2 Presentation title - edit in the Master slide

 

Food Sector in Australia Richard Harper

An Overview of Australia: Facts and Figures• Australia is an island continent and the

world's sixth largest country (7,682,300 sq km)

– the country is approximately 4,000 km from east to west and 3,200 km from north to south.

– 40 % of the total coastline length comprises island coastlines with a coastline 36,735 km long.

– 20 % desert

An Overview of Australia: Facts and Figures• Australia has six states: New South

Wales, Queensland, South Australia, Tasmania, Victoria, and Western Australia; and two major mainland territories: the Northern Territory and the Australian Capital Territory (ACT) which are self-governing territories with powers almost matching those of the states.

An Overview of Australia: Facts and Figures• Australia's estimated resident population

(ERP) at 30 December 2012 was 22.3 million. The most populous states are New South Wales and Victoria, with their respective capitals, Sydney and Melbourne, the largest cities in Australia.

6

Another view of Australia

UNCLASSIFIED

Market Environment: Overview

• In Australia, food and non-alcoholic beverages account for over 17% of household expenditure.

• Food wholesaling represents about 16% of wholesale trade.

• The largest contributor to retail turnover (29%).

8

Market LeadersWOOLWORTHS WESFARMERS METCASH

SUPERMARKETS

Woolworths, Safeway, Thomas Dux (and more in New Zealand)

Coles, BI-LO IGA, Supa IGA, Foodland, Franklins

LIQUOR STORE

Dan Murphy’s, BWS, Woolworths/Safeway Liquor,

plus 316 hotels with 13,480 poker machines

1st Choice, Liquorland, Vintage Cellars, plus 96 hotels with 3,000+ poker machines

Cellarbrations, Bottle-O IGA Plus Liquordistributes to 15,000+ liquor retailers, yet

owns none itself

FUEL & CONVENIENCE STORES

Caltex Woolworths/Safeway Coles Express (with Shell) IGA X-press, Lucky 7

DEPARTMENT STORES

Big W Target, Kmart

SUPERMARKET HOUSE BRANDS

Woolworths, Homebrand, Select, Fresh, Organic, Macro, Naytura, Freefrom

Coles, $mart Buy, Simply Basics, Derma, Purr and Banquet Pet Foods

Black&Gold, IGA, Signature, Way of Life, Purely Organic, Foodland

Woolworths and Coles• The two major supermarkets groups

together account for around 75% of super market sales

– Over 50% of alcohol retail

– 44% of petrol retail and 25% of all retail in Australia

very influential over suppliers

• However major changes have occurred

10

Market Environment: Food• One of the most concentrated grocery markets in the world

• Woolworths, Coles (Wesfarmers) and IGA (Metcash) together account for 78% of supermarket sales. Other players include ALDI (4%), Australia United Retailers (2.3%), and Franklins (~1%)

• Woolworths and Coles account for 60% of alcohol retail, 50% of petrol retail and 40% of all retail in Australia.

• Woolworths is also the largest seller of tobacco and alcohol

11

Woolworths and Coles: Changes• Moving towards reducing the range of all products they offer customers.

• Aim to free up supermarket shelf space, allowing for the introduction of private label range.

• As a result, consumer choice has been limited across all products sold.

• A product category will typically include their two top selling products plus a range of Coles or Woolworths branded products.

Metcash• Australia’s largest wholesaling and

distribution company.

• Part of South- African Metcash group. Supplies IGA supermarkets.

• Accounts for 16% of supermarket sales

• Servicing independent grocery retailers throughout Australia, including those under the IGA and Supa IGA banners. Eg. Foodland, Foodworks, 7-Eleven, Lucky 7, BP and several liquor retailers

IGA (Independent Grocery Alliance)Supplied by Metcash

IGA's primary customers are

• 2,500 plus independent retail stores, including

• over 1,300 IGA branded independent grocery stores;

• over 700 FoodWorks stores; and over 500 non-branded independent grocery stores.

.

14

ALDI

• Opened 280th store in October 2012

• Target of 500 stores in eastern Australia by the end of the decade.

• Currently operating in the eastern states of New South Wales, ACT, Queensland and Victoria,

The evidence is that the company's marketing philosophy has resonated with Australian shoppers.

• ALDI plan to expand operations into Western Australia and South Australia

• First Australian in January 2001.

• Limited number of popular grocery items

• ALDI's products are generally marketed as house brands and heavily discounted.

15

DAVID JONESDavid Jones is the only department store

group with an extensive gourmet food offer,

Generally upmarket foods (sometimes compared to Harrods)

Sold in food halls at a number of selected stores within the group.

Six stores have food halls which are viewed as a key part of the David Jones brand, emphasising quality and style

. There is a large offering of exclusive and esoteric imported foodstuffs.

16

Speciality retailers A growing number of increasingly efficient speciality

retailers. Becoming a significant factor in the industry

Include organic, fresh fruit and vegetable retailers, bakery franchises and meat retailers.

Upmarket retailers and distributors

• Jones the Grocer,

• Harris Farm,

• Simon Johnson (recently acquired by the Manassen group)

have exploited a growing demand.

17

A changing landscape Woolworths, have developed their

standalone Thomas Dux chain to service this niche,

demise of the traditional nuclear family is contributing to a stronger demand for convenience.

Sales through cafes and restaurants.

convenience shopping and away from home eating opportunities.

challenges and opportunities for the future of grocery retail and food.

 

18

The FutureTrends

up to 10,000 independent retailers across Australia.

Australia is significantly smaller in population than the UK, yet has nearly three times as many independents as the UK.

