Euromonitor reports that Australia has registered economic growth over 2021; however remaining strict pandemic containment measures have had a negative effect on the country’s labor market. Furthermore, the tension with the largest trade partner, China, has had a dampening effect on export growth for Australia. Nevertheless, strong energy prices, expanding trade routes and positive outlook for investments into the country pave the way for sustainable growth over the medium term.
Australia’s population is steadily rising and reached 25.8 million in 2021 (CIA World Factbook Est.), up from 19.4 million in 2000. The median age in 2021 was 37.5 years – 2.1 years higher than in 2000. It will rise to 38.3 years
by 2030. Immigration is an important contributor to population growth. More than a fifth of all Australians were born overseas and over a quarter of those born in Australia have at least one parent who was born overseas. Most of
today’s immigrants come from Asia. The population of those over 65 years has more than doubled since 1980 and numbered 4 million in 2021 (15.5% of total population). By 2030, the share will be 18.2%.
Australia is an open market with minimal restrictions on imports of goods and services. The process of opening up has increased productivity, stimulated growth, and made the economy more flexible and dynamic. Australia plays an active role in the World Trade Organization (WTO), Asia-Pacific Economic Cooperation (APEC), the Group of 20, (G20), and other trade forums. Australia’s free trade agreement (FTA) with China entered into force in 2015, adding to existing FTAs with the Republic of Korea, Japan, Chile, Malaysia, New Zealand, Singapore, Thailand, and the U.S., and a regional FTA with ASEAN and New Zealand.
Australia continues to negotiate bilateral agreements with Indonesia, as well as larger agreements with its Pacific neighbors and the Gulf Cooperation Council countries, and an Asia-wide Regional Comprehensive Economic Partnership that includes the 10 Association of Southeast Asian Nation (ASEAN) countries and China, Japan, Korea, New Zealand, and India. Australia is a member of the new 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which was formally created in March 2018. The new agreement excludes the U.S.
USDA’s Foreign Agricultural Service (FAS) Office of Agricultural Affairs (OAA) in Canberra reports that Australia is a prosperous and industrialized nation with a stable economy. Underpinning Australia's strong economy is its open and transparent trade and investment environment, and trade and economic links with emerging economies, particularly in Asia. The U.S. - Australia Free Trade Agreement provides some advantages for U.S. products, which are well regarded as high quality and good value. The U.S. accounted for US$1.2 billion or 12% of Australia’s total food related imports in 2020. Despite continued impact on the economy in 2021 due to the COVID-19 Delta strain, Australia’s economy has begun to recover, and consumer sentiment has rebounded.
Post adds that like all vital U.S. agricultural export markets, Australia comes with its own unique opportunities and challenges.
2021 U.S. exports of agricultural products to Australia totaled just over US$1.4 billion, a decline of 7% compared to the prior year. Over US$1.1 billion were of the consumer oriented variety or just over 78% of the agricultural total, with a decline
of 6%. Australia also ranks 9th in the world for U.S. exports of processed foods, totaling US$919 million in 2021, which was down 4% from that of 2020.
Top U.S. processed food exports to Australia included:
“All of Food Export's programs were a tremendous help getting us export ready, understanding the challenges that come with international business, and learning how to navigate them.”
Katz Gluten Free
Food Export-Northeast Participant since 2018
According to Euromonitor, retail sales in the packaged food market in Australia are expected to reach US$44.5 billion in 2022. That represents a growth rate of 16.3% or US$6.2 billion since 2018. By the year 2026 the retail sales in the packaged food market in Australia is expected to reach US$52.4 billion, a growth rate of 17.7% and US$7.8 billion from 2022.
High growth products in the forecast include:
FAS Canberra reports that health, wellness, and the environment continue to be key purchasing factors for Australian consumers. Portion sizes are increasingly important as consumers want quality over quantity, and they expect packaging to be informative
and environmentally responsible. The value of food and liquor retailing in Australia rose by 5%in 2020 to US$133 billion. Supermarket and grocery expenditures continue to account for the bulk of food retailing purchases with a share of
The value of Australian consumer oriented (i.e., snack foods, breakfast cereals, meat and poultry, dairy, eggs and products, fresh fruit and vegetables, processed fruit and vegetables, fruit and vegetable juices, nuts, wine, beer, nursery products, pet food, etc.), fish, and seafood imports totaled US$10.4 billion in 2020. The U.S. accounted for US$1.2 billion or 11% of Australia’s total food related imports. Most of Australia’s imports in these sectors are sourced from New Zealand – the U.S. is the second largest supplier.
