While Australian economy is going through some painful adjustments following the end of mining boom, the Australia Food Industry is facing unprecedented profitable growth opportunities due to technological advancements, socio economic developments in Asia and rapidly growing demand for quality foods across the world. According to latest data from the Australian Bureau of Statistics the size of Australian food industry is over $150billion in annual sales. In the last financial year, Australian food industry grew by $7billion (or 4.7%) in sales while Australian GDP grew by 2.3% in the same period – i.e. the Australian food industry grew at a rate twice as fast as the whole economy.
In this blog, which is the first of our three part review of Australian food industry, we look at changing consumer preferences and drivers of demand for quality foods. In the 2nd blog we’ll look at other key economic, business and global supply chain initiatives influencing the food industry; and in the 3rd blog we’ll discuss some of the exciting developments in processes and business technologies that will help you pursuing these opportunities with increased productivity and competitive edge.
Key consumer trends influencing the food industry and specific opportunities that Australian food businesses can take advantage of include:
- Food Awareness and Multiculturalism
Consciousness of the taste and quality of food and issues related to food has been increasing for many years. Cooking shows fill many slots in television schedules; diet and well-being are staple topics in the major newspapers, magazines and in the public discourse in general; our broadly successful integration of migrant communities and their specific cuisines have broadened and enriched the Australian food landscape and increased consumers’ interest in (and acceptance of) new kind of foods.
What are some of the specific outcomes of this broad upwelling of interest?
Clearly the move from the meat-and-three-veg culture of mid-20th century Australia to the dazzling breadth of today’s cosmopolitan foods have greatly increased the number of ingredients and fully or partially prepared meals that Australians seek when they dine out or when they prepare food in their home.
For suppliers of food ingredients (including farmers, graziers, processors and importers) there are great opportunities – identify the supply gaps side gaps and develop/grow/source new items.
A few examples from an extensive list of successes in niche products that have emerged in the last 10 years:
Wagyu beef; Fuji apple; Galangal; Lactobacillus yoghurts (Yakult and others); Varietal potatoes (Kipfler, Desiree, Dutch Cream, Sebago, etc); Kaffir Lime; Dragonfruit; Truffles; Saffron
For manufacturers, food service operators and importers, more value added food items are awaiting commercial development whether it is a restaurant food, frozen meals, meal starter packs, etc.
The Next “It” Cuisine
A classic illustration of this type of opportunity is the rise and rise of Thai cuisine in the Australian consciousness. Thirty years ago Thai food was a rare treat offered by a handful of restaurants in capital cities. Today the local Thai restaurant has become almost as ubiquitous in suburbia as the Chinese restaurant of the 1960s and 70s; fresh and processed Thai ingredients are readily available to urban Australians through the supermarket chains, and supermarket shoppers can choose from a wide range of Thai meal kits and recipe ideas.
For entrepreneurs and market developers the emerging cuisines are presenting with numerous opportunities for expansion and increasing sales and profits. Here are some ethnic cuisines (including variations on established ones) that could present opportunities for exploitation:
Burmese, Uyghur, Caribbean, Regional Chinese, North African, Hungarian, Regional Russian
- Health and Well-being
In relation to food one could almost label the last 10 or so years as the Era of Food Angst. Consumers are bombarded with sometimes conflicting health messages and many are looking for foods that offer reassurance:
“Is red wine good for me?”
“How much fat should I eat and what type is best for me?”
“What are all those numbers on the ingredient list for?”
“I don’t trust all those additives and chemicals they put in food these days. I want organic food”.
“I think I’m gluten intolerant ‘cos every time I eat a packet of biscuits before dinner I feel sick”
“Atkins Diet? Paleo Diet? No Fat Diet? Super Foods Diet? Brad and Angelina Diet?” etc
Sugar – AAARRGGGHHH!!
Food products which aim to address these concerns are being developed and introduced to markets at an increasing rate. Hence new product categories such as organic, low fat, low sugar, gluten free, cholesterol lowering, digestion improving, etc. are popping in supermarkets on a regular basis. There are still many needs that are not being met – fully or partially – and innovative growers and producers can grow their businesses with appropriately targeted new products.
- Accompanying Social Trends
The Greening of Food
There is an ongoing discussion of notions such as freshness, “food miles”, seasonality and regional sourcing of foods reflecting broader social concerns about globalisation and perceived (or real) over-processing of what we eat.
The supermarkets are searching for ways to meet customer expectations about fresh produce and to combat negative press associated with importing food products that were traditionally sourced in Australia (particularly the housebrand offerings).
Branding of local specialties, whether it be Otway pork, Batlow apples or King Island cheeses is a way of giving the product a more attractive narrative and differentiating from their competitors.
Equally, reducing the level of processing and keeping the product more natural can make it more appealing to some non-price-sensitive consumers. Innovative processing technologies and improvements in supply chain processes and packaging are giving producers the chance to offer more sympathetically processed items and move them more rapidly through the distribution chain.
Vegetarian Food Comes in From the Cold
Concerns about the carbon footprint of livestock production are combining with more traditional and ethical motivations to promote vegetarian choices. Substantial increases in the unit price of many meat products in the last few years have also added economic pressure to look for cheaper alternatives. This does not only mean people renouncing meat entirely (although there has been an increase in the number of people who describe themselves as vegans) but is also leading to “ordinary” households opting to have a non-meat meal more often.
Supermarket vegetarian offerings still commonly fall into the stereotypical “vegie burger” or “lentil loaf” category thus there is a great opportunity to produce ingredients, meals and meal ideas that appeal to these consumer groups.
A less politically correct but nonetheless real social trend is the embrace of “extreme” foods.
Probably the best example has been the explosion of caffeinated/high energy beverages in the marketplace. Brands such as Red Bull, V, Mother, Monster and Dare have grown huge new beverage sub-categories on the promise to their target demographic of a “hit”. Double/triple chocolate ice creams (Magnum anyone?) and other “extremifying” range extensions of established products (e.g. Tim Tams) are playing on similar motivations. For the developer of the next Red Bull there is surely a great pile of money to be made by tapping into the zeitgeist of Gens Y and Z.
In the second part to be followed, we will look at the drivers of Food Industry’s growth from broader Australian economy and global context.