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Understanding Food Markets Outside RetailPart 1: What is Foodservice?By Steve Spencer
Understanding Food Markets Outside Retail
Part 1: What is Foodservice?
by Steve Spencer
December 2016
RIRDC Publication No 16/040 RIRDC Project No PRJ-010142
© 2016 Rural Industries Research and Development Corporation. All rights reserved.
ISBN 978-1-74254-886-9
Understanding Food Markets Outside Retail. Part 1: What is Foodservice? Publication No. 16/040 Project No. PRJ-010142
The information contained in this publication is intended for general use to assist public knowledge and discussion and to help improve the development of sustainable regions. You must not rely on any information contained in this publication without taking specialist advice relevant to your particular circumstances.
While reasonable care has been taken in preparing this publication to ensure that information is true and correct, the Commonwealth of Australia gives no assurance as to the accuracy of any information in this publication.
The Commonwealth of Australia, the Rural Industries Research and Development Corporation (RIRDC), the authors or contributors expressly disclaim, to the maximum extent permitted by law, all responsibility and liability to any person, arising directly or indirectly from any act or omission, or for any consequences of any such act or omission, made in reliance on the contents of this publication, whether or not caused by any negligence on the part of the Commonwealth of Australia, RIRDC, the authors or contributors.
The Commonwealth of Australia does not necessarily endorse the views in this publication.
This publication is copyright. Apart from any use as permitted under the Copyright Act 1968, all other rights are reserved. However, wide dissemination is encouraged. Requests and inquiries concerning reproduction and rights should be addressed to RIRDC Communications on phone 02 6923 6900.
Researcher Contact Details
Name: Steve Spencer Address: Unit 2.04 17-19 Yarra Street Abbotsford VIC 3067 Phone: 03 84140904 Mobile: 0417 969873 Email: [email protected]
In submitting this report, the researcher has agreed to RIRDC publishing this material in its edited form.
RIRDC Contact Details
Rural Industries Research and Development Corporation Building 007 Boorooma Street Charles Sturt University Wagga Wagga NSW 2650
C/o Charles Sturt University Locked Bag 588 Wagga Wagga NSW 2678
Phone: 02 6923 6900 Email: [email protected]. Web: http://www.rirdc.gov.au
Electronically published by RIRDC in 2016 Print-on-demand by Union Offset Printing, Canberra at www.rirdc.gov.au or phone 1300 634 313
WHATISFOODSERVICE?Part1
UNDERSTANDINGFOODMARKETSOUTSIDERETAIL
Page2
The big picture
Understanding food markets outside retail
Distribution to consumers• The chart on the right shows the mix of
estimated total spending through the various channels to the consumer. This draws on the analysis conducted in the FOODmap study in 2012 updated to 2015.
• The numbers of outlets in the chart were assessed in June 2015. They have been established based on a variety of sources, including data from industry groups, databases of food establishments, and information from specific retail and foodservice chains.
• This shows the significant influence of the grocery channel on overall spending on food with a high percentage of sales through a relatively small number of outlets.
• While a large influencer of the value available at wholesale, grocery is a key determinant of value in the broader food market.
• There is some potential minor double-counting in this analysis, as some of the smaller independent retail and food service outlets buy food and other groceries through grocery chains and specialist food stores (such as bakeries and butcher shops).
grocery
convenience
specialised
Takeaway*
dining out*
event/leisure*
Full-service supermarketsIndependent grocersIndependent stores
Bakery, cake and pastryDelicatessen
Butcher, poultry, seafoodFruit & vegetables
Convenience stores
Quick-serve restaurants
Correctional
Sandwich barsIndependent takeaway
Restaurants & cafes
Event, leisure & travel
Pubs clubs functions
Accommodation
HospitalsAged care
Education Corporate (workplace)
Defence
retail
institutional
foodservice
Master channel Sub-channel
9,950
7,100
21,2505,300
2,9009,500
1,3603,480
8095
1,3509,400
Liquor merchants
Outlets
*referred to as “Commercial segments”
$77bn
$142bn Total
$11bn
$16bn
$3bn
$24bn
$8bn
$3bn
Estimated annual
FY2015 sales
Source: Freshagenda analysis drawing on ABS, IBIS
Figure 1.1 – Size of channels and distribution to consumers
Page3
The big picture
Understanding food markets outside retail
The composition of major segments• The chart on the right further illustrates the
diversity of outlets arranged by each of the “master channels”.
