UK Trade & Investment Australia - Food & Drink Webinar
2 Presentation title - edit in the Master slideFood Sector inAustraliaRichardHarper
An Overview ofAustralia: Facts and Figures• Australia is an island continent and theworlds sixth largest country (7,682,300sq km)– the country is approximately 4,000km from east to west and 3,200 kmfrom north to south.– 40 % of the total coastline lengthcomprises island coastlines with acoastline 36,735 km long.– 20 % desert
An Overview ofAustralia: Facts and Figures• Australia has six states: New SouthWales, Queensland, South Australia,Tasmania, Victoria, and WesternAustralia; and two major mainlandterritories: the Northern Territory and theAustralian Capital Territory (ACT)which are self-governing territories withpowers almost matching those of thestates.
An Overview ofAustralia: Facts and Figures• Australias estimated resident population(ERP) at 30 December 2012 was 22.3million. The most populous states areNew South Wales and Victoria, withtheir respective capitals, Sydney andMelbourne, the largest cities in Australia.
Market Environment: Overview• In Australia, food and non-alcoholicbeverages account for over 17% ofhousehold expenditure.• Food wholesaling represents about 16%of wholesale trade.• The largest contributor to retail turnover(29%).
8Market LeadersWOOLWORTHS WESFARMERS METCASHSUPERMARKETSWoolworths, Safeway, Thomas Dux (andmore in New Zealand)Coles, BI-LO IGA, Supa IGA, Foodland, FranklinsLIQUOR STOREDan Murphy’s, BWS,Woolworths/Safeway Liquor,plus 316 hotels with 13,480 pokermachines1st Choice, Liquorland, Vintage Cellars,plus 96 hotels with 3,000+ poker machinesCellarbrations, Bottle-O IGA Plus Liquordistributes to 15,000+ liquor retailers, yetowns none itselfFUEL & CONVENIENCE STORESCaltex Woolworths/Safeway Coles Express (with Shell) IGA X-press, Lucky 7DEPARTMENT STORESBig W Target, KmartSUPERMARKET HOUSE BRANDSWoolworths, Homebrand, Select, Fresh,Organic, Macro, Naytura, FreefromColes, $mart Buy, Simply Basics, Derma,Purr and Banquet Pet FoodsBlack&Gold, IGA, Signature, Way of Life,Purely Organic, Foodland
Woolworths and Coles• The two major supermarkets groupstogether account for around 75% ofsuper market sales– Over 50% of alcohol retail– 44% of petrol retail and 25% of allretail in Australia very influential over suppliers• However major changes have occurred
10Market Environment: Food• One of the most concentrated grocery markets in the world• Woolworths, Coles (Wesfarmers) and IGA (Metcash) together account for 78% ofsupermarket 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
11Woolworths 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 labelrange.• 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 ofColes or Woolworths branded products.
Metcash• Australia’s largest wholesaling anddistribution company.• Part of South- African Metcash group.Supplies IGA supermarkets.• Accounts for 16% of supermarket sales• Servicing independent grocery retailersthroughout Australia, including thoseunder the IGA and Supa IGA banners.Eg. Foodland, Foodworks, 7-Eleven,Lucky 7, BP and several liquor retailers
IGA (Independent Grocery Alliance)Supplied by MetcashIGAs primary customers are• 2,500 plus independent retailstores, including• over 1,300 IGA brandedindependent grocery stores;• over 700 FoodWorks stores; andover 500 non-branded independentgrocery stores..
14ALDI•Opened 280th store in October 2012•Target of 500 stores in eastern Australiaby the end of the decade.•Currently operating in the eastern statesof New South Wales, ACT, Queenslandand Victoria,The evidence is that the companysmarketing philosophy has resonated withAustralian shoppers.•ALDI plan to expand operations intoWestern Australia and South Australia•First Australian in January2001.•Limited number of populargrocery items•ALDIs products are generallymarketed as house brandsand heavily discounted.
15DAVID JONESDavid Jones is the only department storegroup with an extensive gourmet foodoffer,Generally upmarket foods (sometimescompared to Harrods)Sold in food halls at a number of selectedstores within the group.Six stores have food halls which are viewedas a key part of the David Jones brand,emphasising quality and style. There is a large offering of exclusive andesoteric imported foodstuffs.
16Speciality retailersA growing number of increasingly efficient specialityretailers. Becoming a significant factor in theindustryInclude 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 theManassen group)have exploited a growing demand.
17A changing landscapeWoolworths, have developed theirstandalone Thomas Dux chain toservice this niche,demise of the traditional nuclear familyis contributing to a stronger demandfor convenience.Sales through cafes and restaurants.convenience shopping and away fromhome eating opportunities.challenges and opportunities for thefuture of grocery retail and food.
