Enhancing the export capability of Australian food businesses

As the Food and Agribusiness Industry Growth Centre, Food Innovation Australia Limited (FIAL) is working with industry to grow Australia’s share of the food and beverage pie in the global marketplace. This requires boosting the competitiveness and productivity of the sector as a whole. FIAL supports industry in achieving this aim by sharing knowledge, improving capabilities, increasing opportunities for collaboration and commercialisation, and facilitating connections with new markets.

“Since travel restrictions came into play, FIAL quickly pivoted to offer its Meet the Buyer initiative in a virtual format. This has seen many businesses develop new connections with buyers in China, Singapore and Thailand,” said FIAL’s general manager commercial, Rod Arenas. “I don’t think it will be business as usual for international trade, but with disruption comes opportunities.”

FIAL will continue to offer its virtual Meet the Buyer events in markets all around the world, allowing Australian businesses to create those face-to-face connections that are critical to capitalising on export opportunities.

Arenas points out that Australian producers also stand to benefit from Australia’s reputation for being a source for high-quality, safe, and traceable products.

“Since COVID-19, we have seen a huge increase in the number of international buyers registering on the Australian Food Catalogue. Demand for Australian products has not stopped,” he said.

The only platform of its kind to be endorsed by Austrade and various state agencies, the Australian Food Catalogue allows suppliers to showcase their range to hundreds of registered buyers that are specifically looking to source Australian products.

“We are conscious that businesses need to keep their head above water,” he said. “How do they do that. They need to sell product, and find new customers. That doesn’t stop just because travel does.

“Industry needed quick solutions that were able to deliver tangible outcomes. FIAL was able to quickly adapt its initiatives and we are excited to continue to explore the digital opportunity.”

With announcements beginning to be made regarding confirmed tradeshow dates in 2021, many businesses may be returning their attention to this method of securing sales.
FIAL makes the tradeshow experience a low-risk exercise for Australian businesses.

“Businesses that exhibit with us can focus on maximising the opportunity as FIAL takes care of everything – from the stand build, right through to stock freight.”

Exhibiting with FIAL is cost-effective, and with 80 per cent of industry being SMEs, this is critical, according to Arenas.

“These businesses usually don’t get the chance to attend international exhibitions due to cost constraints. We help bridge the gap so they can tap into these export opportunities,” said Arenas.

Arenas emphasises that to stand the best chance of succeeding in a competitive global marketplace, businesses must be export-ready. They must understand the market they are looking to enter and they must have a clear strategy.

To ensure attending businesses have the greatest chance of success, FIAL undertakes a thorough review of the business to identify abilities and readiness.

FIAL also runs numerous workshops to prepare businesses for export, and gain invaluable market-specific insights.

International buyers are not open to all new suppliers. According to Arenas, they are seeking businesses that can show they are reliable suppliers of consistently high-quality products, take a strategic and long-term view to their markets, are prepared to support buyers with promotional activity, and don’t have minimum quantities for initial orders, to enable new buyers to test the product before committing to larger volumes.
Buyers of food and beverages are looking for products that have both a strong marketable story behind their product, as well as unique attributes that makes their product novel compared to others.
Which categories receive the most interest depends on the wants and needs of the market within a specific country, as well as the target consumer/client, the marketplace or frame of reference, and the brand’s unique benefit, said Arenas.

As travel picks up, FIAL will also return to running its out-bound and in-bound trade missions.

An out-bound mission is where FIAL facilitates a comprehensive program for a group of Australian companies to build capability and knowledge in order to make the most of entering new potential markets overseas. It organises events that culminate in one-to-one business matching events, connections and introductions to key government contacts, insights and retail tours, forums and workshops in order to build a company’s in-market capabilities.

“We are looking to do an outbound for the UK, ASEAN and other markets for the next year,” said Arenas.

Then there are in-bound missions whereby overseas buyers come to Australia to meet potential export partners. Last year FIAL brought in seven international buyers to the Fine Food Australia event.

“We took those buyers to Victoria, New South Wales, Launceston and Brisbane. We did business-matching events in all those places,” said Arenas. “Again, it was to create and establish connections. We didn’t charge.

“We co-ordinated appointments with 180 companies. It was very successful. Some ended up purchasing stock. When these sorts of things happen, companies don’t have to go anywhere. They can stay in their home state and attend the event. Again, this is important with a huge proportion of the sector being comprised of SMEs.”

Arenas said his own gauge of how well FIAL is doing is still results-driven.

