| Australian
food industry and the GFC
Recent research from Leatherhead Food Research (LFR, UK) Global Food
Markets database suggests that the key food sectors in Australia are
weathering the global recession well. Although there are signs that
consumers have begun to economise during the slowdown, many sectors
reported strong growth in 2008, with 2009 sales estimates also positive.
This is in part due to the fact that total consumer expenditure in Australia
has not dropped at the same levels as other major economies. Real private
consumption expenditure in Australia grew 2.2% in 2008, with an OECD
forecast of 1.3% in 2009 and 1.5% in 2010 (compared to +0.3%, -1.3%
and -0.2% respectively for the Euro area).
Baby food sales, for example, rose 8.8% in 2008 with 2.8% growth forecast
for 2009, reflecting a trend towards higher quality and more expensive
products, as well as increased costs of raw materials being passed on
by manufacturers.
Chocolate sales were up 6.1% in 2008 with 3.9% growth forecast for
2009. Much of the recent market growth can be attributed to the increasing
popularity of premium chocolate, especially in sectors such as boxed
and bite-sized chocolate assortments. In addition, sales of everyday
blocks and countline products have also held firm. Sugar confectionery
has also been a buoyant sector, up 5.8% in 2008 and an anticipated 3.7%
in 2009. Much of the recent growth can be attributed to growing consumer
interest in healthier varieties of sweets, with sugar free products
featuring strongly. Medicated confectionery has also performed well
of late.
Sales of coffee grew 7.5% in 2008 and are 25% higher than in 2005,
due to a trend towards specialty instant and roast coffees. A further
rise in value of 5.3% was predicted for 2009.
In ice-cream, sales of premium and indulgence products held firm in
2008, despite the squeeze on spending power during the downturn. Sales
through grocery channels were up 5.9% in 2008, with a 4.8% increase
estimated for 2009.
Compared to European standards, per capita consumption of bottled
water is relatively low in Australia at around 25 L, but consumption
levels have been growing and sales in value rose 12.0% in 2008 with
an increase of 8.3% predicted for 2009. Sales of more expensive smaller
formats for children along with the success of vitaminised products
targeted at adults have contributed to growth.
The sauces market is one sector that has benefited from the tendency
for consumers to economise and prepare meals from scratch at home in
place of dining out, as convenience and ease of use have become a key
selling point. Overall sales of sauces in 2008 reached $998 million,
up 4.0% on the previous year, with 3.1% growth forecast for 2009. Asian
influences have been a key trend in terms of flavour development. For
example, soups based on traditional Far East Asian recipes as well as
Latin tastes, which are spicy and often incorporate beans and lentils,
have proved successful. In recent years, Asian savoury snack foods have
become more popular, although their level of sales remains modest. Australian
consumers have developed a taste for ethnic cuisine, with Indian, south-east
Asian, Mediterranean and Latin recipes all proving popular and currently
accounting for 75% of ready meal sales.
Since 2007, considerable merger and consolidation activity has taken
place in the marketplace as the industry moves into a phase of maturity
and as many domestic and foreign companies alike are looking to take
advantage of opportunities in the Asia-Pacific region as a whole. As
a result, several key sectors have become increasingly dominated by
a handful of players as shown in the following table.

Major deals in recent years have included:
- Leading dairy and juice company National Foods
was acquired by Japan’s Kirin Holdings in late 2007, and itself
purchased the Dairy Farmers Co-operative for $910 million in 2008.
Via its Australian affiliate Lion Nathan, Kirin had also tried to
take over Coca-Cola Amatil, the anchor bottler for Coca-Cola in Australia,
but withdrew its bid in 2009.
- In the savoury snacks market, Snack Brands Australia
now takes second place (behind PepsiCo) with an 18% share, having
acquired Campbell’s Arnott operation in May 2008. Snack Brands
Australia is itself majority owned by Real McCoy Snackfood Company,
a locally owned snackfoods company. The transaction included the Cheezels,
Thins, Tasty Jacks, French Fries and Kettle Chips brands, as well
as the transfer of two snack factories in Australia.
