BMI's Executive Summary

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If one trend can account for Australia's ranking in BMI's new Food & Drink Business Environment Ratings it is premiumisation. This mature market, with its relatively tiny population and vast areas of unpopulated and under-developed land, ranks second out of 14 Asia Pacific markets in terms of the potential it offers to would be food and drink investors. A high spending population, intrigued by, and willing to part with cash for, innovative products ensures attractive consumption levels and yet these levels are forecast to grow further still thanks to industry dynamism and the continued pursuit of premiumisation. In BMI's newly-published Q108 Australia Food & Drink Report we examine the nature of the investments driving industry growth and assess the five-year sales outlook for the industry.

Two of BMI's industry forecasts that best demonstrate the extent of premiumisation in the local market are our food consumption forecast and our confectionery sales forecast. Food consumption is forecast to increase by 10.4% to US$32.28bn in 2011. This represents considerable growth in a market in which food consumption in volume terms is forecast to remain fairly constant. Of course, this growth will in part by fuelled by rising food prices; a global trend caused by severe climatic extremities of the past couple of years, by heavy demand from the alternative energy sector and by soaring fuel prices which push up both production and transportation costs. However, this growth also reflects an ever-growing Australian demand for higher-value, better-quality food and beverage products. Growth in the confectionery sector perhaps sums this up best. This is a completely non-essential product category which consumers would simply retreat from should rising food prices jeopardise their spending patterns. However, BMI's confectionery sales growth forecast of 5.3% to 2011 in volume terms, is completely usurped by our growth forecast of 17% in value terms, reflecting the fact that Australian consumers are still buying nonessential goods such as confectionery and are increasingly buying more expensive, added-value variants.

This trend is in evidence across multiple sectors of the food and drink industry; soft drinks, alcoholic drinks, frozen foods, snacks and processed foods among them. Two, reasonably small, yet significant investments from the last three months, ably highlight the phenomenon. Coopers Brewery – a mere bit part player in Australia's vast beer market – announced plans to invest US$9.7mn in production and warehousing in order to boost its market share from 3% to 5% by 2011. The company plans to exploit interest in its premium niche and boutique brands to get one over on the industry giants whose expertise lies in the mass-market sector. Meanwhile US food major Heinz announced a US$8.6mn investment in its Wagga Wagga processing plant, the bulk of which would go towards a new ready meal line. This is notable not just because of the impact that convenience foods such as ready meals have on the value of food sales in Australia, but because it highlights a rare case of a global major opting to stay in Australia and exploit the market's potential from within rather than looking to the low-cost and potentially higher growth markets of Asia. In summary, the Australia food and beverage market might be mature, but it remains immensely profitable and dynamic.

Contents

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Chapter 1 – Business Environment

Retail Business Environment Rankings

Table: Asia Pacific Business Environment Rankings

SWOT Analysis

Australia Food & Drink SWOT

Macroeconomic Outlook

Table: Australia – Economic Activity

Chapter 2 – Retail

Regional Overview – Private Labelling in Asia Pacific

Table: Assessment Of Private Label Qualities – By Region

Table: Leading Private Label Categories By Market Share & Annual Growth Rate

Industry Forecast Scenario

Table: Australia MGR Sales By Format – Historical Data & Forecasts

Industry Developments

Company Developments

Market Overview

Table: Structure Of Australia’s MGR Market By Number Of Outlets

Table: Structure Of Australia’s MGR Sector – Value By Format (US$bn)

Table: Value Of Sales (US$mn) Per Outlet Type 2005

Chapter 3 – Food & Drink

Regional Overview – Dairy in Asia

Table: Per-Capita Dairy Consumption (kg) & Consumption Growth In Selected Asian Markets

Table: Milk Production (000 tonnes) & Production Growth In Selected Asian Markets

Table: Dairy Production (000 tonnes) Forecasts In Selected Asian Markets

Industry Forecast Scenario

Table: Food Consumption Indicators – Historical Data & Forecasts

Industry Developments

Company Developments

Market Overview

Table: Australia Agricultural Sub-Sector Production – Historical Data

Chapter 4 – Tobacco

Industry Forecast Scenario

Table: Cigarette Value/Volume Sales – Historical Data & Forecasts

Industry Developments

Company Developments

Market Overview

Chapter 5 – Competitive Landscape

Key Players

Table: Key Players In Australia’s MGR Sector – 2005

Table: Key Players In Australia’s Food & Drink Sector – 2005

Asia Pacific Regional Company Case Studies

AEON in Asia Pacific

Table: AEON Five-year Financials (JPYmn)

Table: Speciality Store Network (as at February 20 2006)

Coca-Cola Amatil in Asia Pacific

Table: Coca-Cola Amatil Five-Year Financials

Table: Coca-Cola Amatil Market Share By Country And By Beverage Sub-sector – As At Year-End 2005

Table: SPC Ardmona Market Share By Product Category

Heineken in Asia Pacific

Table: Heineken – Brands Distributed In The Asia Pacific Region

Table: Contribution Of Asia Pacific Region To Heineken 2005 Financial Performance

Kraft in Asia Pacific

Table: 2005 Kraft Global Facts

Company Analysis

National Foods

Aldi

Coles Myer

Woolworths

Metcash

Foster’s Group

Coca-Cola Amatil

Lion Nathan

BMI Forecast Modelling

How We Generate Our Industry Forecasts

Retail Industry

Sources

Competitive Landscape for Asia Food & Drink Reports: Sample of  
Companies Ranked

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At-a-glance perspective on the strengths, weaknesses, opportunities and threats facing each market’s food & drink industry. BMI also provides similar economic and business environment studies. Company SWOTs (Strengths, Weaknesses, Opportunities, Threats) covering all leading food and drink companies operating in each market, including competitive intelligence on geographic presence and competitive positioning of multinationals against local companies; leading products, services and brands; sales and local market share; foreign direct investment, projects, partners and acquisition strategy. Illustration of the industry via rankings tables comparing revenues, number of outlets, number of employees and registration dates. BMI analyses each company’s performance, market position, strategy and investment potential.

Network of Asain Food Sources

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BMI's Asian Food Reports are based on an extensive network of multilateral organisations, government departments, food industry associations, chambers of commerce and company reports. Information sources include: