King Island Dairy Saputo owners historical Mafia connections (part 5)

By Tess Lawrence

Continued from Part 4

2024

On December 2 last year, McGill University’s Professor Karl Moore from the Desautels Faculty of Management, specializing in leadership and strategy, interviewed Lino Saputo Jr, for his podcast on CEOs.

This episode is of particular interest to Australia because it provides an insight into the culture of Saputo under the stewardship of Lino Supato the younger.

(The Montreal university was actually founded in 1821 by Royal Charter from King George 1V no less. It is sometimes referred to as the ‘Harvard of Canada’ and has forged a particular reputation in the field of public research).

During the discussion, Saputo Jr revealed how he first came into contact with Warrnambool Cheese and Butter in 2001 and for 14 patient years he maintained entrepreneurial strategic personal contact with WCB management, finally securing the co-operative in 2014 for Saputa.

(Lino Saputo Jr., CEO of Saputo Inc. – The CEO Series with McGill’s Karl Moore).

2024

On September 5 last year, Saputo issued a crushing, strange press release that had a downbeat, desultory air of business surrender and finality that was of course heartbreaking to King Island Dairy workers, families and Tasmanians, let alone cheese lovers. Furthermore, it was hardly likely to entice prospective buyers. Check it out:

Outcome of King Island Dairy strategic review

5 September 2024

Today, after careful consideration, Saputo Dairy Australia (SDA) announces it has made the difficult decision to commence the final operating season of King Island Dairy, with the intention of closing the facility and retiring the brand in mid 2025.

Over the past 10 months, SDA has sought to maximise value for the business by conducting an intensive review of all commercial and financial alternatives for King Island Dairy, including a potential sale to a third party. SDA’s immediate focus will be to work with its valued King Island employees, dairy farmers and the broader King Island community to support them through the transition period.

Leanne Cutts, President and Chief Operating Officer (International and Europe), Saputo Inc., said this decision had not been taken lightly. After thoroughly reviewing every possible option, closure of the facility was determined as the most viable way to strengthen SDA’s competitiveness based on changing industry and market conditions.

“As King Island Dairy’s historic roots are deeply embedded in the region, it was hoped the strategic review would identify a potential buyer for the facility. It is a unique brand, with a plant that is nearly 100 years old and designed to produce hand-made specialty cheeses.

“We have invested more than $40m in all our Tasmanian operations over the past five years. While our other Tasmanian brands such as Mersey Valley and Tasmanian Heritage are thriving, and King Island Dairy products hold a nostalgic place in the hearts of Australians, the brand has not maintained its position in today’s ultra-competitive food industry…” 

Whose fault is that, then?

Yes, there had been an earlier news release the year before, that announced in blurbspeak spin and what we might describe as weasel words touting the strategic review by MA Moelis Australia.

The concern in the news release seemed more for SDA (Saputa Dairy Australia) rather than King Island Dairy.

Here’s part of that news release that’s worth revisiting after the above.

Again, Leanne, nicknamed “she of a thousand” Cutts, President and CEO of Saputa Inc, International and Europe, was quoted to keep the media at bay:

Strategic Review of our King Island Dairy facility

8 November 2023

Today, Saputo Dairy Australia (SDA) makes new announcements in line with the Optimise and Enhance Operations pillar of Saputo Inc.’s Global Strategic Plan:

● after careful consideration, SDA will undertake a strategic review of its King Island Dairy facility in Tasmania; and
● SDA has committed an additional $27 million towards improvement projects across its sites in Victoria and Tasmania, commencing this fiscal year.

SDA intends to keep its King Island Dairy operations running at regular capacity while it assesses possible future scenarios to maximise value for the King Island Dairy business. With the assistance of its advisors, MA Moelis Australia, the review will consider a range of strategic, commercial and financial alternatives, including a potential sale to a third party so the facility can continue to make its award-winning products for the long term. Approximately 63 employees that work at the facility have been informed of the strategic review and site management will work closely with them throughout the process.

Alongside this strategic review, SDA will continue a series of investments across its Victorian and Tasmanian sites. To further enhance the company’s network efficiency and capability, and reduce its operating costs, SDA is investing an additional $27 million in new capital projects, including $8 million to improve its climate, water and waste performance.

“In making these investments and strategic decisions, we remain focused on maximising our return for every litre of milk to further enhance SDA’s position as a high-quality, low-cost processor in Australia,” said Leanne Cutts, President and Chief Operating Officer (International and Europe) of Saputo Inc…”

Saputo Bought King Island Dairy for mere $290 million

Previous 12 Months KID Generated Revenues of $192 million

So What Went Wrong?

Saputo Inc bought the King Island Dairy for a sea farer’s ditty.

I say “mere” because in the preceding 12 months of that purchase, the KID had generated revenues of about $192 million and you don’t have to be Alan Kohler to know that Saputo is the cat that got the cream in this deal.