- In May 2009, Cadbury Schweppes’ Australian
drinks operations (the chief bottler and distributor of PepsiCo brands
in Australia) were acquired by Asahi Breweries of Japan for $1.17
billion.
Own label is not as well developed as in many European countries but
has been a growing feature of the market. Its share in value terms is
highest in butter (39%), milk (38%), cooking oils (27%), bread and morning
goods (24%), cheese (20%), cakes (18%), dried pasta (13%), sugar confectionery
(13%) and savoury snacks (12%).
Despite the market’s increasing maturity, in many sectors a
period of further growth is expected, driven by rising demand for healthier
and more convenient product formats. Increasing manufacturing costs
however will push value sales ahead of volume gains. Further increases
in value sales are expected to be highest in mineral water, coffee and
ice-cream. Consumption of mineral water will continue to grow as per
capita rates start to catch up on levels in the western world. Growth
in coffee is expected, with market value likely to approach $1 billion
by 2012, due to the strong performance of premium instant and roast
products. Ice-cream sales (through grocery channels), also influenced
by premium varieties, will grow at a similar amount and will also surpass
the A$1 billion sales mark by 2012. Predicted growth in the major categories
is shown in the figure below.
Further information on LFR Global Food Markets reports
is available from
www.leatherheadfood.com/global-Food-markets.
Australian Food Statistics 2008
The recently published Australian Food Statistics 2008 prepared
by the Food and Agriculture Division of the Australian Government Department
of Agriculture Fisheries and Forestry (DAFF) covers the financial year
2007–2008. It contains an Overview by Gayathiri
Bragatheswaran and colleagues from ABARE and Year in Review
by Steve Spencer, Director, Freshlogic, Melbourne.
There are also some 91 tables of statistics and 20 figures, illustrating
the trends and other information presented.
In his foreward, Minister for Agriculture, Fisheries and Forestry
Tony Burke highlighted the resilience of the Australian
food industry saying, “The food and beverage sector generated
total sales and service income from food processing of $79b in 2006–07,
an increase of $8b on the previous year. Improved seasonal conditions
helped lift the value of food-related farm and fisheries production
to $37.4b in 2007–08, an increase of 18% on the previous year.”
“I am confident that the Australian food industry is well positioned
to meet the challenges and opportunities of the future, including those
represented by the global financial crisis. Of course, it is not enough
to produce more food – we must create an environment in which
Australian produced food can move more freely to where it is wanted
and needed, so work to access, establish and maintain overseas markets
continues to be a high priority for the Australian Government,”
said Mr Burke.
In their overview, ABARE highlighted that Australia’s total
consumer expenditure on food and liquor continued its rising trend in
2007–08, increasing by 6% to around $113b compared to $106.4b
in 2006–07. The market share of total retailing expenditure for
food and liquor expenditure decreased slightly (by 0.5%) to 52% in 2007–08.
Australia’s total farm and fisheries production increased in
value by 18% to $37.4b in 2007–08, with the increase being attributed
to a slight rebound in broadacre crop production after the 2006 drought.
The value of Australia’s food exports remained largely unchanged
at $23.4b. Increases in the value of grains, oilseeds and dairy exports
were offset to some extent by a decline in the value of meat, wine and
sugar exports.
Although the value of Australia’s food imports increased by
10% to $9b, Australia remains a significant net exporter of food, with
an export surplus of $14b over food imports in 2007–08. Over the
past five years, this surplus has averaged $18b a year.
Food exports accounted for only 13% of total Australian merchandise
exports in 2007–08, down from nearly 14% in 2006–07 and
16% in 2005–06. This decline in relative importance largely reflects
the strong growth in value of Australian minerals and energy resources
exports in 2007–08.
Australian food industry employment
In 2007–08, total employment in food and beverage manufacturing
increased by 141000 (almost 7%) to 205 925 people. The major contributors
to this rise were dairy products (27%), the food, beverage and tobacco
not fully defined sector (up 19%) and bakery products (12%). Employment
levels fell in oil and fat products (by 26%) and flour mill and cereal
food (10%).
Employee numbers in agricultural food declined by 1% with the biggest
reduction occurring in New South Wales (by 9%). Contributors to the
decline were the agriculture not fully defined sector and the horticulture
and fruit growing sector.