• The classification of channels into large groups is based on their characteristics in terms of the nature of the outlets themselves and how meals are generally provided to patrons.
• There is some blurring between these sub-channels. Many of the meals provided by Quick Service Restaurant (QSR) chains – especially some of the recently-emerged cuisine-based groups –are eaten in-house at provided tables, yet essentially those operations are primarily geared to serve takeaway meals.
• There is often blurring between restaurants and cafes – cafe for this definition is a venue that is themed around the service of coffee and/or other hot drinks.
• Many accommodation hotels will feature restaurants that draw significant numbers of patrons not staying at the hotel, and hence which compete against other restaurants in the hotel’s proximity.
• Many large sporting venues feature QSR-style outlets as well as clubs and pubs. They are however typically managed as a single major facility.
• Institutional food channels are based on large commercial kitchens where meals are made, assembled, or reheated for large-scale provision to patients, inmates, employees or students. The meals and consumers may be radically different, but the systems and management of these facilities are similar.
takeaway
dining out
event/leisure
Quick-serve restaurants
Prison
Sandwich bars
Independent takeaway
Restaurants
Sporting venue
Pubs
Large hotels
Hospitals
Aged care
Education
Factory/office (canteen)
Defence institutional
Master channel Sub-channel
Source: Freshagenda analysis
Figure 1.2 – The composition of major market segments
Clubs
Function centres
Cafes - chains
Independent cafes
Day treatment clinic
Mining kitchen
Juice bars
Motels
Page4
The state of the market
Understanding food markets outside retail
The composition of the market• The charts below provide some high-level analysis of the composition of the overall market in terms of the share of
spending, frequency of visits, and the timing of eating out (time of week and time of day).
• This analysis shows the importance of the weekend peak in activity, as well as the importance of different occasions to certain large foodservice channels.
• It also shows the different spending patterns across the market.
Source: FSAA
Figure 1.3 – Preference in dining at certain outlet types (% of people dining at each outlet type – May 2015)
Figure 1.4 – Day of week eating out at different venues
Figure 1.5 – Time of day eating out at different venues
Source: FSAA
Source: FSAA
Figure 1.6 – Average spending per outlet type (May 2015)
Source: FSAA
Page5
What is different?
Understanding food markets outside retail
Features Grocery Foodservice Convenience & specialist
Product form Packaged finished goods An ingredient for a meal,generally supplied in bulk but increasingly in form to improve convenience
Packaged finished goodsProteins as large primals or portions
Buyer priorities ReliabilityCost
FunctionCost as a meal ingredientWaste
Outlet size/diversity
Limited number of grocery store models
Small, highly diverse range of outlets across different channels
Small, highly diverse requirement
Ability to plan demand
Readily based on established (historical) demand patterns that govern supply chain fulfilment requirements
Limited ability for many to predict walk-in trafficProne to shifts in patronage
Generally based on established (historical) demand patterns
Path to market Generally through a major Distribution Centre (DC)High proportion of fresh produce volumes move direct from producer to retailer but co-ordinated through a DC
Complex and diverse, depending on the nature of the product and the sales channels.Distributors – general and specialist – play a major role.Limited volumes move from producer to retailer
Similar to food service but generally through distributor networks
Supply chain costs Lowest, pressure to reduce further
High-cost, several points of handling and significant roles for intermediaries
Higher than retail due to outlet size/scale, simplifying supply chains with grocer involvement
Reward for convenience
Consumer prepared to pay, but want perceived value
Expected to be built into the service offering by many buyers
Consumers prepared to pay higher than retail
Information resources
Detailed sales data (at a cost) based on retail scanned sales
No aggregated supply or channel data, commercial providers supply survey-based insights
Convenience channel data from providers, some based on scanned sales for larger chains
FOODSERVICECHANNELS
Understanding food markets outside retailPage6
Type Nature of business Examples
Generaldistributors
• Large scale distribution networks• Dominating volumes of packaged products into most
channels and also into convenience retail• Wide category coverage, extending into fresh chilled
categories• Buying practices and category management similar to
grocery
BidvestPFDNAFDA
Drinks distributor
• Chilled milk and juice, and ambient drinks specialists• Servicing many independent foodservice outlets as well
as convenience retail and independent grocery outlets• Some are either tied to or integrated into the businesses
of specific drinks manufacturers & processors
AIDA groupThe Distributors
Specialist distributor
• Fresh category specific, generally with cold-chain capabilities
• Includes gourmet and “fine foods” specialists• Wide coverage of channels and outlets
Meat/seafoodspecialistsFresh dairyImported/ gourmet
Wholesaler • Distributors integrated into fresh produce and meat wholesalers
Fresh produce or protein wholesaler
Caterers (or Facility managers)
• Large scale contract supply and service co-ordination of facilities that include food and a wide range of other site services for event and institutional outlets
ISSSpotlessDelaware North
Cash & carry • Large retail chains specialising in bulk goods CostcoCampbells
Fresh cut processor
• Process and distribution of fresh produce and prepared meals
Chef’s PantrySnapfresh
Page7
Channels to consumers
Understanding food markets outside retail
This section
This document provides an overview of the structure of channels from producers and manufacturers through to consumers. This page summarises some of the key supply chain partners relevant to food and beverage suppliers that operate across foodservice. There are a large number of distributors that operate in the sector.
