NARGA - The challenge to feed a growing nation November 2010 - National Association of Retail ...
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NARGA The challenge to feed a growing nation November 2010
Content
NARGA Chairman’s Analysis 5
1. Executive summary 9
2. Australian food sustainabity at the crossroads 11
2.1 Australian population trends
2.2 Australian food consumption trends
2.3 Australian primary production trends
2.4 Australian processed food production trends
2.5 Australian food exports and imports trends
2.6 Food industry sustainability dilemma
3. Australian grocery industry - Context and structure 19
3.1 An employment perspective on the retail, grocery and
food industries
3.2 Retail and grocery sectors - cross industry perspectives
3.3 Grocery sector - size, shares and stores context
4. Australian food and grocery industry & "paddock to plate"
context and structure 29
4.1 The "paddock to plate" profiles and value add analysis
5. Appendix 39
5.1 Study methodology and sources
5.2 Study terms and definitions
5.3 Dairy industry case study
5.4 Private label case study
2
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3
John Cummings 4
NARGA Chairman’s Analysis
There have been many inquiries into aspects of the and more food and at the same time creating
Australian grocery industry, including the report of: conditions which will make it difficult for primary
producers and manufacturers to remain viable.
·the House of Representatives Standing Committee
on Industry, Science and Technology We believe this is being driven by the unparalleled
(the Reid Committee, 1997), hyper-concentration of the grocery retailing
sector, where two major supermarket chains have
the report of the Joint Select Committee on the
· almost 80 per cent of packaged grocery sales. By
Retailing Sector (the Baird Committee, 1999), comparison, the two largest grocery retailers in the
United States (Wal-Mart and Kroger) jointly have 20
the ACCC’s report to the Senate On prices paid
·
per cent market share and the top five chains in the
to suppliers by retailers in the Australian grocery
United Kingdom have about 80 per cent.
industry (2002),
Governments have not to date acknowledged
·the Review of the Competition Provisions of the
that the level of market concentration in the
Trade Practices Act (the Dawson inquiry, 2003),
Australian grocery retailing industry has been
the Senate Economics References Committee
· adversely affecting the ability of many Australian
inquiry into The effectiveness of the Trade Practices primary producers to survive - the dairy farming
Act 1974 in protecting small business (2004), sector is a case in point, as the Senate Economics
References Committee reported earlier this year -
·the Report of the ACCC inquiry into the and processors and manufacturers are being forced
competitiveness of retail prices for standard to bulk up through mergers and acquisitions to give
groceries (2008) and various Senate Economics themselves some hope of negotiating fair deals with
Committee inquiries, the major retailing chains.
·most recently the Senate Economics References These are the types of issues which were
Committee’s report on dairy pricing (May 2010), acknowledged as early as 1997 in the Reid
Milking it for all it’s worth - competition and pricing Committee’s report Finding a balance: Towards fair
in the Australian dairy industry. trading in Australia. The problems remain today, but
are more urgent. Piecemeal amendments to the
The frequency of these inquiries suggests that there Trade Practices Act have been ineffective.
are issues which remain unresolved, issues which
continue to cause problems for Australian primary The ACCC’s 2008 grocery inquiry report found
producers, processors and manufacturers, retailers that Woolworths and Coles were only “workably
and consumers. competitive”. We think that was far too bland a
conclusion: they merely share the market and
This report reviews the entire food and grocery exert enormous power over their suppliers, their
supply chain from paddock to plate. We believe this competitors and their customers, not through
has been the first report to gather hard data on the efficiency or economies of scale, but simply
entire supply chain. because of their dominant position in the market.
The result is a clear picture of an industry facing There are a number of indications in this report
serious issues: without concerted action by suggesting that the retail grocery market may not
government, Australia risks losing its domestic food be genuinely competitive. These include:
industry as we currently know it.
• The disparity between volume and value growth
The National Association of Retail Grocers of during the last decade (12 per cent versus 42 per
Australia commissioned Accenture Australia to cent) that suggests an increase in profit margins
conduct this research because we have grown taken at the retail level; (see page 13)
increasingly concerned that the country with the
cleanest paddocks in the world is importing more
5
• The margin shift from producer to retailer - in If these trends continue, substantial parts of
the dairy sector, retailers take 80 per cent of the Australia’s domestic food industry are at risk.
available gross profit, processors 16 per cent and
farmers four per cent; (page 43) There is no simple, single remedy for the problems
facing the Australian food and grocery industry.
