asean market update for agrifood exporters

ASEAN Market Update for Agrifood Exporters

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David LawsonHead of Client Services

Agribusiness/Food

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Sally DeaneA/g General Manager, ASEAN

ASEAN SNAPSHOT

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'Hot' Industry Sectors*

1. Dairy

2. Beef and lamb

3. Horticulture

4. Wine

* With variations by market

Key Facts And Top Trends

Rising interest in healthy lifestylesEmerging middle class interested in health trends

Increasing interest in 'western' food and experiencesBut local tastes and palettes do remain important and in many cases 'fusion' can be a path to success

Rapid acceleration of digital economy40 million new users online in 2020, bringing total internet users in the region to 400 million

Import regulations can be complexSome countries have goals of self sufficiency and non-tariff barriers can arise

>12,500 Australian businesses exporting to ASEAN (all sectors, 2019)

IndonesiaHannah Wade Trade Commissioner

Population• 52 million middle class

(264 million total)• 55% urban population

Trade Relationship• 13th largest trading partner

• Dominated by agricultural exports, petroleum,

manufactured goods imports

Economy• Largest in ASEAN

and 16th largest globally

Political• World’s third largest

democracy

Digital • 170 million social media users • Most popular social platforms:

YouTube, WhatsApp, Instagram, Facebook

FTAs• AANZFTA (2010)• IA-CEPA (2020)

Workforce• 135 million (World Bank)

• Agriculture (27%), Wholesale/retail trade (19%),

manufacturing (15%), construction (7%) (OECD)

Ease of Doing Business

• #73 globally in EODB Index 2020

Indonesia Political & Economic Overview

Market Overview

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Covid-19 Impact Update

Distribution channel Opportunities Challenges

• Daily caseload remains high, localised restrictions, vaccine rollout commenced

• Food service significantly impacted, particularly tourist centres

• Stronger performers include vitamins, fresh food, 'healthy food'

• Increased e-commerce sales during pandemic& home delivery

• Largely through importers/distributors

• End channel for most imported products are 'modern retail', food service or food manufacturing (not traditional retail / convenience) - Ranch Market, Hypermart, Farmers Market

• E-commerce is through traditional channels first (though cross-border still occurs)

• IA-CEPA has (re)opened access (carrots), reduced tariffs (meat, dairy, honey) & increased quotas (live cattle, citrus, grains)

• Strong consumer Australian dairy & beef recognition

• Strong pandemic performance for vitamins, fresh food, healthy packaged food

• Consumer interest in 'new things'

• Growing middle class

• Market access challenges - complexity in import quotas (e.g. carrots, potatoes), import permits (e.g. table grapes, wine)

• Product registration for packaged products (inc. dairy) 6-12 months. Change in importer means re-registration

• Restrictions on alcohol sales via e-commerce

• International competition – USA, South Korea, Japan, Europe, NZ

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Top tips

Top 3 takeaways Drivers of success

Be ready for Indonesia to be a ‘long term play’ – regulatory and brand establishment may take some time

Middle class increasingly seeking healthy lifestyle products and new trend products (e.g. K-Pop popularity has seen rapid increase in Korean food sales; new interest in home baking)

Covid-19 continues to affect food service (particularly in tourist centres), though rise of takeaway and ease of home delivery has compensated in major cities

Regulatory regime can be complex and takes time– be prepared!

Important to cater to local expectations and tastes (e.g. how product flavours interact with local cuisine, importance of halal certification)

Finding a strong import partner and committing to (potentially large-scale) joint promotions and marketing

Malaysia (& Brunei)Paul SandaSenior Trade Commissioner

Population• 32 million

• Urban population 76.6%• Average age 29 years

Trade Relationship• 2nd largest trading

partner ASEAN

Economy• 3rd largest ASEAN economy

• Upper middle-income

Political• Generally stable

• Good IP protection

Digital Data• High internet

penetration rate 84%

Workforce• Multi-ethnic and

diverse society• Malays 70%, Chinese

23%, Indians 7%

Ease of Doing Business• #12 out of 190 economies• English business language

• 3,800 Australian companies trade with Malaysia

Malaysia Political & Economic Overview

FTA• RCEP, AANZFTA, MAFTA• 99% Australian goods

tariff free• Preferential treatment for import requirements

Market Overview

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• Malaysia now in recovery phase and GDP growth is forecasted to reach 6% (2021)