Australian food processing
The most recently available Australian Bureau of Statistics data on
the Australian processed food industry at the time of publication was
2006–07. In that year the industry’s total sales and service
income increased to around $79b and industry value added to $19b. The
food and beverage sector was the largest in the Australian manufacturing
industry, providing more than 19% of industry value added and 21% of
total sales and services income. The sector also consistently accounts
for around 18% of Australian manufacturing sector employment.
Australian food retailing
Retail turnover of food and liquor in 2007–08 was valued at $112.9b,
an increase of 6%. This result is slightly less than the 8% rise observed
in 2006–07. In 2007–08, food and liquor retailing represented
52% of total retailing. Higher fuel prices were a contributing factor
towards this increase.
Supermarkets and grocery outlets continued to capture the majority of
food sales in Australia, with around 61% of the value of total food
and liquor retailing in 2007–08. The shares of sales turnover
of the other food and liquor retail outlet categories have remained
relatively constant; cafes and restaurants have averaged 14%, and takeaway
food outlets around 10% of total food sales since 2003–04.
Australian food trade
In 2007–08, the value of Australian food exports was similar to
2006–07 at $23.4b. This value is around 10% lower in real terms
than it was 10 years earlier. The value of Australia’s food exports
reached a peak of $31.8b (2007–08 dollars) in 2001–02 and
has been declining since then. Droughts and fluctuating import demand
as a result of health issues including severe acute respiratory syndrome
(SARS) have affected Australia’s food exports in key markets such
as Asia. The Australian exchange rate has also influenced the value
of food exports.
In 2007–08, the value of food exports within the substantially
transformed category fell by 6% to $16.5b. This category contributed
around 71% of the total value of Australia’s food exports, a 4%
fall from 2006–07. In contrast, the value of exports within the
minimally and elaborately transformed categories increased by around
19% to $6.6b and 9% to $324m respectively.
The grains, meat, wine and dairy products industries have been major
contributors to growth in Australia’s food export earnings. Meat
exports accounted for 28% of the value of food exports in 2007–08,
down from 30.5% for the previous year, while grains increased from 14%
to 18%. The value of wine exports has grown from 2% in 1990–91
to 12% currently. The value of dairy products has increased by 5% to
12% over this time.
Export earnings from processed seafood, processed fruit and vegetables
and sugar have declined. Sugar now only contributes around 4% to the
total value of food exports in comparison to 17% in 1990–91.
The export value of processed meat was down by 8% to $6.5b, wine down
by 7% to $2.7b, cereal food and baking by 23% to $287m, processed fruit
and vegetables by 1% to $568m and sugar by 33% to $1b. These decreases
were balanced by a 13% increase in the value of dairy exports to $2.8b.
Beer and malt increased by 23% to $335m, bakery products up by 5% to
$144m and confectionery up by 10% to $237m.
The increase in the minimally transformed category was largely driven
by higher exports of grains, which were up by around 27% to $4.2b. This
follows a 23% decrease the previous year due to lower production levels
due to the drought. Other increases in this category were fish or shellfish
(up 2% to $647m) and oilseeds (up 107% to $346m), mainly due to increased
Australian canola production and world oilseed prices.
Over the past 12 months, Australian food imports have increased to
$9b, an increase of 10%. Overall, most of the imported goods are substantially
and elaborately transformed products. These products accounted for around
95% of the value of imports. The main contributors to this growth were
flour mill and cereal (up 47% to $527m), wine (up 36% to $454m), dairy
products (37% to $656sm), beverage/malt (14% to $1.8b), fruit and vegetables
(13% to $1.4b) and other food (10% to $1.7b). However, some commodities
decreased in import value. Oilseeds fell to $49m (down 37%) and seafood
fell by 5% to $1.1b.
Over the past 17 years the import share of goods such as processed
meat, wine, confectionery, bakery products, beer and malt, processed
food not elsewhere classified (nec), flour mill and cereal food has
increased, whereas live animals (except fish), seafood, oilseeds, processed
fruit and vegetables, fish or shellfish, fruit and nuts, unprocessed
foods (nec), sugar and spirits have shown a decreasing value.