Page8
Approach for channel
Understanding food markets outside retail
Disadvantages
• Large groups provide limited visibility to suppliers of the end-user market segments, to understand trends and better assess needs
• This factor provides a barrier to supplier-led innovation that may lower cost or improve functionality and utility of the products supplied
• They prevent the building of closer relationships over time between food buyers and suppliers
• There is a potential layer of profit-margin that is being either met by the buyer or supplier. There are various views on the likely extent of any cost disadvantage as large distribution groups offer scale efficiencies
• Their use may limit the ability to offer provenance into customers that may value such a point of difference – why many go around these models
• Many regard larger operators as similar to grocery chains in the strictness of requirements.
Advantages
• Larger distributors assume the risks of market access – this includes reducing the search costs for an entrant attempting to identify and approach target customers in a preferred channel
• Their use may improve the spread of market channels reached, and reduce the dependence on a narrow number of outlets in a specific channel or region that might be exposed to changing market conditions
• They provide easier management of supply chain logistics providing cost efficiencies between supplier/producer and end-user
• They assume the working capital risk by purchasing and storing products in their supply chains for on-supply to customers
• These operations have strong compliance and supply chain management disciplines in place which are based on customer and consumer requirement
• The scope for use of supplier brands (including those in meat protein) is steadily increasing.
The pros and cons of distributors
Many suppliers of FMCG goods and fresh foods have mixed feelings about the role and impact that foodservice distributors – whether general or category specialists – have on their capabilities to optimise opportunities from foodservice channels. Our consultation provides a set of pros and cons that suppliers should consider when assessing path to market.
Page9
Dining out
Understanding food markets outside retail
Role Priorities Competitive advantage
General distributor
• Ensuring critical mass of coverage
• Range and geographical coverage
Drinks distributor
• Efficient logistics across all channel types
• Range• Strength of
distribution & logistics network
• “Fridge ownership” model to ensure loyalty
Specialist retailer
• Improving throughput and unit value to premium outlets
• Agility • Quality of
product/service
Cash & carry • Expansion of club-retailing model across small-scale outlets
• Cost-competitiveness • Range
Specialist wholesaler
• Viable throughput based on network of dependent outlets
• Specialist
The roles of key players
Food manufacturer
Restaurants & cafes
Specialist distributor Pubs, clubs and function centres
General distributor
Drinks distributor
Wholesaler
Cash and carry
Drinks manufacturer
Specialised retailers
Fresh food supplier
Grocery retailersThe dining out segment• The largest and most complex segment
of the market with significant diversity of cuisine-specialty, price-positioning, size and formality.
• Total outlet numbers are difficult to accurately estimate at any point in time but are estimated at 21-22,000. The diversity of cuisine varies by region, yet over time reflects trends in consumer preferences for variety in dining experiences.
• There has been increased blurring between cafes and restaurants, mostly defined by the extent of emphasis on coffee.
• There has also been considerable change in the repositioning of the “pub” as a gourmet food venue, blurring the distinction with restaurants.
