Presentation delivered by Richard Harper on behalf of UK Trade & Investment Australia

2. 2 Presentation title - edit in the Master slide
Food Sector inAustralia
RichardHarper

3. An Overview ofAustralia: Facts and Figures
• Australia is an island continent and the
world's sixth largest country (7,682,300
sq km)
– the country is approximately 4,000
km from east to west and 3,200 km
from north to south.
– 40 % of the total coastline length
comprises island coastlines with a
coastline 36,735 km long.
– 20 % desert

4. An Overview ofAustralia: Facts and Figures
• Australia has six states: New South
Wales, Queensland, South Australia,
Tasmania, Victoria, and Western
Australia; and two major mainland
territories: the Northern Territory and the
Australian Capital Territory (ACT)
which are self-governing territories with
powers almost matching those of the
states.

5. An Overview ofAustralia: Facts and Figures
• Australia's estimated resident population
(ERP) at 30 December 2012 was 22.3
million. The most populous states are
New South Wales and Victoria, with
their respective capitals, Sydney and
Melbourne, the largest cities in Australia.

6. 6
Another view of
Australia
UNCLASSIFIED

7. Market Environment: Overview
• In Australia, food and non-alcoholic
beverages account for over 17% of
household expenditure.
• Food wholesaling represents about 16%
of wholesale trade.
• The largest contributor to retail turnover
(29%).

8. 8
Market Leaders
WOOLWORTHS WESFARMERS METCASH
SUPERMARKETS
Woolworths, Safeway, Thomas Dux (and
more in New Zealand)
Coles, BI-LO IGA, Supa IGA, Foodland, Franklins
LIQUOR STORE
Dan Murphy’s, BWS,
Woolworths/Safeway Liquor,
plus 316 hotels with 13,480 poker
machines
1st Choice, Liquorland, Vintage Cellars,
plus 96 hotels with 3,000+ poker machines
Cellarbrations, Bottle-O IGA Plus Liquor
distributes to 15,000+ liquor retailers, yet
owns none itself
FUEL & CONVENIENCE STORES
Caltex Woolworths/Safeway Coles Express (with Shell) IGA X-press, Lucky 7
DEPARTMENT STORES
Big W Target, Kmart
SUPERMARKET HOUSE BRANDS
Woolworths, Homebrand, Select, Fresh,
Organic, Macro, Naytura, Freefrom
Coles, $mart Buy, Simply Basics, Derma,
Purr and Banquet Pet Foods
Black&Gold, IGA, Signature, Way of Life,
Purely Organic, Foodland

9. Woolworths and Coles
• The two major supermarkets groups
together account for around 75% of
super market sales
– Over 50% of alcohol retail
– 44% of petrol retail and 25% of all
retail in Australia
 very influential over suppliers
• However major changes have occurred

10. 10
Market Environment: Food
• One of the most concentrated grocery markets in the world
• Woolworths, Coles (Wesfarmers) and IGA (Metcash) together account for 78% of
supermarket sales. Other players include ALDI (4%), Australia United Retailers
(2.3%), and Franklins (~1%)
• Woolworths and Coles account for 60% of alcohol retail, 50% of petrol retail and 40%
of all retail in Australia.
• Woolworths is also the largest seller of tobacco and alcohol

11. 11
Woolworths and Coles: Changes
• Moving towards reducing the range of all products they offer customers.
• Aim to free up supermarket shelf space, allowing for the introduction of private label
range.
• As a result, consumer choice has been limited across all products sold.
• A product category will typically include their two top selling products plus a range of
Coles or Woolworths branded products.

12. Metcash
• Australia’s largest wholesaling and
distribution company.
• Part of South- African Metcash group.
Supplies IGA supermarkets.
• Accounts for 16% of supermarket sales
• Servicing independent grocery retailers
throughout Australia, including those
under the IGA and Supa IGA banners.
Eg. Foodland, Foodworks, 7-Eleven,
Lucky 7, BP and several liquor retailers

13. IGA (Independent Grocery Alliance)
Supplied by Metcash
IGA's primary customers are
• 2,500 plus independent retail
stores, including
• over 1,300 IGA branded
independent grocery stores;
• over 700 FoodWorks stores; and
over 500 non-branded independent
grocery stores.
.