Export/import markets
The major markets for Australia’s exports have become more diverse
over the past 17 years. The proportion of food exports going to Australia’s
major markets, Japan and the USA, has fallen from 21% and 14% respectively
in 1990–91 to 20% and 11% in 2007–08. The share of exports
going to Indonesia, the Republic of Korea, New Zealand and the United
Kingdom has increased over this period. Exports to Indonesia have increased
from around 2% of the total in 1990–91 to 7% in 2007–08,
from 4% to 7% for the Republic of Korea, from 2% to 6% for New Zealand
and 2% to 5% for the United Kingdom.
In addition to being able to supply high quality food products to
relatively close Pacific Rim markets, Australia has been able to establish
a growing presence in more distant markets such as Saudi Arabia and
the United Arab Emirates over the past 17 years. The latter has increased
its share of exports from 1% in 1990–91 to 5% in 2007–08.
Australia has free trade agreements (FTA) with Singapore, Thailand,
USA, Chile and more recently ASEAN–New Zealand.
The ASEAN–Australia–New Zealand Free Trade Agreement (AANZFTA)
is the largest FTA Australia has negotiated. It will provide market
access to a region with almost 600 million people. ASEAN is our second
largest food market behind Japan. Over the last 12 months, food exports
to ASEAN increased from $3.8b to $4.3b, the major commodities being
grains ($1.2b) and dairy ($906m) products. Other key commodities are
meat, live animals, sugar and beverages and malt.
Australia is also negotiating FTA with Malaysia, China, Japan and
the Gulf Cooperation Council countries such as United Arab Emirates
and Bahrain.
The United States is also an important market for Australia, with food
exports and imports totalling $2.6b and $810m respectively in 2007–08.
Australian food exports to China were valued at $928m in 2007–08,
up 40% from the previous year. Australia’s largest food export
market, Japan, is valued at $4.6b.
Australia is the world’s 14th largest food exporter with a 1.8%
share of trade value, dropping down from the 13th position in 2006–07.
USA is still ranked first with 8.9% of business. Australia is still
27th on the importer list, maintaining a 0.9% share in 2007–08.
New Zealand remains the major source of Australia’s food imports,
accounting for almost $1.7b of the total value, up from $1.5b 12 months
ago. New Zealand accounts for 19% of Australia’s total imports,
steadily increasing from 14% in 1990–91. Other countries to increase
share over the same period are China, France, Italy, Ireland, Viet Nam
and India. Countries to decrease share over the period include Brazil,
Canada, Indonesia, Malaysia, Singapore, Spain, the Netherlands, Papua
New Guinea, the UK and the USA.
The full publication is available in pdf format from www.daff.gov.au/agriculture-food/food.


Supporters Congratulating food
Australia
on the 60th Anniversary
" Danisco would like to congratulate food Australia on
its achievement of 60 years and wish Barbara and the team every success
in the future. "



food Australia – a brief history
The first 50 years
The beginnings of food Australia can be traced back to a monthly
bulletin issued to members of the Food Technology Association of NSW
in 1946.
In 1949, Dr F H Reuter, who was
an Associate member of FTA (NSW), suggested that the Association merited
a more substantial publication. He was challenged by Frank Bradhurst,
first President of FTA (NSW), to ‘produce something better yourself’.
By this time other States had formed Food Technology Associations, which
had come together in a federal body, the Council of Australian Food
Technology Associations (CAFTA). Dr Reuter’s proposal was supported
by CAFTA and in August 1949 the first issue of Food Technology in
Australia appeared.
Dr Reuter remained sole editor for 28 years then
continued in the editorial team until 1990.
The journal began in modest octavo format until 1966
when it moved up to quarto size. The 21st anniversary issue (1970, 22
August) had 124 pages made up of survey articles that give a comprehensive
picture of the Australian food industry at that time.