Page10
Takeaway channel
Understanding food markets outside retail
Role Priorities Competitive advantage
General distributor • Ensuring critical mass of coverage • Range and geographical coverage
Drinks distributor • Efficient logistics across all channel types • Strength of distribution & logistics network
• “Fridge ownership” model toensure loyalty
Cash & carry • Expansion of club-retailing model across small-scale outlets
• Cost-competitiveness with other suppliers
• Range
Specialist wholesaler • Viable throughput based on network of dependent outlets
• Relationship focus• Cold-chain management• Just-in-time service • Fresh food focus
The roles of key players
Food manufacturer
Sandwich bars & takeaway
Specialist distributorIndependent fast
food
General distributor
Drinks distributor
Wholesaler
Cash and carry
Drinks manufacturer
Fresh food supplier
Grocery retailers
The takeaway segment• This comprises a large number of small
independently-owned food outlets.
• This segment is very strongly dependent on traffic flows, with a strong focus on servicing workers and shoppers, mostly catering to breakfast, lunch and casual snacking occasions.
• Takeaway outlets in this segment are distinguished from the QSR segment (next page) in terms of operational scale and uniformity.
Page11
Quick Service Restaurant channel
Understanding food markets outside retail
Role Priorities Competitive advantage
General distributor • Maintaining business growth through expanding small chains
• Strength of distribution & logistics network
• Range
Fast-moving consumer goods
• Product solutions and functionality• Close relationships with major QSR chains
• Direct to store delivery
Drinks distributor • Efficient logistics across all channel types • Strength of distribution & logistics network
Specialist wholesaler or distributor
• Fresh product solutions to back of house operations
• Cold-chain management • Just-in-time service • Fresh food focus
The roles of key players
Food manufacturer
QSR Chains
Fresh-cut processor
General distributor
Drinks distributor
Wholesaler
Drinks manufacturer
Fresh food supplier
The QSR or fast-food segment• QSR chains are defined by large chains
of branded casual dining outlets with uniform product offerings, sourcing, systems, and policies.
• Chains vary significantly in scale and cuisine focus, with increasing diversity in offerings in response to greater demand for variety and value.
• Due to the scale and systems in use, sourcing policies feature more directly-sourced and tailored solutions, and in general are far more sophisticated than the independent fast food segment.
Page12
Health and aged care channel
Understanding food markets outside retail
Role Priorities Competitive advantage
General distributor • Ensuring critical mass of coverage • Product range (one stop)• Strength of distribution &
logistics network
Drinks distributor • Efficient logistics across all channel types • Strength of distribution & logistics network
Caterers • Whole of facility service • Large-scale meal delivery capabilities
• Lower cost than in-house options• Cost-management disciplines
Specialist wholesaler • Fresh product solutions to kitchen operations • Cold-chain management • Just-in-time service • Fresh food focus
The roles of key players
Food manufacturer
Hospitals
Specialist distributor
Aged care
General distributor
Drinks distributorDrinks manufacturer
Fresh food supplier
Own kitchensCaterers
Wholesaler
The institutional care segment• These segments refer to the provision of
meals in catered aged care and hospital facilities, most of which is funded through government programs.
• Various delivery models exist from fully external through to in-house facilities, but there has been a gradual shift towards out-sourced meal supply over food prepared and assembled in on-site kitchens, due to the focus on cost-saving in this sector.
• The size of the market is governed by the number of patients requiring extended care, and number of places provided in aged care facilities and funding available. A much larger number of meals are provided outside the aged care institutions in private retirement villages and delivered meals for at-home care.
Page13
Events and leisure channel
Understanding food markets outside retail
Role Priorities Competitive advantage
General distributor • What drives their model • Product range (one stop)• Strength of distribution &
logistics network
Drinks distributor • Brand presence at profile events • Brand sponsorship or access relationships
Caterers • Whole of facility service • Large-scale meal delivery capabilities
• Cost management disciplines
Specialist wholesaler • Fresh product solutions to kitchen operations • Cold-chain management • Just-in-time service • Fresh food focus
The roles of key players
Food manufacturer
Sports
Specialist distributor
Travel
General distributor
Drinks distributor
Drinks manufacturer
Fresh food supplier
CaterersWholesaler
The events and leisure segment• This diverse segment covers a large
number of venues that stage or host major sporting, cultural or corporate events, including conferences and exhibitions.
• It also covers services to the travel market, either servicing aircraft or airport foodcourts and lounges.