“A good month for me is based on programs and activities in collaboration with industry. How many companies have we managed to get across the line to secure – for example – an international order?” he said. “It doesn’t matter where around the globe, it’s all about how we drive the industry and provide opportunities and build capabilities for the overall sector. We want to talk to anyone who is interested in food and agribusiness and how we can facilitate some of these opportunities.

“At the end of the day, it is about creating jobs. It is also about selling more Australian products into the global marketplace.”

Food businesses among finalists in export awards

Several businesses from within the food and beverage sector have been named finalists in the Premier of QLD’s Export Awards.

The finalists in the Agribusiness category are AGT Foods Australia, Australian Country Choice, BNY Trading, and CJ Nutracon.

Elsewhere in the finalists list, soft serve ice cream maker Frosty Boy Australia made the cut in both the Business Services and Manufacturing categories, while AGT Foods Australia is a finalist in the Regional Exporter category.

The Export Council of Australia would like to congratulate the finalists announced for the 2017 Premier of Queensland’s Export Awards. As exporters from across the state compete for 12 industry categories the program celebrates business excellence in international trade.

“The QLD Export Awards are about rewarding businesses that have shown a commitment and determination to grow their global business and who, against adversity, seek new innovative ways to compete on the international stage,” said Chief Executive Officer for the Export Council of Australia (ECA) Lisa McAuley.

“The competition is extremely tough and we are thrilled to see a number of new names recognised for their tremendous efforts. It’s fantastic to also see the diversity of the companies that entered the awards this year.

As Australia enters negotiations over a free trade agreement (FTA) with the Pacific Alliance, an excellent opportunity emerges to place these countries top-of-mind among Australian companies evaluating new market and diversification opportunities.

These negations come at an opportune moment given numerous positive developments in the Australia- Latin America relationship. We look forward to a great event that recognises our QLD champions and looks at the new growth opportunities for the state this in this important region,” said McAuley.

The awards ceremony will be held on Thursday 19 October at the Brisbane Convention and Exhibition Centre Southbank with both the Honourable Annastacia Palaszczuk MP, Premier of Queensland, Minister for the Arts and the Honourable Curtis Pitt, Queensland Treasurer and Minister for Trade & Investment as guests of honour.

New Head of Trade for Export Council of Australia

Heath Baker has been appointed Head of Trade Policy and Industry Engagement at the Export Council of Australia (ECA).

“The ECA is pleased to welcome Heath Baker as the newest addition to the ECA team,” said Lisa McAuley, CEO of ECA. “We are incredibly lucky to have Heath working on behalf of our members.”

Before joining the ECA, Baker spent four years at the Australian Trade Commission (Austrade) with roles including Manager of Trade Policy, State Director for NSW and the AT and Trade Commissioner in Seoul.

Prior to Austrade, Baker spent four years in the Department of the Prime Minister and Cabinet working as an intelligence analyst and advising on international policy.

Before joining government, Baker spent five years in investment banking, working with Macquarie, JP Morgan Chase and Credit Suisse First Boston.

Wine makers looking overseas as Aussies drinking less

A recent report by IBISWorld reveals that in 2016-17, domestic consumption of alcohol per capita is expected to reach the lowest level of the past 50 years.

This is part of a trend of consistently declining alcohol consumption that has played out over the past decade. Beer brewers have struggled, with negligible export exposure forcing them to rely on limited domestic demand. Meanwhile, many wine makers have found new growth as export demand for Australian wines booms, particularly in Asian markets.

Declining Consumption

IBISWorld expects per capita alcohol consumption will decrease by 0.8% over 2016-17, to 9.37 litres per capita. This trend is forecast to continue, with alcohol consumption in Australia expected to fall to 8.54 litres per capita by 2023-24, down from 10.57 litres in 1990-91.

“Domestic per capita consumption of beer, wine and spirits has slumped to a 55 year low, largely as a result of government legislation and increasing health consciousness among consumers,” said Mr Andrew Ledovskikh, IBISWorld Senior Industry Analyst.

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Wine exports boom

According to IBISWorld, export markets represent the largest market for wine makers, and are expected to account for 41.5% of industry revenue in 2016-17, totalling $2.5 billion. Domestic wholesale wine merchants represent the second largest market for wine makers, and are expected to account for 27.5% of industry revenue in 2016-17.

“Rising exports to Asia are anticipated to drive export growth over the next five years. Free trade agreements signed with Japan, South Korea and China in 2014 and 2015 are expected to lead to new growth in Asian export markets, as Australian wines become more competitive,” said Mr Ledovskikh.

