Background
Duxton Orchards owns, leases and operates 316 ha of apple orchards, located at Loxton and Nangwarry in South Australia, along with a 5,127sqm storage and packing facility at Monarto, South Australia. Duxton Orchards is planning an additional 50ha planting at Nangwarry along with an expansion of the cool room facility at Monarto, planned to commence in 2022. Duxton Orchards currently produces approximately 4% of Australia’s total apple production, representing 25% of South Australia’s apple production.
Fundamental Drivers of Value
Fragmented Australian Market: The apple industry is highly fragmented throughout Australia, with no dominant producers commanding market share. It is estimated that approximately 60% of apple growers in Australia earn less than AUD$200,000 annually, with only 6% of industry participants generating more than AUD $6m in revenue.14
Inelastic Demand: Apples are a staple in most households and consumption is not impacted by economic prosperity. Australians consume ~8.5kg of fresh apples per capita annually, with 88% of Australian households purchasing apples as a fruit staple.15
Decreasing Supply: Although demand has been strong historically, Australian apple production has decreased from 300,000 tonnes in 2017 to 263,000 in 2020.16 The decrease is primarily attributable to the combined impact of increased water prices in Victoria and the recent Australian bushfires which destroyed approximately 5% of Australian production.17
14 Apple and Pear Australia Limited, apal.org.au
15 Australasian Agribusiness Review, 2020, Volume 28, Paper 2
16 Apple and Pear Australia Limited, apal.org.au
17 Australasian Agribusiness Review, 2020, Volume 28, Paper 2