• Corporate events can influence the demand for meals at function venues, hotels as well as private restaurants located adjacent to venues themselves and are hence difficult to measure as a separate segment of the market. Events
Page14
Institutional channel
Understanding food markets outside retail
Role Priorities Competitive positioning
General distributor • Ensuring critical mass of coverage • Range
Drinks distributor • Efficient logistics across all channel types • Strength of distribution & logistics network
• “Fridge ownership” model toensure loyalty
Caterers • Whole of facility service • Large-scale meal delivery capabilities
Specialist wholesaler • Addressing low-cost portion requirements to balance usage
• Cold-chain management • Just-in-time service • Fresh food focus
The roles of key players
Food manufacturer
Corporate
Specialist distributor Corrections
General distributor
Drinks distributor
Drinks manufacturer
Fresh food supplier
CaterersWholesaler Defence
Own kitchens
Educational
The institutional segment• These markets are generally serviced by
larger contract caterers and distributors due to the size of the facilities, with fewer in-house meal facilities due to the efficiency of those providers.
• The approach to meal provision at schools varies markedly across states and between school systems.
CATEGORIESINFOODSERVICE
Understanding food markets outside retailPage15
Page16
Channel shares
Understanding food markets outside retail
Overall volume shares• The apparent share of sales into the overall foodservice market at a category level has been
reconciled. This has been developed based on firstly arriving at total food available to domestic markets which is the sum of:
• Total production (including yields in converting fresh product into processed lines)
• Less exports
• Add imports
• Less waste factors/estimates
• Volumes sold into foodservice are based on estimated retail shares using insights as to the total retail volumes (grocery and specialist stores) at a category level.
• Channel shares have been taken from a number of industry reference points and past studies.
• Poultry is higher than red meat due to the size of the QSR market for processed poultry portions.
• Seafood remains the highest protein sector in percentage terms given the importance of the fish and chips takeaway segment.
• Vegetable volumes exceed fruit with the importance of processed potatoes (a significant portion of which are imported) to the QSR segment.
• While pork and red meat channels arrive at similar outcomes, this is co-incidental due to the size of beef sold into QSR and restaurant channels, and the volumes of processed smallgoods (ham and bacon) sold into takeaway and café channels.
• The analysis shows the volumes sold into food service channels – which may be far more in some categories than those volumes that are actually eventually sold to end consumers. The potential for waste in product sourcing and meal preparation is much higher in food service channels than grocery.
Estimated share of food volumes (as a % of available to the domestic market) sold into foodservice channels (5 year average)
Page17
Category size: Milk
Understanding food markets outside retail
grocery
specialised
takeaway
dining out
event/leisure
Retail
institutional
Foodservice
Production
Export
Domestic supply
360 million litres
Key volume drivers • Growth in coffee consumption
Key value determinants • Retail private label white milk prices
Challenges faced • Balancing supply and offtake in small-scale integrated operations• Retail packages sold through much of food service (not always fit for
purpose)
Dominant players • Wholesale fresh dairy distributors
1.97 billion litres
24%
67%
33%
18%
50%
8%Import
0.5 million litres
106 million litres
2.42 billion litres*
Production
FSS retailer
Independent retailer
Specialty retailer
Takeaway
Dining out
Event/leisure
Institutional
Processing
Distribution
Foodservicedistribution
Caterers
Processing
* Waste/shrinkage is deducted to derive sales volumes in each channel
2.52 billion litres*
Page18
Category size: Cheese
Understanding food markets outside retail
grocery
specialised
takeaway
dining out
event/leisure
Retail
institutional
Foodservice
Production
Export
Domestic supply
73,500t
336,000t
173,300t
20%
75%
25%
40%
