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Food and beverage

Food and beverage market in Australia

Food and beverage market in Australia

Information on this page:

Market structure

Market entry and development

Market resources and contacts

Australia, a big food and beverage producer in its own right, imports a number of New Zealand
food and beverage products and is a net importer of food and grocery products. Australia
currently has major concerns about the population's health, so fresh, natural foods and meal
solutions are high on the country's shopping list. The growing private label sector in Australian
retail is another opportunity for New Zealand exporters.

Market structure

The $70 billion supermarket sector in Australia is dominated by supermarket chains,

Coles and Woolworths who have around 80 per cent of the market, which also includes
discount chain Aldi and Metcash Trading, operating under the IGA banner.

The specialty retail sector is fragmented. The biggest names are Woolworths-owned,
Thomas Dux, David Jones Food Halls and Harris Farm Markets. An increasing number
of consumers shop at specialty and traditional fresh food shops such as fish markets and
greengrocers.

Nearly one quarter of Australians will be older than 65 by 2050, (i) which will increase
the need for the country to bring in more skilled migrants to boost the working
population. This will put pressure on the domestic food industry to provide for a wide
range of multi-cultural food demands.

The leading players of the wine sector, Accolade Wines and Treasury Wine Estates, have
45 per cent of all branded wine sales. Coles and Woolworths have their own ranges of
private/own label wine and import exclusive ranges of wine directly, controlling 60
percent of the liquor retail market.

Growth drivers

Due to the expansion of discount supermarket chain, Aldi, the major supermarket
players, Coles and Woolworths are stepping up their private label products. They
now account for nearly one quarter of the grocery market.

With heightened health awareness in Australia, demand for white meat, seafood,
fruit and vegetables rising. Consumption is also increasing of low fat cheeses,
cholesterol-reducing spreads and nutrient rich products. Food exporters should be
creating quality portion sizes which still have some room for indulgence.(ii)

There is an increasing demand for organic food in Australia with 50 per cent growth
in the production and consumption of organic produce in the last two years and an
annual growth in demand of between 10 and 30 per cent.

New Zealand is Australia's primary supplier of fish and seafood, accounting for 25
percent followed by China at 18 percent. It is estimated that in 15 years, Australia
will need to import 500,000 tonnes of seafood annually in comparison to the
200,000 tonnes of edible seafood it currently imports.

The foodservice sector offers a number of opportunities with more people eating out
but wanting fresh, healthy natural snacks and meal solutions. The Australian
foodservice sector will have had an annual growth rate of 5.5 percent from 20092014, according to BIS Shrapnel research.

Import trends

New Zealand is the biggest supplier of processed food and beverage products to
Australia, sending over 18 percent of all imported goods in 2010. In 2010, New
Zealand exported more than NZ$2.4 billion worth of food and beverage products to
Australia and in 2011, the exports grew by a further 13.7 percent.

New Zealand's biggest exports to Australia are wine, cheese, food preparations,
bread, pastry biscuits, fish fillets, butter, chocolate, water, infant formula and fish.
(iii) New Zealand products are often packaged for home brand or other local labels.

Many Australian consumers believe that home made products are of a higher quality
than imported products, the vast majority believing it important to buy local
although sales remain cost-based. Nearly 90 per cent of the food and beverage
products Australians consume are still produced locally.(iv)

New Zealand wine exporters have benefited from Australian consumers' preference
for light, crisp wines such as New Zealand's Sauvignon Blanc. Imported wines sales
overall have risen to 12 percent in 2010-2011 and in 2010, New Zealand supplied 54
per cent of all imported wine.

New Zealand was the fourth biggest supplier of meat to Australia in 2010, supplying
5.55 per cent of imported product after Denmark (37 percent), the US (29 percent)
and Canada (26 percent).

Market entry and development

Market entry strategies

The sophisticated Australian market calls for careful research. Ideally New Zealand
companies should partner with a company in Australia, experienced in dealing with
the big supermarkets.

A well-researched selection of a distributor is important especially when dealing

with Coles or Woolworths. These partners, who will offer a number of services,
must be able to demonstrate they are focused on your products and can give a quick
turnaround to customers.

Becoming a private label supplier to a supermarket chain is one route of entry. The
advantage of supplying product for packaging is the freight and mass marketing
costs are reduced but the supplier still has innovation costs and there are lower
profit margins.

Regulatory information
The joint Australia New Zealand Food Standards Code states the same food standards apply in
both markets.
The Australian Quarantine Inspection Service (AQIS) is the equivalent of the Ministry of
Agriculture and Forestry in New Zealand. For import requirements go to the Import Conditions
Database on AQIS.
The major supermarkets and foodservice operators demand that suppliers have HACCP (Hazard
Analysis and Critical Control Point).
New Zealand goods enter Australia duty free under the Australia New Zealand Closer Economic
Relations Trade Agreement (ANZCERTA) as long as the good has been made in either New
Zealand or Australia. For more information please see the Tourist Refund Scheme website.
A Goods and Service Tax (GST) of 10 percent applies to certain food products on the basis of
value. There is no GST on fresh produce but on a number of packaged foods. For more
information please visit the GST food guide on the Australian Tax Office website.
New Zealand and Australia share the same food labelling code, set out in the Australia New
Zealand Food Code.