‘So we pay a premium to buy and use local products, but which in turn creates employment, keeps imports down and sees this money stay in PNG.’

To maintain a level playing field for local manufacturers, Peate believes that import duties have an important role to play.

‘If the market was open slather, I don’t know how many local businesses would survive.’