• Hospitality sector impacted - lower hotel occupancy & decline in restaurant sales

• Offset by growth in grocery retail, food mfg. & e-commerce

• Social distancing, restrictions on alcohol establishments and consumption

• Main upmarket retailers: AEON, Village Grocer, Ben’s Independent Grocer, Jaya Grocer, Cold Storage

• Channels to market: Local distributors, Australian consolidators, Direct import

• Considerable ecommerce presence: Lazada, Shopee, HappyFresh. Retailers (Lotus, Jaya Grocer)

• Strong demand for Australian brands

• Increasing awareness of healthy and organic foods

• Australia's geographic proximity to Malaysia -logistical advantages

• Largest e-commerce market in ASEAN

• Growing demand for plant-based proteins

• "Australia-known"

• Existing trade barriers in several categories (dairy, meat, wine)

• Halal certification process important for food service and manufacturing

• Open market with international imports from competitor countries

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Top tips


Understanding various channels to market and build your market entry strategy accordingly around your target segment

Malaysia's growing aspirational middle class and deep people to people links with Australia means strong recognition of Australian quality

E-commerce growing significantly under the current Covid-19 restrictions and will continue to be an important channel into the future

Opportunities in food manufacturing and engaging with both Malaysia and Brunei - aspirations to be halal hub –gateway and re-export platform to the Muslim world

Build long-term relationships and strategy in-market - work closely with local partners to support building brand over time

Be aware of import regulations (halal requirements, import quotas) and market access issues to ensure smooth market entry

PhilippinesChristopher LimSenior Trade Commissioner

Population110.3 M (2020)

40% Middle class (2018)47.6% Urban

population (2020)

Trade Relationship25th largest trading partner

Agricultural and mineral exports

Electrical and computer imports

Economy5th largest economy in

ASEAN32nd largest economy

globally

PoliticalPresidential Republic

with a bicameral legislature

Digital Data89M active social

media/internet usersE-commerce value at US$ 28B

by 2025#1 globally for time spent on

social media/internet

FTAsAANZFTA - 99% of

products have zero or reduced tariffs

Workforce43.9M with 2.2M OFWs

Agriculture (22.5%)Industry (19.85%) Services (57.64%)

Ease of Doing Business#95 globally in EODB Index

2020

Philippines Political & Economic Overview

Market Overview

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• Economy contracted in 2020

• 70% decline in food service sector due to lockdowns

• Accelerated development of adoption of e-commerce and digital transactions

• Supply chain disruption (logistics and documentation)

• Direct importers• Retailers• Food service

establishments• Manufacturing• E-commerce

and Social Commerce

• Beef• Dairy• Processed/packaged

food for retail sale• Consolidators for

grocery items and fresh products

• Others – functional foods, plant-based food, bulk ingredients

• Fresh produce and nuts• Grains (feeds)• Livestock

• Tough competition to secure distribution agreements with established importers and distributors

• Price sensitive market with niche opportunities

• Underdeveloped cold chain and logistics

• Inconsistent regulations and sudden policy changes

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Top tips


Develop a good relationship with your local partner

The Philippines is the US’ largest food and beverage export market in Southeast Asia / 10th US top agricultural export market (US$2.9 bn)

20 days FDA product registration will allow new products to get registration of food products

Best to only appoint one distribution partner in the market. For niche products or those exported in small quantities, work with an Australian consolidator

Marketing support is necessary. The Philippines is highly US-centric compared to the rest of ASEAN and the market is less familiar with Australian brands and products

The current and future growth opportunity will be through e-commerce and social media

