The Business Herald’s markets and banking reporter.

Church business survives Marmageddon

Sanitarium rides out losing a year of Marmite sales after earthquake damage closes its factory

Stocks of Marmite ran dry in early 2012 after quake damage at Sanitarium's Chch factory required the facility to be shut down for repairs. Photo / APN
Stocks of Marmite ran dry in early 2012 after quake damage at Sanitarium's Chch factory required the facility to be shut down for repairs. Photo / APN

Sanitarium's much-publicised Marmite shortage failed to stop the food manufacturer's owner, the Seventh-day Adventist Church, from reporting a rise in revenue for its tax-free New Zealand businesses in the last financial year.

The church does not disclose financial results for Sanitarium alone, but the Royal Oak-based firm's sales are included in the annual accounts the church lodges with the Charities Register each January for its "Group One" entities.

Those entities - which also include Avondale-based Life Health Food, the maker of brands such as Lisa's and Naked Organics, and the Bethesda retirement village in South Auckland - reported total revenue of $187.3 million for the year to June 30, 2013, up 3 per cent on the previous year.

Stocks of Marmite ran dry in early 2012 after earthquake damage at Sanitarium's Christchurch factory required the facility to be shut down for repairs.

The spread returned to supermarket shelves towards the end of March 2013, roughly three months before the end of the church's last financial year.

After deductions were made for charitable activities and other expenses, including $8.9 million worth of "appropriations" to church entities, the religious organisation reported a net surplus of $5.2 million for the year, up from a net deficit of $56.3 million in the prior comparable period.

The church's businesses are exempt from paying company tax because they are registered with the New Zealand Charities Commission.

James Standish, communications director for the South Pacific Division of the Seventh-day Adventist Church, said most of the 3 per cent revenue growth reported in the latest accounts had come from other areas of the church's trading activities, rather than Sanitarium.

"Sanitarium's total revenue has remained steady over the last two years with any increases being largely offset by the Marmite shortfall during this period."

Standish said the "substantial cost" of the Marmite shortage had been covered by insurance.

The Seventh-day Adventist Church booked $7.2 million in insurance proceeds in the latest financial statements.

Sanitarium general manager Pierre van Heerden said Marmite sales had returned to pre-shortage levels since sales resumed 10 months ago.

"We're back to the penetration levels we had prior to the earthquakes," van Heerden said.

"It's taken a bit of time to get all of our different (product) sizes into the marketplace."

He said Sanitarium - which also produces Weet-Bix and Skippy Cornflakes - stood to gain a small amount of benefit from an improving economy.

The company was relatively recession-proof, van Heerden added.

Sanitarium has faced criticism in the past for the income tax exemption it receives.

Its profits help fund the church's charitable activities, which include the Adventist Development & Relief Agency, schools and aged care facilities.

In a 2001 submission to an Australian inquiry into the definition of charities, New York-listed cereal giant Kellogg's complained that Sanitarium's tax exemption gave its Australasian rival an unfair advantage.

Sanitarium says on its website that it operates exclusively for charitable purposes.

It says it does not hold a "preferential position" in the market as a result of its tax-exempt status.

The Inland Revenue Department considers the "advancement of religion" a charitable purpose that qualifies for a tax break.

- NZ Herald

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