“Rising middle class incomes in China are also expected to contribute to strong demand growth over the next five years. As a result, China is anticipated to overtake the United States as the largest importer of Australian wine,” added Mr Ledovskikh. “Despite declines in per capita wine consumption, the wine production industry is expected to increase by an annualised 2.3% over the five years through 2016-17. Strong demand growth from Asia is improving world prices and easing global oversupply issues, which have plagued the industry over the past decade.”

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Beer market

The Beer Manufacturing industry is expected to decline by an annualised 0.7% over the five years through 2016-17. The domestic consumption of beer has been hit hard by increasing health consciousness among consumers. Traditionally staple brands, such as VB, are declining rapidly in popularity, proving a major challenge for local beer manufacturers looking for growth.

“Unlike the Wine Production industry, local beer brewers produce almost exclusively for the domestic market. This has compounded the effect of declining alcohol consumption for brewing companies,” said Mr Ledovskikh.

As most of the large Australian beer brewers are owned by foreign multinationals, which have extensive worldwide production and distribution facilities, there is little incentive for these companies to produce locally for export. Most exported brands are actually produced under contract in the destination country, rather than physically shipped overseas.

Crafting a future

One silver lining for the Beer Manufacturing industry has been growing demand for craft beer. Craft breweries have popped up around the country at a rapid pace. In 2011-12, there were just over 140 craft brewers in Australia. In 2016-17, there are expected to be almost 300.

The Craft Beer Production industry is expected to grow by an annualised 11.7% over the five years through 2016-17, to $454.2 million. This strong performance has helped offset some of the declines in the consumption of traditional mainstream beer brands.

Export demand for craft beer is a potentially lucrative market, although it is not without challenges. Exporting bottled beers tends to be expensive, and the transport process can harm the quality of the product. Some local producers, such as Australian Brewery, have switched to canned craft beer products to help tap into export markets.

Craft beer batches also tend to be small, making efficient transport difficult. This will likely drive craft brewers to create export groups among themselves, using export agents to consolidate shipments and reduce per unit costs.

 

 

 

 

 

 

Sweet cheese cubes add new flavour to growing Asian market

AUSTRALIAN cheese products flavoured with chocolate, fruits and nuts are aiming to win new customers in Asia.

Beston Pure Foods began producing its Edwards Crossing range of natural cheeses in Murray Bridge, South Australia, in September 2015. It sent its first shipment of cheddar and gouda to Thailand and Singapore in December where it is reprocessed and flavoured under the Kyubu brand.

Flavours include Chocolate & Almond, Strawberry, Orange Yoghurt, Nacho and Milky Cheddar.

The Japanese-style cheese snack cubes hit the shelves through a retail supermarket chain in Thailand in July and in Singapore last month.

Beston Pure Foods General Manager Daniel Raschella said the flavoured cheeses were designed to be a first introduction to cheese for people before encouraging them to try the more traditional cheese products.

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He said Kyubu was developed specifically for the growing Asian market, particularly Thailand, Vietnam, Indonesia and Malaysia.

“It’s a bridge for a period to allow people to get a feel for some of the cheeses we can make but also we want to use it as a platform to give people the experience of eating the natural cheeses we make as well,” Raschella said.

“We’re also very keen at the moment to move it into China and we’ve got a person on the ground in Vietnam who’s getting a lot of interest. We’re also talking to distributors in Cambodia and Malaysia.”

Australia sent 17,000 tonnes of cheese to China worth US$81 million in 2014 and is the second largest exporter of cheese to China, behind New Zealand.

Japan is Australia’s most important overseas cheese market, accounting for almost 55 per cent of product exports in 2014-15, followed by China, Malaysia, South Korea and Singapore.

“The Japanese are much more mature in their palate for cheese,” Raschella said.

“Kyubu is more aimed at the ASEAN countries and potentially China.”

“What’s also happening is a lot of the ASEAN countries and China have a lot of expats who have lived in Australia, the US or Europe for many years, have had children abroad and are now coming back with children who have been brought up with western foods and are still looking for these sorts of products.”

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Asia eats less than 10 per cent of the world’s cheese but its appetite is growing fast.

Cheese consumption in Asia rose from about 550,000 tonnes in 2000 to just over a million tonnes in 2012. It is expected to reach 1.65 million tonnes by 2020.

Raschella said the Asian cheese market was very commodity driven at the moment, meaning that a lot of cheese was going into processed products such as slices or cubes.

“What we’re trying to do is slowly move people away from full processed cheeses and back to natural to get more flavour,” he said.

“The market is so big – we’re not out to take the whole world, we’re out to find the pockets and the people who are interested in quality products.”