SingaporeAmelia WalshTrade Commissioner

Population• Small population of 5.6m

• Tourism market

Highly Skilled Workforce

• English language for business

• Availability of educational and technical abilities

Economy• High purchasing power• 20% GDP into Covid-19

recovery

Stable Environment• Stable political

environment• Strong legal system

Digital Readiness• Highest internet penetration globally

(84%)• Redmart (Lazada), Shopee and Amazon

Trade Relationship• 6th largest trade

and investment partner globally, largest

in ASEAN• SAFTA, CSP, DEA

Connectivity• Major transhipment

hub• Logistic infrastructure

Ease of Doing Business• No tariffs, clear

regulations• #2 globally in EODB

Index 2020

Singapore Political & Economic Overview

Market Overview

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Covid-19 Impact Update Go to market Opportunities Challenges

• MTI expects a positive growth forecast of 4-6% for SG economy

• Tourism greatly impacted, lower consumption

• Food service down approximately 30%

• Limited dining in capacity to 8, alcohol consumption ending at 10.30pm

• 20% GDP economic recovery package

• Three main retailers that dominate the market NTUC FairPrice, Cold Storage and Sheng Shiong

• Channels to supermarket: local distributors, Australian consolidators, direct import

• Food service• Strong e-commerce

presence: RedmartLazada, Shoppee, Amazon

• Strong awareness and demand for Australian brands

• 90% reliant on import products for F&B, diversification for food security

• Increasing awareness for sustainability, organic produce and health and wellness products

• Plant based products

• Singapore is a highly competitive market and Australian exporters must be ready to compete against global brands

• Consumers have high purchasing power but price still does matter

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Top tips


Know your unique value proposition, brand or story and have introductory and promotional material, case studies and examples that are concise and targeted for potential partners

Land and expand model: Singapore is a great testbed for brands to expand into the region

Singapore is a highly connected place and therefore a highly competitive environment

Relatively easy market to access as there are low barriers to trade with strong FTAs and easy to navigate regulatory processes

Relationships matter especially in a small market think about how will you build trust and demonstrate long term commitment to the market, especially when you can’t travel

Provide sales and marketing support, by engaging closely with retailers/distributors to ensure that brand awareness is strong to drive sales

ThailandKaren SurmonTrade Commissioner

Population• Up to 30M 'middle class'

• 60% urban 40% rural

Trade Relationship• 11th largest two-way trading partner

Economy• -6% growth 2021

• +2-3% 2021

Political• Complex, ever -changing political

system

Digital Data• 55 million social

media users• Most popular social platforms: Facebook,

Line

FTAs• Thailand-Australia FTA

• AANZFTA

Workforce• Largely

manufacturing and agriculture

• Skilled labour shortage


• #21 globally in EODBIndex 2020

• 'Ten for Ten' Initiative

Thailand Political & Economic Overview

Market Overview

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• Currently in grip of 'third wave' - up to 2000 cases per day

• Various business and provincial restrictions

• Severe impact on international tourism = 20% GDP

• Driving online and in-home consumption

• Relatively slow vaccine roll-out

• Premium Retail –Central Food Hall, Gourmet Market, Villa Market

• Supermarket – Tops• Hypermarket – Lotus',

Makro, Big C• Convenience – 7-11• Food Service – fine

dining, hotels, QSR• E-Commerce – Lazada,

Shopee, JD-Central & FB / Line

• Significant demand for high quality, fresh and packaged products

• Health and wellness trend increasingly important

• Shop and cook at home a new trend; ready-to-eat

• Experimental consumers – localise recipes, make tasty

• Strong competition from international and domestic products

• Product registration (FDA and/or DLD) can be onerous, slow

• Typically need local partner/ importer

• Tourism rebound will take time, impacting food service

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Top tips


Market Testing –consider trial shipments, encourage sampling, consider localisation, understand your competition

Tourism rebound –strong growth in food service expected

Education & Training –Invest time and $ to show customers how to prepare / consume your product; educate retailers

Support local partner -Leverage brand Australia, and build business in partnership with your importer/distributor

TAFTA/AANZFTA –tariff elimination on most categories makes Australia competitive

Sophisticated retail market -have a story, be unique to compete

VietnamRebecca BallSenior Trade Commissioner

Population• 97.5 million (2020)• 13% middle class

• 36.6% urban population

Trade Relationship• 13th trading partner (2020)