14. 14
ALDI
•Opened 280th store in October 2012
•Target of 500 stores in eastern Australia
by the end of the decade.
•Currently operating in the eastern states
of New South Wales, ACT, Queensland
and Victoria,
The evidence is that the company's
marketing philosophy has resonated with
Australian shoppers.
•ALDI plan to expand operations into
Western Australia and South Australia
•First Australian in January
2001.
•Limited number of popular
grocery items
•ALDI's products are generally
marketed as house brands
and heavily discounted.

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DAVID JONES
David Jones is the only department store
group with an extensive gourmet food
offer,
Generally upmarket foods (sometimes
compared to Harrods)
Sold in food halls at a number of selected
stores within the group.
Six stores have food halls which are viewed
as a key part of the David Jones brand,
emphasising quality and style
. There is a large offering of exclusive and
esoteric imported foodstuffs.

16. 16
Speciality retailers
A growing number of increasingly efficient speciality
retailers. Becoming a significant factor in the
industry
Include organic, fresh fruit and vegetable retailers,
bakery franchises and meat retailers.
Upmarket retailers and distributors
• Jones the Grocer,
• Harris Farm,
• Simon Johnson (recently acquired by the
Manassen group)
have exploited a growing demand.

17. 17
A changing landscape
Woolworths, have developed their
standalone Thomas Dux chain to
service this niche,
demise of the traditional nuclear family
is contributing to a stronger demand
for convenience.
Sales through cafes and restaurants.
convenience shopping and away from
home eating opportunities.
challenges and opportunities for the
future of grocery retail and food.

18. 18
The Future
Trends
up to 10,000 independent
retailers across Australia.
Australia is significantly
smaller in population than
the UK, yet has nearly
three times as many
independents as the UK.
Private Label
Private label is not as well
developed as in many
European countries

19. 19
Food Sector inAustralia
.Continued consumer focus on
health.
• Consumers are looking for more
nutrition advice, health movement to
salt and sugar reduction, which is being
pushed health organisations.
•Consumers want products with
recognisable origins.
•Chic packaging and premium products
•Growing consumer demand for
organic goods
An influential factor in the product range
on offer by supermarkets

20. 20
Things to remember:
You are not Captain Cook! Many others
have found this market before you
which means your product must be:-
• Attractive and well presented
• Well priced
• Have a clear USP
• You may need to modify your product

21. Market Environment: Drink
• UK companies have been considerably
successful with exporting tea, coffee and
alcoholic beverages to Australia
• Soft drinks have been met with less
success due to competitions from other
global brands.
•  opportunities for specialty beverages,
unusual packaged beer, out-of-
mainstream non-alcoholic beverages

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Alcoholic Drink Sector:
On Premise Trade
• Confusion over the term “pub” and “hotel” in
Australia. The term “pub” is used in the same sense
as in the UK; however “hotel” also means the same
thing. And contemporary modern hotels are also
called hotels.
• The industry mainly consists of small independent
pub owners who lack a chain or franchise affiliation
(approximately 85% of market share). The
remaining 12% include Woolworths Ltd (8.1%),
Wesfarmers Limited (3.6%) and ALE Property
Group (0.3%).
• Large pub chains as found in the UK have a very
small proportion of the sector.
• Woolworths and Coles are moving aggressively
into pub ownership by buying hotel licenses
cheaply , thus adding to their bottom line with
liquor sales and gaming machine revenue.

23. Alcoholic Drink Sector
Off Premise Trade
• Subdued growth due to increasing
consumer demand for higher value,
premium beverages in addition to the
growing trend of home entertainment
• Liquor laws separate the sale of alcohol
from other food and beverages, except
for ACT and Victoria. Retail liquor store
(bottle shops) are therefore widespread.
• Supermarket-owned liquor stores are
attached to but physically separated
from supermarkets. Woolworths and
Coles liquor store chains have also
gained dominance in this market (over
58% of industry revenue).
• Significant shift away from bottle-shops
and high-street liquor retailers to big-box
liquor stores.