35%
5%Import
76,300t
162,000t
247,300t*
Processing
Production
FSS retailer
Independent retailer
Specialty retailer
Takeaway
Dining out
Event/leisure
Institutional
Manufacturing
Distribution
Cash & carry
Specialist distribution
Caterers
Key volume drivers • Growth in pizza and burger consumption through QSR chains
Key value determinants • Wholesale prices for cheddar and mozzarella
Challenges faced • Volatile world prices for cheeses, sold into the large volume segments of the market which are price-sensitive
Dominant players • QSR chains• General distributors increasing cold-chain business
* Waste/shrinkage is deducted to derive sales volumes in each channel
Page19
Category size: Beef
Understanding food markets outside retail
grocery
specialised
takeaway
dining out
event/leisure
Retail
institutional
Foodservice
Production
Export
Domestic supplyProcessing
Fresh: 125,000t
Slaughter: 8.8m head # Prod’n: 2.32mill t
Fresh: 317,000t
24%
72%
28%
21%
47%
8%
Import
3,000t
# 1.09mill t
465,000t*
Key volume drivers • Growth of pizza and burger consumption through QSR chains• Demand for gourmet burgers through various segments of the dining
out market• Consumer health concerns regarding red meat
Key value determinants • Export returns for beef primals and portions
Challenges faced • Volatile world prices for beef, sold into the large volume segments of the market which are price-sensitive
Dominant players • QSR chains• Local butchers servicing larger portions of the dining out market
* Waste/shrinkage is deducted to derive sales volumes in each channel# Carcass weight equivalent
Production
FSS retailer
Independent retailer
Takeaway
Dining out
Event/leisure
Institutional
Processing
Further processing
Meat wholesaler
Foodservice distribution
Caterers
Specialty retailer
Page20
Category size: Sheepmeat
Understanding food markets outside retail
grocery
specialised
takeaway
dining out
event/leisure
Retail
institutional
Foodservice
Production
Export
Domestic supplyProcessing
Lamb: 19,000t
Lamb: 20.5m headSheep: 7.6m head
Lamb: 106,000t
28%
72%
28%
4%
60%
8%
Import
# Lamb 213,080t# Sheepmeat 134,300
Lamb 125,000t
Production
FSS retailer
Independent retailer
Specialty retailer
Takeaway
Dining out
Event/leisure
Institutional
ProcessingFurther
processing
Meat wholesaler
Foodservice distribution
Caterers
Key volume drivers • Demand for premium cuts through various segments of the dining out market
• Consumer health concerns regarding red meat
Key value determinants • Export returns for lamb and mutton primals
Challenges faced • Volatile world prices for lamb and mutton, sold into the price-sensitive segments of the market
Dominant players • Specialist meat distributors• Local butchers servicing larger portions of the dining out market
#Lamb 450,000t#Sheepmeat 173,000t
* Waste/shrinkage is deducted to derive sales volumes in each channel# Carcass weight equivalent
Page21
Category size: Fresh pork
Understanding food markets outside retail
grocery
specialised
takeaway
dining out
event/leisure
Retail
institutional
Foodservice
Production
Export
Domestic supplyProcessing
Fresh: 10,400t
Slaughter: 4.76m head # Prod’n: 356,000t
Fresh: 56,900t
24%
85%
15%
18%
50%
8%
# 28,000t
71,000t
Production
FSS retailer
Independentretailer
Specialty retailer
Takeaway
Dining out
Event/leisure
Institutional
Processing
Meatwholesaler
Smallgoodsdistributor
Foodservicedistribution
Caterers
Import Smallgoodsmanufacturing
Cash & carry
Key volume drivers • Demand for premium cuts through various segments of the dining out market• Demand for pork cuts through ethnic segments• Consumer health concerns regarding red meat
Key value determinants • Overall carcass returns for pork (influenced by value of imported cooked meats)
Challenges faced • Competing prices for landed processed meats
Dominant players • Specialist meat and ethnic food distributors• Local butchers servicing larger portions of the dining out market
Smallgoods
# 140,300t
Page22
Category size: Smallgoods
Understanding food markets outside retail
grocery
specialised
takeaway
dining out
event/leisure
Retail
institutional
Foodservice
Pork Production Domestic supplyProcessing
105,600t
70,000t
248,400t
24%
62%
38%
18%
50%
8%Import
354,000t
284,200t
Production Processing
Import Smallgoods manufacturing
FSS retailer
