Bliss Down Under

Latest research from Leatherhead’s Global Food Markets database suggests that the key food sectors in Australia are weathering the global recession well. Although there are signs that consumers have begun to economize during the slowdown, many sectors have shown strong growth in 2008, with positive 2009 sales estimates.

This is partly because the total consumer expenditure in Australia has not dropped at the same levels as other major economies. Real private consumption expenditure in Australia grew 2.2% in 2008, with an Organisation for Economic Co-operation and Development (OECD) forecast of 1.3% in 2009 and 1.5% in 2010 (compared with +0.3%, -1.3% and -0.2% for the European region respectively).

Australians have developed a taste for ethnic cuisine with Indian, Southeast Asian, Mediterranean and Latin recipes proving popular and currently accounting for 75% of ready meal sales.

Growth segments

Baby food sales rose 8.8% in 2008 with 2.8% growth forecast for 2009, reflecting a trend towards higher quality and more expensive products, as well as increased costs of raw materials being passed on by manufacturers.

Chocolate sales were up 6.1% in 2008 with 3.9% growth forecast for 2009. Much of the recent market growth can be attributed to the growing popularity of premium chocolate, especially in sectors such as boxed and bite-sized chocolate assortments. Sales of everyday blocks and countline products have also held firm.

Sugar confectionery has been a buoyant sector up 5.8% in 2008 with an anticipated 3.7% in 2009. Much of the recent growth can be attributed to growing consumer interest in healthier varieties of sweets and the strong sales of sugar-free products. Medicated confectionery has also performed well.

Coffee sales grew 7.5% in 2008 and are 25% higher than in 2005, due to a trend towards specialty instant and roast coffees. A further rise in value of 5.3% was predicted for 2009.

In ice cream, the sales of premium and indulgence products held firm in 2008, despite the squeeze on spending power during the downturn. Sales through grocery channels were up 5.9% in 2008 with a 4.8% increase estimated for 2009.

The sauces market has benefi ted from the tendency for consumers to economize and prepare meals at home in place of dining out, as convenience and ease of use have become key selling points. Overall sales of sauces in 2008 reached AUD$998 million ($898.7 million), up 4.0% on the previous year, with 3.1% growth forecast for 2009.

Asian infl uences have been a key trend in terms of flavor development. Soups that are based on traditional Far East Asian recipes and Latin tastes, which are spicy and often incorporate beans and lentils, have proved successful. In recent years, Asian savory snack foods have become more popular, although their level of sales remains modest.

Australians have also developed a taste for ethnic cuisine with Indian, Southeast Asian, Mediterranean and Latin recipes proving popular and currently accounting for 75% of ready meal sales.

Since 2007, there has been a considerable merger and consolidation activity as the industry moves into a phase of maturity and as domestic and foreign companies are looking to take advantage of opportunities in the Asia-Pacific region. As a result, several key sectors have become increasingly dominated by a handful of players (see Table 1).

Table 1: Consolidation in the Australian food and drink industry. Source: Leatherhead Food Research, Global Food Markets Database.

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