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Australia Food and Drink Report Q3 2008
Business Monitor International, July 2008, Pages: 73
In Food & Drink Business Environment Ratings for Q308, Australia remains in second place out of 14 markets surveyed in the Asia Pacific region, on a par with the much smaller Taiwan. While, on the one hand, Australia continues to offer opportunities based on high per capita disposable income and consumption, major drawbacks include its small population (of around 20mn population) and – more
importantly – mature and competitive retail industry.
Nevertheless, subsectors, such as premium alcoholic beverages, will continue to perform strongly, stimulated by innovation and changing customer demands. In the course of 2008, however, the Australian retail landscape is expected to be modified after the results of the competition authorities’ probe into grocery prices. The inquiry is seen as specifically targeting the dual monopoly of Woolworths and Coles, which has been attacked as unfair competition. In the meantime, the rising price of fuel will cause some consumers to turning to independent retail operators, which are seen as having more consumer-friendly pricing criteria, although Woolworths has confirmed that it will not pass such increases onto its customers.
However, other retailers, such as German Aldi, have gone even further, by announcing a national pricing strategy, which will support its planned outlet expansion. The business environment will remain challenging also for major food and drinks companies in Australia. In April 2008, the Australian arm of Cadbury Schweppes lost another legal battle in its bid to protect its characteristic colour purple used in wrapping for many of its confectionery items. Cadbury Schweppes, which originally challenged the use of a shade of purple by Australian Darrell Lea Chocolate Shops as ‘misleading and deceptive conduct’, has announced that it will appeal the decision.
In the meantime, the food and drinks industry continues to consolidate. In March 2008, Australian food major Goodman Fielder, a specialist in the baked goods industry, acquired local biscuit producer Paradise Food Industries. Goodman will now look to use Paradise to launch an assault on the Australian, and perhaps even broader regional, biscuit and snack food markets, with an emphasis on healthy alternatives of high-growth cereal bar and crispbread business. Similarly, Italian dairy conglomerate Parmalat confirmed that it is interested in acquiring Australian companies, with the Dairy Farmers co-operative being one of the possible targets
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