24. Alcoholic Drink Sector
• Beer
• RTDs
• Cider
• Spirits

25. Alcoholic Drink Sector: Beer
• The largest source of alcohol
consumption (37% of all alcohol
consumed in Australia)
• Premium beer is growing in popularity
• Standard bottle size is either 375ml
(Stubby) or 750ml (Long neck)
Stubby Long Neck

26. 26
Alcoholic Drink Sector: Breweries
• Highly concentrated: Fosters Group and Lion Nathan National Foods dominating the
industry
• More international brands are brewed under licence in Australia

27. Alcoholic Drink Sector:
Specialty and Craft Beer
• Premium imported beers have gained
market share steadily
• Examples: Guinness, Stella Artois,
Carlsberg, Heineken, Corona
• Increased competition from
supermarkets, hotels and pubs’ house
brands.
•  opportunities for specialty sector:
unusual packaged beer, specialty and
craft beers (both locally produced and
imported)
• Boddingtons Pub Ale is arguably the
most ubiquitous single UK brand sold in
Australia

28. Alcoholic Drink Sector: Cider
• One of the lowest taxable alcoholic
drinks in Australia
• About 120 types of local and
international ciders are available in
Australia
• Locally produced cider dominates the
market (73%) with Mercury Cider and
Strongbow leading the industry
• However there is a growing interest in
imported brands (New Zealand has the
largest market share of 13% of all
imported brands).
• Cider is increasingly viewed as a
refreshing alternative to beer at home
opportunity for premiumised brands

29. Alcoholic Drink Sector: RTDs
• Experienced a 70% rise in tax in
order to discourage binge
drinking.
• However IBIS World predicted
that sales were expected to
recover with RTDs being
marketed towards more mature
tastes
• Pre-mixed cocktails are also
expected to perform well
• Shifting focus towards improved
formula, bottle design and
packaging

30. Alcoholic Drink Sector: Spirits
• Sales of spirits have constantly
increased in recent years.
• Australia imports most of the spirits it
consumes (62.6%). Of these imports, the
UK accounts for 32.5%
• Strong AU$ facilitates greater growth in
imports.
• Trend: premiumisation: shifting
preference towards high-value and
quality brands
• 5% tariff in addition to domestic excise
upon entry into Australia

31. 31
Do your homework!

32. 32 Presentation title - edit in the Master slide
Key Lessons from the
Market Visit
 Think Australian - NOT POM, sell to Australians for
volume
 Add value vs. local offering
 Support distributor
 Price-points (understand margins and currency)
 Need to innovate
 Create volume / increase rate of sale to win both trade
and distributor support

33. 33
Assessment / Reappraisal
• SWOT analysis
• What were we selling (USPs)
• What was the realistic potential for the
brand ?
• Could we export ‘relevant’ elements of
the UK success?
• Revise

34. DON’T DO
Promise the earth
Over-estimate your sales
potential
Manipulate your distributor
Plan well in advance
Optimise your product benefits
Manage your marketing and
promotional budgets carefully

35. Find the right distributor - remember it’s
horses for courses
And not all the sharks are in Sydney Harbour!

36. How can UKTI help?
OMIS service:
• Industry specific sector report.
• In-depth report with a bespoke section
tailored to a specific sector with contacts
in core areas.
• Product Launch.
• Commercial publicity.

37. Thank You
• Any Question?

38. 38
Food and Drink Sector inAustralia
Richard Harper
Senior Trade Development Manager
UK Trade & Investment
British Consulate-General
Level 16, The Gateway,
1, Macquarie Place
Sydney
NSW 2000 | Tel: +612 8247 2233
Mobile: 61 (0) 408 662 324
Email:richard.harper@fco.gov.uk
sydharpuk@hotmail.com
URL www.ukti.gov.uk/greatbritain/au