Consumer aspirations, both personal and social, along with product developments by suppliers and retailers, continue to be important influences on shopping choices. For example – Sustainability: Consumers support products and brands that address concerns for better environmental outcomes. Food producers and retailers have made considerable investments into sustainability platforms. Waste reduction: Consumers desire to reduce household food waste. Integrity of food production systems: Consumers have supported products positioned to resonate with them (such as free-range egg, poultry, and meat products). Healthy eating: The high profile given to obesity has increased the awareness of managing portion sizes.
Woolworths is an Australian-owned company that has been trading since the 1920s. Woolworths is the number one player in the grocery sector with a 37% value share of the market in 2020. Cole’s supermarkets are part of Wesfarmers Limited and are the second largest player in the grocery sector with a 28% value share in 2020. ALDI Stores Supermarkets Pty Ltd, the German based international discount food retailer which began trading in Australia in 2001, is the only grocery discounter in Australia and continues to increase its market share (10.5% in 2020). Metcash Trading Limited Australasia ranks fourth in supermarkets in value terms (7% in 2020). Metcash is Australia’s largest grocery wholesaler and is a leading marketing and distribution company operating in the food, and other fast-moving consumer goods, categories. There are no hypermarkets in Australia, with no investment made by retailers to develop the channel since a failed attempt by Coles in the 1990s.
The supermarkets industry is one of the most fiercely competitive sectors in Australia with the rapid growth of German-owned ALDI over the past five years significantly altering the industry. Supermarkets and grocery stores continue to maintain most of the retail food market share, at around 66%. The market share of cafés, restaurants and takeaway food outlets is around 21%, reflecting consumers’ continued desire for convenience. Other food retailers, such as butchers and bakeries, remain relatively stable with around 5% market share.
Private label in Australia tends to be more prominent in the grocery channel. ALDI’s private-label strategy has been so successful in Australia that it has changed the perception that Australians had of the quality of private-label brands. Leading supermarket operators, Coles and Woolworths, are increasing their range of private-label products each year. Growing satisfaction with private label products has resulted in many consumers sticking with those products even during periods of positive consumer sentiment when they would have previously switched back to branded products.
Convenience stores in Australia are facing growing competition from smaller-sized supermarkets. Best exemplified by the Woolworths Metro and Coles Local formats, these smaller outlets are increasingly found in busy inner city locations and densely populated suburban areas. Like convenience stores, they target time pressed consumers who tend to shop more frequently, but buy fewer items at a time. Crucially, however, smaller supermarkets generally offer lower prices, while some also serve as “click and collect” points for online customers.
Euromonitor reports that during the pandemic, the concept of unattended self-service grocery store in shipping-container-size drew a lot of attention. The concept was developed by small, local producers to sell their own products and in 2021 was adapted by long-standing brands Billa and Unimarkt who both opened a handful of such stores. The typical selling space is around 11 sqm with a range of around 200 products. The concept aims to ensure supply in rural areas where it is difficult to run a classic store economically. Under certain conditions it can be run 24/7 which is a major advantage in the face of Austria’s very restricted opening hours. Due to the lack of relevant branch networks, existing examples have not yet qualified to be classified as convenience stores and therefore have not been contributing to category sales. However, assuming continuing expansion and more investment by established brands, the concept could potentially reshape the channel in the forecast period and lead to better sales prospect.
In spring 2021, Rewe publicly announced the intention to give the control of several its Billa supermarkets to independent, local traders. This idea is nothing new since the Spar, Adeg, and Nah & Frisch brands have been using this model in Austria for decades and is one of the reasons why a portion of Spar outlets are considered convenience stores. The local traders usually have a say in terms of suppliers, product range, and store design. However, more importantly to the owners, they give the stores more regional flavor and credibility within the community. Given the increasing consumer appreciation for local manufacturers and products, this has allowed Spar to significantly outperform Billa in recent years. Rewe’s plans for implementing this new business model are still very vague but could potentially lead to the presence of Billa in convenience stores. Such an entry would certainly aid category prospects, similarly to Unimarkt’s new franchise concept.
FAS Canberra that prospects are excellent for organic and natural ingredients as well as consumer-ready processed foods and beverages. Findings from a recent survey show that Australian consumers are adopting a back-to-basics mindset, focusing on simple ingredients and fewer artificial or processed foods. The types of products consumers are demanding include all natural; no artificial colors; low sugar/sugar free; no artificial flavors; and low fat/fat-free. U.S. exporters who are able to incorporate ingredients and preparation methods that improve the nutritional profile of products will be strongly positioned to succeed in this market. It should be noted that although consumers are trying to eat healthier, they have not completely ruled out buying confectionery products.
Your Connection To Growth®
©2023 Food Export Association of the Midwest USA and Food Export USA–Northeast. All Rights Reserved.