So what curdled in the intervening less than five years since Saputo took over?

Saputo is a behemoth when it comes to being a big cheese in the global dairy products industry.

Big Daddy Saputo retired as chair in 2017 but like Rupert Murdoch he is said to maintain control, despite his successor Lino A Saputo Jr. a former president and chair of the company, now appointed executive chair.

Lino junior is rather like Lachlan junior. Or Donald Trump Junior. Like little boys in short pants busting to wear long pants.

Saputo Is a Global Behemoth

Whether we know it or not, Saputo is a global behemoth and its products inhabit the wider world and not just supermarkets. It’s everwhere, even atop Domino’s Pizza.

 

 

Saputo makes certified Halal and Kosher products and cheeses made from rBGH-free (recombinant bovine growth hormone) milk.

2024

Premier Rockcliff Accuses Saputo of Trying to Kill off the KID

Tasmania’s premier accuses Saputo of trying to kill off King Island Dairy brand, rather than sell brand

On December 19, the Australian Broadcasting Corporation (ABC) report by Sandy Powell quoted an angry Tasmanian Premier Jeremy Rockcliff calling out Saputo:

“The Tasmanian premier says he is worried a Canadian food giant may not actually be interested in finding a buyer for the King Island Dairy…

In September, the multinational Saputo said it had been unable to find a buyer for the beloved cheesemaker and would simply shut it down in mid-2025…

But the government’s efforts to engage Saputo in discussions with “interested parties” have so far been unsuccessful and Mr Rockliff issued a statement on Thursday accusing the company of welshing on its responsibility…”

Rockcliff’s views are widely shared – at least insofar as the King Island Dairy is concerned, but he is being criticised for his perceived inertia. For not walking the talk.

2024

On December 23, always a good time for releasing bad news that media consultants and crisis managers hope will float into an invisible ether, Saputo announced that its Chief Operating Officer, Frank Guido, who had been in the job for a nano second – was out. Effective immediately!

There is much speculation about Guido’s exit.

2024

On December 29, when things were already dismal for King Island Dairy workers and families, for the word had got around, the Simply Wall St Editorial team published a brutal study about Saputo:

Saputo Inc.’s (TSE:SAP) Dismal Stock Performance Reflects Weak Fundamentals

It is hard to get excited after looking at Saputo’s (TSE:SAP) recent performance, when its stock has declined 15% over the past three months. We decided to study the company’s financials to determine if the downtrend will continue as the long-term performance of a company usually dictates market outcomes. Specifically, we decided to study Saputo’s ROE in this article.

2025

On February 4, the UK based FoodBevMedia’s Melissa Bradshaw ran an article confirming that Saputo Dairy UK was about to do to some Davidstow farmers/suppliers in England’s south west, what it has done to Tasmania’s King Island Dairy; that is, pull the plug.

Bradshaw also revealed that “…The news follows Saputo’s proposed closure of its Kirkby Malzeard plant in North Yorkshire, UK, announced in January 2025. If implemented, 80 jobs would be put at risk and the majority of the site’s operations would be relocated to Nuneaton, Warwickshire, following a major investment at the Nuneaton site…”

Saputo’s press release contained its well worn, arguably meaningless platitudes that seem so regular and familiar, they may as well be AI computer generated.

2025

Saputo Reports Financial Results for the Third Quarter of Fiscal 2025 Ended December 31, 2024

On February 6, possibly earlier than expected, Saputo published its Third Quarter results.

The only reference to the closure of the King Island Dairy that I could find is this oblique mention: –
During the second quarter of fiscal 2025, we recorded severance and site closure costs totalling $7 million ($5 million after tax) mainly in connection with our intention of closing one of our Dairy Division (Australia) sites. There were no restructuring costs during the first and third quarters of fiscal 2025.

There is no reference to seeking or securing a new buyer for the King Island Dairy.

Fiscal 2025 Third Quarter Financial Highlights

● Revenues amounted to $4.994 billion, up $727 million or 17.0%.
● Net loss totalled $518 million.
❍ A non-cash goodwill impairment charge of $674 million after tax was recorded in relation to the Dairy Division (UK) in our Europe Sector.
● Net loss per share (EPS) (basic and diluted) were $1.22, compared to $0.29.
● Adjusted EBITDA1 amounted to $417 million, up $47 million or 12.7%.
● Adjusted net earnings1 totalled $167 million, up from $163 million, and adjusted EPS1 (basic and diluted) were stable at $0.39.

 

(unaudited)	For the three-month periods ended December 31				For the nine-month periods ended December 31
	2024		2023		2024		2023
Revenues	4,994		4,267		14,308		12,797
Adjusted EBITDA1	417		370		1,189		1,130
Net earnings (loss)	(518)		(124)		(250)		173
Adjusted net earnings1	167		163		491		498
Earnings (loss) per share
Basic and Diluted	(1.22)		(0.29)		(0.59)		0.41
Adjusted EPS1
Basic and Diluted	0.39		0.38		1.16		1.18

 

Why is Saputo so Secretive?