• Commodities, agrifood, education exports & electronics imports

Economy• 4th largest economy in

ASEAN (2020)• 2.9% growth (2020)

• Approx. 6% growth in 2021

Political• One-party system• Politically stable

Digital Data• 72 million social media

users (2021)• Most popular social

platforms: YouTube, Facebook, Zalo

FTAs• AANZFTA

• CPTPP

Workforce• 54.6 million (2020)• Services (36.3%), agriculture (32.8%),

industry (30.9%)


• #70 globally in EODB Index 2020

• Trade liberalisation

Vietnam Political & Economic Overview

Market Overview

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• Vietnam’s GDP still grew by 2.9% in 2020

• 50% of customer spend on food to support resistance, strengthen resilience (clean, healthy food)

• HORECA was badly hit by social distancing and border closures

• Consumers moved to online shopping and cooking at home

• Businesses focused on digital transformation

• Major distribution channels for food retail include: modern trade, tradition trade and e-commerce

• Traditional channel still dominates >90% of total market

• Modern channel’s accounts for 8%, but grows 8.5% per annum

• E-commerce grew 18% in 2020, accounting 5.5% of total retail sales with 53% population joined online retail market

• Increasing demand for imported products of high quality, safe, clean and clear origin

• Growing demand for ready-made healthy food and condiments

• Strong affinity for premium products that enhance quality of life and health

• Market access and non-tariff barriers

• Fragmented supply and cold chain

• Highly competitive environment

• Rapidly changing regulatory environment

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Top tips


Relationship managementChoose the right partner, build trust and respect, understand your business partner, listen to their feedback

Food & Beverage sectors are expanding due to growing middle class, +ve GDP and increased appetite for premium products

Under AANZFTA/CPTPP >90% of Australian products enjoy tariff elimination, Australian exporters should take this opportunity before FTAs with other countries come into effect

Monitor market access issues / non-tariff barriers and rapid competition

Patience is virtueNegotiation and plan building can take sometime, so be patient, it can also take time to follow up with your business partner(s)

Support your business partnerProvide seasonal promotional support, work closely with your business partner to build your brand and position, educate the market and consumers through training/sampling

David LawsonHead of Client Services Agribusiness/Food

Agribusiness Expansion Initiative (ABEI)

Suite of services to help clients expand and

diversify

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Comprehensive sector/market info

online 24/7, self serve

Events and activities specifically for the

agrifood sector

Boots on the ground to work with you in multiple markets

Working with peak bodies & government agencies on agreed priorities & for seamless service

AU$781.8 million International Freight Assistance Mechanism maintaining global air connections for AusBiz and helping protect hard fought market share

Helping the movement of high-value perishable Australian products to almost 70 international destinations and enabled the import of nationally important goods, aiding Australia’s pandemic response

Visit: Austrade.gov.au/news/news/international-freight-assistance-mechanism

• The budgeted forward estimate for the 2021/22 financial year (2020/21 grant year) is $157.9m.

• EMDG is changing July 1st 2021 to be more flexible and responsive

For full details on the program visit Austrade.gov.au/emdg

• If your business has been affected by COVID-19 and you need finance, Export Finance Australia (EFA) is here to help you

• EFA’s export finance solutions could support your business during these challenging times

For more information, visitExportfinance.gov.au

• This site provides updates on markets and logistics, and links through to the Government’s extensive business support programs

• To help Australian businesses overcome complex and fast-evolving COVID-19–related challenges

For more information, visitAustrade.gov.au/news/news/novel-coronavirus

Support for businesses impacted by COVID-19

Assistance

• export.business.gov.auTry the Guide to Exporting tool to identify, understand and prioritise markets

• 13 28 78Ask specific questions about grants, programs and services

• agriculture.gov.au• austrade.gov.au

Read more about the $72m Agribusiness Expansion Initiative (ABEI)

• [email protected] about the ATMAC (Agricultural Trade and Market Access Cooperation) Program

• austrade.gov.au/news/newslettersKeep informed about the latest agribusiness news

asean market update for agrifood exporters

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