Learning export lessons from Frosty Boy Australia

If you’ve ever wondered what it’s like to export to 48 countries around the world, Frosty Boy Australia’s (Frosty Boy) CEO Dirk Pretorius will tell you that it takes diligence, thorough research and automation of business practices to achieve this feat.

“The team at Frosty Boy has worked really hard to get where we are today. Through research and process automation, we’ve been able to remain competitive with local markets and abroad,” Pretorius (pictured right) said.

“Many Australian companies see labour as a major cost to running their business and often take this offshore, in order to compete. However, one of our key selling points is that our product is manufactured in Australia, ensuring safe to consume, tasty, versatile and high quality product.

“We’ve been able to keep costs down through automation. This does not mean less jobs, in fact, further down the line, for example in logistics, this creates more employment.”

Having streamlined Frosty Boy’s internal processes, Pretorius now wants to drive the discussion around keeping Australia competitive in international markets.

“Although there has been significant steps forward by the Australian Government, such as the advent of the China-Australia Free Trade Agreement (ChAFTA), there are still many issues Australian businesses face when competing with local markets abroad,” he said.

Mr Pretorius last week met with The Australian Minister for Trade and Investment, The Hon Steven Ciobo MP and the Federal Member for Forde Bert van Manen MP, to discuss the challenges faced by Australian food manufacturers when exporting products abroad.

“This meeting provided Frosty Boy with an opportunity to discuss the barriers we face and present issues the manufacturing industry faces as a whole. One of the main issues is still implementation of the Free Trade Agreements by local companies,” he said.

“The government is already working on this and I am hopeful that our concerns will be addressed in the near future.”

Frosty Boy currently manufactures the equivalent of two million serves of soft serve ice cream per day, with 75 per cent heading into export markets and has seen a 15 per cent year-on-year average increase in sales.

Frosty Boy’s target market includes retail businesses such as cafés, convenience stores, quick service restaurants and service stations, with millions of serves of product distributed each week to international clients.

 

NZ v Australia in the Chinese food market – who is winning?

New Zealand and Australia food producers are competing for the hearts and minds of the Chinese consumer.

This infographic by Shanghai-based market research company DDMA compares how both countries are rated by Chinese consumers of imported foods.

Judging by this analysis, New Zealand is currently performing better than its trans-Tasman rival.

Not only are New Zealand's per capita food exports to China much higher Australia's, but it also outranks us on all areas investigated by researchers.

These include trustworthiness, use of new technology, environmental image, and quality.

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The Australian food and beverage boom in China

By 2050, 60 per cent of the world’s demand for agrifood will come from Asia, with China responsible for 43 per cent of the global growth in food consumption. Asia’s demand for quality Australian food and beverages is at an all-time high and will continue to boom for decades to come.

China is the world’s largest food importer, with 300 million middle-class citizens and a larger urban than rural population. China’s urban population is not only getting larger; its income levels are also rising – making imported products more affordable for more consumers.

Australia’s reputation for clean, green produce is our greatest advantage

The ‘new’ Chinese consumer has lost confidence in local food and is now seeking high quality clean, green, healthy and safe food and beverage products, and they are willing to pay a premium for these quality goods.

Australia’s food and beverage industries are already highly regarded by Chinese consumers. As the ‘food bowl’ of Australia, Victoria is perfectly placed to take advantage of this booming market.

China’s ecommerce market – the world’s largest in 2015

China’s ecommerce market is growing at a rapid rate – it bypassed the US in 2013 and is more than double by 2015 and by 2020 worth more than e-commerce in the U.S., the UK, Japan, Germany and France combined. China’s internet users also reached 700 million in 2015, equating to half its total population and almost twice the number of internet users as the US and Japan.

The Chinese government has a target to connect 1.2 billion people (85 per cent of the population) to 3G or 4G mobile Internet by 2020.

While there are plenty of physical shopping options in China’s larger cities, lower-tier cities cater less to international brands. In light of this demand, the internet has allowed many retailers to offer goods to consumers in lower-tier cities and further afield without the need and cost of setting up a physical outlet.

With the introduction of the China Australia Free Trade Agreement (ChAFTA) in December 2015, there has never been a better time for your business to tap into the Chinese online market. The FTA will make our exports more competitive in the growing Chinese market through reducing or removing tariffs on our high-quality goods.

The explosive ecommerce market growth and increased reliance on imported goods to China affords food and beverage manufacturers and exporters an opportunity to reach a lucrative market and increase competitiveness on a global scale.

To find out about how VECCI Export Services’ China eCommerce Platform can connect your non-perishable food and beverage products with 300 million Chinese consumers, download the China eCommerce Program brochure or contact Shirley Ng on 03 8662 5172 or sng@victorianchamber.com.au