Independent retailer
Specialty retailer
Takeaway
Dining out
Event/leisure
Institutional
Meat wholesaler
Smallgoods distributor
Foodservicedistribution
Caterers
Cash & carry
Key volume drivers • Health of the breakfast occasion• Health of independent takeaway outlets• Consumer health concerns regarding cooked meats
Key value determinants • Landed prices of imported processed pork (ham, bacon, other cooked portions)
Challenges faced • Competing prices for landed processed meats
Dominant players • Specialist meat and ethnic food distributors• Local butchers servicing larger portions of the dining out market
Other meats
140,300t
Page23
Category size: Poultry
Understanding food markets outside retail
grocery
specialised
takeaway
dining out
event/leisure
Retail
institutional
Foodservice
Production
Export
Domestic supplyProcessing
Fresh: 192,000tProcessed: 138,000t
Slaughter: 572m birdsProduction: 1.06mill*
Fresh 573,000tProcessed 173,000t
Fresh: 381,000tProcessed: 35,000t
33,000t
13%
88%
12%
24%
46%
16%
Production
FSS retailer
Independent retailer
Specialty retailer
Takeaway
Dining out
Event/leisure
Institutional
Processing
Poultry meat wholesaler
Smallgoods distributor
Foodservice distribution
Caterers
Key volume drivers • Growth in chicken product consumption through large and gourmet QSR chains• Demand for poultry cuts through ethnic dining out segments• Consumer health concerns regarding red meat has boosted consumption over
time• Ease of application across meal types
Key value determinants • Overall bird returns for poultry across retail and foodservice uses
Challenges faced • Ensuring suitable mix of business for product recoveries• Passing on rises in input costs to low-value segments of the market
Dominant players • QSR chains• General distributors increasing share of processed products
* Waste/shrinkage is deducted to derive sales volumes in each channel
Page24
Category size: Eggs
Understanding food markets outside retail
grocery
specialised
takeaway
dining out
event/leisure
Retail
institutional
Foodservice
Production
Export
Import
Domestic supplyPackaging
Fresh: 52m dozenProcessed: 20,300tProcessed eggs: 980t
399 million dozen 363m dozen
Fresh: 260m dozenProcessed: 3,000t
Processed egg: 220t Fresh Processed
68% 72%
32% 28%
55% 55%
32% 20%
3% 10%
10% 15%
Production
FSS retailer
Independent retailer
Specialty retailer
Takeaway
Dining out
Event/leisure
Institutional
Grading and packing
Wholesale egg distribution
Fresh produce distributor
Foodservicedistribution
Caterers
Key volume drivers • Growth in demand through QSR chains• Health of the breakfast occasion• Consumer health concerns regarding red meat
Key value determinants • Wholesale prices influenced by market balance
Challenges faced • Balancing supply and demand across channels with some volatility in egg production
• Improving the integrity of free-range product
Dominant players • Major integrated egg marketers
Processing
Page25
Category size: Grains & flour
Understanding food markets outside retail
grocery
specialised
takeaway
dining out
event/leisure
Retail
institutional
Foodservice
Production
Export
Domestic supply
Wheat: 19.0mt Flour: 50,000t
Flour: 2.3mt
Milling
Production
FSS retailer
Independent retailer
Specialty retailer
Takeaway
Dining out
Event/leisure
Institutional
Miller
Flour products distributors
Foodservicedistribution
Caterers
Key volume drivers • Healthy eating trends improving demand for high fibre products
Key value determinants • Higher demand for artisanal products in bread and bakery markets • Differentiation in bread styles
Challenges faced • Private label price pressure on retail flour and bread markets
Dominant players • Major millers as processors and distributors• Major bread manufacturers• Large bakery chains servicing home use
Wheat: 25mt
Industrial
Handling
Total flour sold into the food industry for various uses including breadmakingand a range of bakery products is estimated at about 1.8mt per annum (excluding industrial uses of flour), however shares between channels are not measured.
Large-scale breadmaking is estimated to consume about 40-45% of total flour supply, but this does not count consumption in small bakeries. It is estimated that major grocery chains hold about 60% of the retail bread market, while specialist bakeries hold 30%.