You will have noticed how often media has sought comment from Saputo and been met with silence, a sure invitation to speculation and conjecture.

Saputo seems to operates from a defiant position of privilege. There is little evidence of public accountability or transparency.

From discussions with empoyees, there appears to be little empathy with employees, and are accused by by sources of behaving like a corporate sociopath, in relation to the King Island Dairy kill in particular.

Workers whose families may have invested successive decades of loyalty to some of these cherished and proud businesses claim they are not treated as if they are sentient human beings.

Here I do not single out Saputo. The community is always entitled to assurances that businesses are neither deliberately “fatted” up nor alternatively “starved” to satisfy any behind-the-door requisites/agreements between the buyer or seller. So-called ‘friendly ‘takeovers need to be transparent.

There are certainly legitimate concerns about aspects of the King Island Dairy story; a story that started with a group of soldier settlers, I understand.

There is disquiet put to me, that the KID may have been deliberately drained of blood and employees tell me that machinery has not been upgraded or properly maintained, and that there has been an obvious lack of investment in this valuable property.

These claims extend to marketing campaigns for some KID products in particular.

Speaking with locals, former and present workers – and corporate analysts, it is clear that there is reduced respect for the Saputo name, its professed corporate ethics and claims of treating workers like family.

Despite their future being doomed, heartbroken employees said they carried on working not because of the Saputos, but despite them and rather more because of their pride in their products and the King Island Dairy – and for King Island itself.

They explained how it was they in the first place who were responsible for “growing” the fine reputation of the KID cheeses and that whilst Saputo had bought the company it had not bought their loyalty. That had to be earned. And it never was.

It’s apparent ‘hit and run’ style of acquisitions and touchy-feely public relations guff appealing to familial and nostalgic threads – and the subsequent ruthless dispatch of those very same entities in what some perceive as a very short space of time, does seem to warrant proper corporate forensic analyses.

Of course workers are understandably upset at losing their livelihood, especially when there is little employment opportunity for their talents and experience.

Informants were/are fearful of retribution and spoke on condition of omerta, the code of silence, broken by mobster Joe Bonanno those years ago.

Given the body of material in the public domain about the relationship between Bonanno and Lino Saputo, the public surely has the right to know if due diligence was conducted before Saputo bought Australian entities.

Put simply, did our regulators, including the ACCC check him out?

Did they watch the documentaries you’ve seen in this article?

Did they watch the most recent documentary made in 2020?

If so, what did they conclude?

Was Lino Saputo Sr ever interviewed about Joe Bonanno?

Was Lino Saputo Jr ever interviewed about his father’s relationship with Joe Bonanno?

Did the authorities and regulators seek advice from their counterparts overseas?

One draws this analogy – if someone who had documented links to a known ISIS terrorist decades ago wanted to set up shop in Australia, what checks would our regulators and policing authorities implement?

What would be the extent of their intelligence gathering?

Senator Jacqui Lambie Fights For King Island Dairy

Few would dare to question Senator Lambie’s passion for Tasmania – and King Island. She spoke for so many of us, in Federal Parliament.

She also informed the Senate – and Australia – that she’d contacted Saputo and they had nothing to say.

You would be forgiven for thinking such attitude towards an elected Senate representative for Tasmania reflects Saputo’s contempt for Senator Lambie, indeed the Senate and parliament itself.

Why wouldn’t Saputo want to talk with the Senator for Tasmania?

There’s that Code of Silence again.

 

 

It is curious how the Fates seem to conspire with us at times.

How ironic that at the time of writing the original building of the King Island Dairy is for sale at $495,000.

 

2900 North Rd, Yambacoona, Tasmania

 

 

 

 

 

From the photos, it looks as if the building could do with some TLC. I’d buy it in a flash had I a penny to my name.

How is it that its contemporary offspring has come to such ignominy. Surely the Tasmanian Government should step in, at least on a temporary basis.

People deserve a Federal Parliamentary Inquiry, possibly a Royal Commission into the King Island Dairy debacle.

It is time that Saputo be compelled to abandon its Code of Silence. Omerta is intolerable in its bid, as the Premier said, to kill the KID.

 

*Disclaimer. Once again, I confirm neither I nor The AIMN make any imputation whatsoever against Lino Saputo Sr or Saputo entities. Furthermore, I, Tess Lawrence, assume any and all editorial responsibilities for the writing and publishing of this article/series in The AIMN.

 

© Tess Lawrence

 

Tess Lawrence is Contributing editor-at-large for Independent Australia and her most recent article is The night Porter and allegation of rape.

 

 

 

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