After AIFST was founded in 1967, an accord between
CAFTA and AIFST made Food Technology in Australia the official
organ of both bodies in 1968, and AIFST was given representation on
the Journal Management Committee (JMC). By 1977 Dr Reuter felt the need
to share the editorial task and he was joined by Professor Ron
Edwards and A/Professors Terry Lee and Ken
Buckle. Terry Lee became Editor in July 1980. He modernised
the format of the Journal and in January 1981 moved it up to A4 size.
When Terry moved on in 1982, Ken Buckle succeeded him and held the position
until 1988.
In May 1988, Jack Kefford, who was
a long-standing member of the JMC, accepted the position of Technical
Editor, a position which he still holds today.
About this time, the CAFTA Board became concerned
about the financial viability of the Journal. In the hope of increasing
circulation by appealing to a wider range of readers, they proposed
major changes including a change of name to Food Australia.
The first issue under this name was September 1988.
The changes made did not however improve the situation
sufficiently, so in 1989 AIFST became partners with CAFTA in joint publication
of the Journal. This arrangement worked very smoothly, and the JMC,
chaired alternately by CAFTA and AIFST, and aided by vigorous staff
effort to attract advertising, was successful in restoring the Journal
to healthy financial status while maintaining its high standing as a
technical journal. It was during this time that Mel Malloch,
currently AIFST Executive Manager was recruited as Advertising/Journal
Manager.
In 1995 the formation of the Australian Food Council
(now AFGC) led to the winding down of CAFTA, and AIFST became sole owners
and publishers of Food Australia from August 1995. In February
1996, Keith Richardson, of Food Science Australia joined
the editorial team for a two year period as Features Editor. During
this time Keith also made some important recommendations to AIFST with
respect to the ongoing editorial management of the Journal, one outcome
of which was the creation of the position of Supervising Editor. Dr
Barbara Munce, a former AIFST President with association with
the journal since 1989, took on this position in January 1998.
The next 10 years
During the last 10 years, food Australia has gone from strength
to strength as a successful business stream of AIFST; and as a vehicle
for communicating the wide range of topics and issues that impact on
all aspects of the safe and efficient delivery of product and services
along the whole of the agrifood chain, from primary industry to the
consumer.
Each volume is around 600 pages, with some 30 features on almost as
many topic areas. In addition we have industry and people news, updates
and special reports on issues, trends and ‘hot’ topics between
the features, as well as event information and a Diary that continues
on-line well into the future. Most issues also contain technical, research
or review paper(s) many of which are peer reviewed, plus other authored
articles. There are now also three on-line Directories updated twice
per year.
Four reader surveys have been conducted since 1998. In all of these
food Australia has been consistently rated as Good/Excellent
by more than 80% of respondents and is the most highly valued benefit
of the AIFST membership, who comprise around two-thirds of our circulation.
There is also a high retention rate of issues for future reference and
a significant pass on rate, which boosts our audited circulation of
just over 3000 to a readership of almost 8000.
…and beyond
In 2002 food Australia underwent a redesign including a new
logo/masthead and media kit. At the same time our website, which had
been in existence since the mid 1990s, was also redesigned and updated.
As we celebrate our 60th anniversary and approach the second decade
of the 21st Century we are again actively planning the future evolution
and success of food Australia. This includes a fresh look at
our logo/masthead, design and marketing material, a re-evaluation of
the role and structure of the food Australia website from commercial,
content and user perspectives and the appointment of an Associate Editor.
This year we also changed to an Australian made environmentally certified
(PEFC) paper and use a printer with a proactive environmental and sustainability
program.
While not immune to the current global financial situation, food
Australia has a good reputation and strong stakeholder base. We
are still attracting advertising commitment from both loyal supporters
and new clients who see the value in food Australia and in
continuing to trade positively through the current economic climate.
We thank them for their support.
We also acknowledge the other members of the current food Australia
and National Office team which brings you the publication each month;
viz Advertising Manager Mark Whiskin, Production Officer
Ian Macdonald and Admin Asst. Rosanna Silvestro,
in addition to the finance and account services from Vicki Wallace,
subscription database services from Janet Stanistreet,
general office support from Julie Bennett, and the
ongoing support of AIFST Executive Manager Mel Malloch
and successive AIFST Executives and Councils.
Barbara Munce Managing Editor
Jack Kefford Technical and Literature Editor
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