Breadmaker
Feed use
Wheat: 2.6mt
Flour: 0.5mt
Page26
Category size: Fresh Seafood
Understanding food markets outside retail
grocery
specialised
takeaway
dining out
event/leisure
Retail
institutional
Foodservice
Fresh catch
Export
Import
Domestic supply
146,000t
113,000t17%
206,000t
74,000t
233,000t*
81,000t40,000t49%
51%
34%
30%
19%
Production
FSS retailer
Independent retailer
Specialty retailer
Takeaway
Dining out
Event/leisure
Institutional
First stage processing Fresh chill
processing
Seafood wholesaler
Specialist distribution
Caterers
Imports
Key volume drivers • Growth in demand through takeaway segment• Overall demand across the dining out market• Consumer health concerns regarding red meat
Key value determinants • Wholesale prices for different qualities of white fish and salmonids influenced byoverall supply
Challenges faced • Balancing supply and demand across channels with some volatility in supply • Length of the supply chain affecting product freshness in discerning market
segments
Dominant players • Specialist seafood distributors• Specialist seafood retailers (with wholesale activities)
Processing
* Waste/shrinkage is deducted to derive sales volumes in each channel
Page27
Category size: Processed Seafood
Understanding food markets outside retail
grocery
specialised
takeaway
dining out
event/leisure
Retail
institutional
Foodservice
From fresh catch
Export
Import
Domestic supplyProcessing
58,000t
111,000t17%
74,000t 59,000t 170,000t
111,000t82%
18%
50%
25%
8%
Production
FSS retailer
Independent retailer
Specialty retailer
Takeaway
Dining out
Event/leisure
Institutional
First stage processing
Seafood wholesaler
Specialist distribution
Caterers
ImportsFMCG
processing
Seafood distributor
Key volume drivers • Growth in demand through takeaway segment• Overall demand across the low-value of the dining out market• Budgetary scope within institutional channels• Consumer health concerns regarding red meat
Key value determinants • Benchmark value of imported lines
Challenges faced • Remaining price competitive with imported products
Dominant players • Major Fast-Moving Consumer Goods (FMCG) processors• General distributors• Specialist seafood distributors
Page28
Category size: Fresh Horticulture
Understanding food markets outside retail
grocery
specialised
takeaway
dining out
event/leisure
Retail
institutional
Foodservice
Production
Export
Import
Domestic supply
25%
Fruit: 1.69million tVeg: 3.31million t
Fruit: 254,000tVeg: 1,098,000t
71%
29%
15%
50%
10%
Fruit: 344,000tVeg: 177,000t
Fruit: 1.25million t*Veg: 2.06million t*
Fruit: 175,000tVeg: 31,000t
Fruit: 323,000tVeg: 532,000t
Fruit: 827,000tVeg: 1,364,000
Production
FSS retailer
Independent retailer
Specialty retailer
Takeaway
Dining out
Event/leisure
Institutional
Broker
Wholesaler
Distribution
Caterers
ImportsFresh cut processor
Key volume drivers • Overall demand across the dining out market• Consumer health priorities regarding fresh foods
Key value determinants • Wholesale prices driven by fluctuations in supply
Challenges faced • Balancing supply and demand across channels with some volatility in supply• Minimising waste• Improving meal portion convenience/freshness
Dominant players • Fresh cut processor servicing large takeaway• Specialist fresh produce distributors• Specialist green grocers (with wholesale activities)
Processing
* Waste/shrinkage is deducted to derive sales volumes in each channel
Page29
Category size: Processed Horticulture
Understanding food markets outside retail
grocery
specialised
takeaway
dining out
event/leisure
Retail
institutional
Foodservice
From production
Export
Import
Domestic supply
15%
90%
10%
50%
27%
8%
Fruit: 1,700t Veg: 3,000t
Fruit: 169,000tVeg: 660,000t
Fruit: 46,500tVeg: 125,000t
Fruit: 123,000tVeg: 482,000t
Fruit: 46,000tVeg: 178,000t
Processing
Production
FSS retailer
Independent retailer
Specialty retailer
Takeaway
Dining out
Event/leisure
Institutional
Processor
Frozen food distributor
Foodservicedistribution
Caterers
Imports
Cash & carry
Key volume drivers • Growth in demand through QSR chains• Overall demand across the low-value of the dining out market• Budgetary scope within institutional channels• Consumer health concerns regarding fast food lines
Key value determinants • Benchmark value of imported lines
Challenges faced • Remaining price competitive with imported products• Improving ready-meal assembly to lower cost
Dominant players • Major FMCG processors• General distributors• Ready-meal producers
Fruit: 254,000tVeg: 1,098,000t
* Waste/shrinkage is deducted to derive sales volumes in each channel
N ATIONAL RURAL ISSUESUnderstanding Food Markets Outside RetailPart 1: What is Foodservice?
by Steve Spencer
RIRDC Publication No 16/040
RIRDC Project No PRJ-010142
Bookshop: 1300 634 313
Email: [email protected]
Postal Address: Locked Bag 588 Wagga Wagga NSW 2678
Street Address: Building 007 Charles Sturt University Booroma Street Wagga Wagga NSW 2650
www.rirdc.gov.au