The food and beverage landscape in Australia

Date
12 August 2016

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Australia’s food and beverage industry is one of the most competitive and dynamic in the world – driven by consumers seeking greater diversity, quality and value in their food and beverage choices.

The Australian economy is entering its 25th consecutive year of growth – the second largest continuous period of any advanced economy in the world. Of this growth, the food and beverage industry continues to be a major contributor, with a turnover of approximately A$94 billion in 2015. Changing consumer sentiment and shopping behaviours, the entrance of major overseas retailers and a shift towards private label products are significantly influencing trading conditions – presenting exciting opportunities for export-ready New Zealand companies.

Read our full report into the Australian Food and Beverage Landcsape here.

The market

  • Woolworths and Coles remain the overwhelmingly dominant supermarket operators in Australia, with 31% and 26.4% of the retail market share respectively. However, newer entrants such as Aldi and Costco are gaining ground.
  • Price deflation from the expansion of private label products is expected to constrain revenue growth across bricks-and-mortar stores. Meanwhile, online retailing is set to take off.
  • The rise of health awareness amongst Australians has impacted on the foodservice industry, with many operators responding by introducing healthier choices that are low in, or free of, fat, sugar and salt. This has also impacted on the value and volume of food and beverage bought in each category.
  • There are 82,707 foodservice outlets nationally spending a total of A$15.5 billion on food and non-alcoholic beverages. For more insights into Australian foodservice trends, read our full report into the Australian Food and Beverage Landscape here.

Australian Food And Beverage Stats

Retail growth trends

  • Due to the expansion of discount supermarket chain, Aldi, the major supermarket players, Coles and Woolworths are continuing to step up their private label products. They now account for nearly one quarter of the grocery market. Fierce competition, the continued expansion of private label and the growth of discount companies like Aldi and Costco will continue to influence shopping trends over the next five years.
  • The liquor retail industry is expected to continue growing over the next five years driven by expanding interest in premium product and a rise in consumption rates at home. Independent liquor retailers are expected to feel the squeeze and will be forced to band together to compete.
  • The use of virtual grocery stores is anticipated to become more common, with retailers capitalising on the growing use of mobile devices like smartphones and tablets.
  • New Zealand is Australia's primary supplier of fish and seafood, accounting for 25 percent followed by China at 18 percent. It is estimated that in 15 years, Australia will need to import 500,000 tonnes of seafood annually in comparison to the 200,000 tonnes of edible seafood it currently imports.
  • The foodservice sector offers a number of opportunities with more people eating out but wanting fresh, healthy natural snacks and meal solutions. In the last five years, the trend to dine out has stabilised, with Australians typically spending around 33.5% of their food and non-alcohol beverage budget on foodservice according to Food Industry Foresight.

Import trends

  • New Zealand's biggest exports to Australia are wine, cheese, food preparations, bread, pastry biscuits, fish fillets, butter, chocolate, water, infant formula and fish.(i)  New Zealand products are often packaged for home brand or other local labels.
  • Many Australian consumers believe that home made products are of a higher quality than imported products, the vast majority believing it important to buy local although sales remain cost-based. Nearly 90 per cent of the food and beverage products Australians consume are still produced locally.(ii)

Market entry and development

Market entry strategies

  • The sophisticated Australian market calls for careful research. Ideally New Zealand companies should partner with a company in Australia, experienced in dealing with the big supermarkets. Furthermore, it is important to remember that Australia is not a single market. Each state has its own regulation and legislative requirements as well as cultural differences. Having access to local networks and resources that help you understand and manage those differences is crucial.
  • A well-researched selection of a distributor is important especially when dealing with Coles or Woolworths. These partners, who will offer a number of services, must be able to demonstrate they are focused on your products and can give a quick turnaround to customers.
  • Becoming a private label supplier to a supermarket chain is one route of entry. The advantage of supplying product for packaging is the freight and mass marketing costs are reduced  but the supplier still has innovation costs and there are lower profit margins. However, Australia’s major supermarkets work differently to New Zealand’s supermarkets, so you need to understand the buyers through meeting with them and doing research.
  • For more insights into how to enter the Australian food and beverage market, read the full report here.

Australian Food And Beverage - ImageRegulatory information

  • The joint Australia New Zealand Food Standards Code states the same food standards apply in both markets.
  • The Australian Agriculture and Water Resources Department is the equivalent of the Ministry of Primary Industries in New Zealand. For import requirements, take a look at Australia's Biosecurity Import Conditions System.
  • The major supermarkets and foodservice operators demand that suppliers have HACCP (Hazard Analysis and Critical Control Point).
  • New Zealand goods enter Australia duty free under the Australia New Zealand Closer Economic Relations Trade Agreement (ANZCERTA) as long as the good has been made in either New Zealand or Australia. For more information please see the Tourist Refund Scheme website.
  • A Goods and Service Tax (GST) of 10 percent applies to certain food products on the basis of value. There is no GST on fresh produce but on a number of packaged foods. For more information please visit the GST food guide on the Australian Tax Office website.
  • New Zealand and Australia share the same food labelling code, set out in the Australia New Zealand Food Code.

Market resources and contacts

Government

Australia Customs

Australian Food and Grocery Council

Department of Agriculture and Water Resources

Agribusiness Association of Australia and New Zealand

Food & Beverage Importers Association

Food Standards Australia New Zealand

Industry

Coles

Woolworths

Metcash

Trade

Fine Food Australia

Additional Sources

(i)Statistics NZ, via the World Trade Atlas, International Trade Centre, (ITC) Trade Map
(ii)(Australia Food and Grocery Council, 2010. State of the Industry 2010

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