Private Label

Private label is not as well developed as in many European countries

19

Food Sector in Australia.Continued consumer focus on health. • Consumers are looking for more

nutrition advice, health movement to salt and sugar reduction, which is being pushed health organisations.

• Consumers want products with recognisable origins.

• Chic packaging and premium products

• Growing consumer demand for organic goods

An influential factor in the product range on offer by supermarkets

20

Things to remember:

You are not Captain Cook! Many others have found this market before you which means your product must be:-

• Attractive and well presented

• Well priced

• Have a clear USP

• You may need to modify your product

Market Environment: Drink• UK companies have been considerably

successful with exporting tea, coffee and alcoholic beverages to Australia

• Soft drinks have been met with less success due to competitions from other global brands.

• opportunities for specialty beverages, unusual packaged beer, out-of-mainstream non-alcoholic beverages

22

Alcoholic Drink Sector: On Premise Trade

• Confusion over the term “pub” and “hotel” in Australia. The term “pub” is used in the same sense as in the UK; however “hotel” also means the same thing. And contemporary modern hotels are also called hotels.

• The industry mainly consists of small independent pub owners who lack a chain or franchise affiliation (approximately 85% of market share). The remaining 12% include Woolworths Ltd (8.1%), Wesfarmers Limited (3.6%) and ALE Property Group (0.3%).

• Large pub chains as found in the UK have a very small proportion of the sector.

• Woolworths and Coles are moving aggressively into pub ownership by buying hotel licenses cheaply , thus adding to their bottom line with liquor sales and gaming machine revenue.

Alcoholic Drink Sector Off Premise Trade• Subdued growth due to increasing

consumer demand for higher value, premium beverages in addition to the growing trend of home entertainment

• Liquor laws separate the sale of alcohol from other food and beverages, except for ACT and Victoria. Retail liquor store (bottle shops) are therefore widespread.

• Supermarket-owned liquor stores are attached to but physically separated from supermarkets. Woolworths and Coles liquor store chains have also gained dominance in this market (over 58% of industry revenue).

• Significant shift away from bottle-shops and high-street liquor retailers to big-box liquor stores.

Alcoholic Drink Sector

• Beer

• RTDs

• Cider

• Spirits

Alcoholic Drink Sector: Beer

• The largest source of alcohol consumption (37% of all alcohol consumed in Australia)

• Premium beer is growing in popularity

• Standard bottle size is either 375ml (Stubby) or 750ml (Long neck)

Stubby Long Neck

26

Alcoholic Drink Sector: Breweries• Highly concentrated: Fosters Group and Lion Nathan National Foods dominating the

industry

• More international brands are brewed under licence in Australia

Alcoholic Drink Sector: Specialty and Craft Beer• Premium imported beers have gained

market share steadily

• Examples: Guinness, Stella Artois, Carlsberg, Heineken, Corona

• Increased competition from supermarkets, hotels and pubs’ house brands.

• opportunities for specialty sector: unusual packaged beer, specialty and craft beers (both locally produced and imported)

• Boddingtons Pub Ale is arguably the most ubiquitous single UK brand sold in Australia

Alcoholic Drink Sector: Cider• One of the lowest taxable alcoholic

drinks in Australia

• About 120 types of local and international ciders are available in Australia

• Locally produced cider dominates the market (73%) with Mercury Cider and Strongbow leading the industry

• However there is a growing interest in imported brands (New Zealand has the largest market share of 13% of all imported brands).

• Cider is increasingly viewed as a refreshing alternative to beer at home opportunity for premiumised brands

Alcoholic Drink Sector: RTDs• Experienced a 70% rise in tax in

order to discourage binge drinking.

• However IBIS World predicted that sales were expected to recover with RTDs being marketed towards more mature tastes

• Pre-mixed cocktails are also expected to perform well

• Shifting focus towards improved formula, bottle design and packaging

Alcoholic Drink Sector: Spirits• Sales of spirits have constantly

increased in recent years.

• Australia imports most of the spirits it consumes (62.6%). Of these imports, the UK accounts for 32.5%

• Strong AU$ facilitates greater growth in imports.

• Trend: premiumisation: shifting preference towards high-value and quality brands

• 5% tariff in addition to domestic excise upon entry into Australia

31

Do your homework!

32 Presentation title - edit in the Master slide

 

Key Lessons from the Market Visit

Think Australian - NOT POM, sell to Australians for volume

Add value vs. local offering Support distributor Price-points (understand margins and currency) Need to innovate Create volume / increase rate of sale to win both trade

and distributor support

33

Assessment / Reappraisal

• SWOT analysis

• What were we selling (USPs)

• What was the realistic potential for the brand ?

• Could we export ‘relevant’ elements of the UK success?

• Revise

DON’T DO

Promise the earth

Over-estimate your sales

potential

Manipulate your distributor

Plan well in advance

Optimise your product benefits

Manage your marketing and

promotional budgets carefully

Find the right distributor - remember it’s horses for courses

And not all the sharks are in Sydney Harbour!

How can UKTI help?

OMIS service:

• Industry specific sector report.

• In-depth report with a bespoke section tailored to a specific sector with contacts in core areas.

• Product Launch.

• Commercial publicity.

Thank You

• Any Question?

38

Food and Drink Sector in Australia Richard Harper Senior Trade Development Manager UK Trade & Investment British Consulate-General Level 16, The Gateway,1, Macquarie Place Sydney NSW 2000 | Tel: +612 8247 2233 Mobile: 61 (0) 408 662 324 Email:richard.harper@fco.gov.uksydharpuk@hotmail.com URL www.ukti.gov.uk/greatbritain/au