18The FutureTrendsup to 10,000 independentretailers across Australia.Australia is significantlysmaller in population thanthe UK, yet has nearlythree times as manyindependents as the UK.Private LabelPrivate label is not as welldeveloped as in manyEuropean countries
19Food Sector inAustralia.Continued consumer focus onhealth.• Consumers are looking for morenutrition advice, health movement tosalt and sugar reduction, which is beingpushed health organisations.•Consumers want products withrecognisable origins.•Chic packaging and premium products•Growing consumer demand fororganic goodsAn influential factor in the product rangeon offer by supermarkets
20Things to remember:You are not Captain Cook! Many othershave found this market before youwhich 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 considerablysuccessful with exporting tea, coffee andalcoholic beverages to Australia• Soft drinks have been met with lesssuccess due to competitions from otherglobal brands.• opportunities for specialty beverages,unusual packaged beer, out-of-mainstream non-alcoholic beverages
22Alcoholic Drink Sector:On Premise Trade• Confusion over the term “pub” and “hotel” inAustralia. The term “pub” is used in the same senseas in the UK; however “hotel” also means the samething. And contemporary modern hotels are alsocalled hotels.• The industry mainly consists of small independentpub owners who lack a chain or franchise affiliation(approximately 85% of market share). Theremaining 12% include Woolworths Ltd (8.1%),Wesfarmers Limited (3.6%) and ALE PropertyGroup (0.3%).• Large pub chains as found in the UK have a verysmall proportion of the sector.• Woolworths and Coles are moving aggressivelyinto pub ownership by buying hotel licensescheaply , thus adding to their bottom line withliquor sales and gaming machine revenue.
Alcoholic Drink SectorOff Premise Trade• Subdued growth due to increasingconsumer demand for higher value,premium beverages in addition to thegrowing trend of home entertainment• Liquor laws separate the sale of alcoholfrom other food and beverages, exceptfor ACT and Victoria. Retail liquor store(bottle shops) are therefore widespread.• Supermarket-owned liquor stores areattached to but physically separatedfrom supermarkets. Woolworths andColes liquor store chains have alsogained dominance in this market (over58% of industry revenue).• Significant shift away from bottle-shopsand high-street liquor retailers to big-boxliquor stores.
Alcoholic Drink Sector: Beer• The largest source of alcoholconsumption (37% of all alcoholconsumed in Australia)• Premium beer is growing in popularity• Standard bottle size is either 375ml(Stubby) or 750ml (Long neck)Stubby Long Neck
26Alcoholic Drink Sector: Breweries• Highly concentrated: Fosters Group and Lion Nathan National Foods dominating theindustry• More international brands are brewed under licence in Australia
Alcoholic Drink Sector:Specialty and Craft Beer• Premium imported beers have gainedmarket share steadily• Examples: Guinness, Stella Artois,Carlsberg, Heineken, Corona• Increased competition fromsupermarkets, hotels and pubs’ housebrands.• opportunities for specialty sector:unusual packaged beer, specialty andcraft beers (both locally produced andimported)• Boddingtons Pub Ale is arguably themost ubiquitous single UK brand sold inAustralia
Alcoholic Drink Sector: Cider• One of the lowest taxable alcoholicdrinks in Australia• About 120 types of local andinternational ciders are available inAustralia• Locally produced cider dominates themarket (73%) with Mercury Cider andStrongbow leading the industry• However there is a growing interest inimported brands (New Zealand has thelargest market share of 13% of allimported brands).• Cider is increasingly viewed as arefreshing alternative to beer at homeopportunity for premiumised brands
Alcoholic Drink Sector: RTDs• Experienced a 70% rise in tax inorder to discourage bingedrinking.• However IBIS World predictedthat sales were expected torecover with RTDs beingmarketed towards more maturetastes• Pre-mixed cocktails are alsoexpected to perform well• Shifting focus towards improvedformula, bottle design andpackaging
Alcoholic Drink Sector: Spirits• Sales of spirits have constantlyincreased in recent years.• Australia imports most of the spirits itconsumes (62.6%). Of these imports, theUK accounts for 32.5%• Strong AU$ facilitates greater growth inimports.• Trend: premiumisation: shiftingpreference towards high-value andquality brands• 5% tariff in addition to domestic exciseupon entry into Australia
32 Presentation title - edit in the Master slideKey Lessons from theMarket Visit Think Australian - NOT POM, sell to Australians forvolume 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 tradeand distributor support
33Assessment / Reappraisal• SWOT analysis• What were we selling (USPs)• What was the realistic potential for thebrand ?• Could we export ‘relevant’ elements ofthe UK success?• Revise
DON’T DOPromise the earthOver-estimate your salespotentialManipulate your distributorPlan well in advanceOptimise your product benefitsManage your marketing andpromotional budgets carefully
Find the right distributor - remember it’shorses for coursesAnd not all the sharks are in Sydney Harbour!
How can UKTI help?OMIS service:• Industry specific sector report.• In-depth report with a bespoke sectiontailored to a specific sector with contactsin core areas.• Product Launch.• Commercial publicity.