Did you know there will be 2.5 billion extra mouths needing to be fed in the next 30 years? That’s 20-25% more than today. More importantly, a massive 75% of this growth is in Asia – right on Australia’s doorstep.
This was the focus of discussion at the Global Food Forum, when 400 prominent Australian business leaders and food industry players met in Sydney. This was the big question: “how can Australia’s agriculture and food industry increase its exports to meet the booming demand?” We went along to the forum to find out.
The fact is the Australian food industry, as it stands, is in no place to reap the benefits of Asia’s future demand for food. While Australia has natural competitive advantages, such as proximity, available land, relationships and quality products, we also have a host of challenges. And many of these — employment regulations and climate change to name but two — are out of the control of Australia’s food producers and manufacturers.
So what is within our control?
Here are some ways we can begin to realise the potential food boom that’s within reach, and how Australian food manufacturers can become Asia’s deli:
1. Increase productivity
Easier said than done, we know, but when it comes to productivity, Australia is losing out to rival exporters New Zealand and Brazil in a big way. Since 2006, Australia’s share of the booming international dairy and milk market has dropped from 12% to just 7%. The reason is that national dairy production has failed to keep pace with global productivity gains and the rapidly expanding Asian market.
Australian food manufacturers and producers need to step up productivity and efficiency if they want to be globally competitive. One effective way to do this is to invest in process-improving technologies. For example, Australia’s largest dairy processor, Murray Goulburn Co-operative, has recently said it will need to find up to $500m for capital projects over the next few years. Fonterra has also allocated an extra $NZ400m-$500m towards capital expenditure over the next three to four years. This includes installing additional evaporators at its factories to process milk into whole milk powder, letting it take advantage of the growing market trend — which leads us to the next point…
2. Know the trends
Food trends move fast, often much faster than expected. Take the dairy market. Fonterra’s CEO, Theo Spierings, recently told The Australian newspaper that, although the company had accurately predicted the growing demand for dairy in emerging markets, trends were moving faster than they anticipated — especially demand for whole milk powder.
Only by keeping a closer eye on market trends can food manufacturers and producers be ready to pounce and take advantage of the opportunities. Consumer trends such as gluten free, paleo, healthy beverages and an evolving taste palette in general, should be informing food manufacturers’ decisions. It’s not just about introducing new product lines, food manufacturers need to look at the way food products are packaged; consumers are increasingly looking for more diverse packaging to meet their lifestyles. The rise of convenience or “on-the-go” packaging is a case in point.
3. Seize the potential
Australia has a competitive advantage in its high value, high quality products. (See here why using the Australian Made Australian Grown is valuable.) This is something that should be driving every food manufacturer. Use the trends: look at where consumers are heading and innovate in that direction. Carve a niche for your business, leveraging your unique strengths. (Here’s some more on why carving a niche is so valuable.) There may be potential in your business, or even the wider region, that you have not captured yet. For example, Fonterra sees more potential in Australia to produce cheese, nutritional powders and whey. Your niche doesn’t need to be as significant as that, but whenever there’s an opportunity, don’t wait to take it.
4. Celebrate your success
These words of advice came from Macquarie’s Tim Hornibrook at the Global Food Forum. He said, to attract investors, Australian farmers need to celebrate their success rather than continuing to complain about their problems, and as a result this will help boost the industry. These are wise words that can be applied to any business. We tend not to recognise our successes, but we should. Celebrate your achievements within your organisation with employees and stakeholders, as well as with consumers and the wider public. This will build motivation and improve the value of your business as a whole.
Asia is hungry for our product solutions, so the time to act, build, invest and position is … now. We think this message is so strong, we’ve included it as one of our “manufacturing lessons for 2015”. You might also find it interesting to read some steps for small business on getting ready for Asian export growth.
Discover more growth strategies in our blog on “Top 5 strategies to grow your manufacturing business”. You may also be interested in the outcome of the Food & Drink Business Live Industry of the Future Forum, which featured upfront talks by Nudie’s GM of Sales & Brand, Richard Glenn; former Kellogg Australia MD Jean-Yves Heude; David Beak from Beak & Johnston; and Richard Sauerman, aka “The Brand Guy”. Nothing was off limits.
Contact us to find out more about how Matthews can help your business.