• The high degree of concentration of the retail
grocery market with Woolworths and Coles However, it is clear that the market concentration
identified as having a market share of around 80 of the Australian grocery retailing sector needs to
per cent between them; (page 27) be addressed so that the market dominance of two
major companies can be reduced over time.
• The fact that Australia has a more stable retail
growth pattern, less affected by the type of One way of ameliorating the market power of the
fluctuations that would be expected as a result of major chains is the reintroduction of a prohibition
greater price competition; (page 21) on anti-competitive price discrimination - a
circumstance where suppliers, willingly or unwillingly,
• The evidence of a ‘waterbed effect’ in prices are obliged to sell product to one (or several)
paid by independent retailers, of which the customers at lower prices than are available to
dairy industry is an example. This results in other customers, discounts that are unrelated to
suppliers being forced to charge higher prices genuine discounts for economies of scale.
to some customers for some products in order to
compensate for lower prices being paid by the However, the advantage gained by anti-
major chains; private label milk prices offered by competitive price discrimination at the point of
the major chains have been offset by significant supply cannot be recovered by other competitors,
price increases for cheese, yoghurt and ice cream even if they accept a lower profit margin. The result
in the past few years; (page 43) is a heavy dampening of competition and, over
time, further market concentration.
• Growth in the lower quality private label market
suggesting there is insufficient competitive When the Trade Practices Act was passed by the
pressure to maintain product quality (pages 16, Parliament in 1974 it contained such a prohibition,
46). the then section 49, but after a sustained campaign
by big business, it was repealed in 1995.
The expansion of the major chains’ private label
ranges in recent years has seen an increase in Interestingly, the campaign by big business began
imported products from low-cost countries. As a almost immediately after the Trade Practices Act
consequence, Australian primary producers and 1974 was passed and before any cases had been
manufacturers have lost domestic market share. taken to court. The big business campaign was
reflected in the recommendations of the Swanson
This report highlights some of the problems which Committee as early as 1976. The Blunt Committee
are evident in the market: repeated the recommendation in 1979. The
campaign continued until the Hilmer Committee’s
• Food consumption is growing faster than recommendation of repeal was acted on in 1995.
population Yet the Trade Practices Commission did not take a
single case to court from 1974 to 1995.
• Food consumption is growing faster than food
production It is now extremely clear that the assumption by the
Hilmer Committee, echoing the Reid Committee
• Food imports are growing faster than food exports
and many others since - that a prohibition on anti-
• Grocery industry growth has outpaced both gross competitive price discrimination was unnecessary
domestic product and overall retail growth in the because section 46 of the Trade Practices Act
second half of this decade (dealing with misuse of market power) could be
used to address such conduct - was wrong and
• Grocery prices are growing faster than the unsupported by any evidence whatsoever.
consumer price index (and, because they
constitute a significant part of the CPI, contribute Again, since the repeal of section 49, the ACCC has
to increasing the CPI itself). never used section 46 of the TPA to test allegations
of anti-competitive price discrimination in court.
6
That is a matter of record. Yet many small businesses, Governments need to acknowledge that the threats
particularly in the grocery sector, have also said to the continued viability of the Australian food
publicly that they cannot buy product at wholesale industry stem from the hyper-concentration of the
cheaper than the major supermarket chains ask for retail sector and, as the inquiry reports listed earlier
the identical product at retail. That circumstance indicate, there has been a long-term failure of the
has nothing to do with economies of scale. regulatory framework to address such issues.
We believe the reintroduction of a prohibition on JOHN CUMMINGS
anti-competitive price discrimination is now critical. Chairman
Australia and New Zealand are now the only two National Association of Retail Grocers of Australia
OECD countries without such a prohibition, resulting November 2010
in a situation where the major supermarket chains,
amongst other big corporations, are able to
demand pricing advantages which suppliers could
not deny them without risking the loss of one or
other of their two largest customers, potentially to
be replaced by imports.
However, without a regulator committed to active
monitoring of industry and application of the
legislation, black letter law is largely irrelevant. The
failure of regulatory commitment was noted as
early as the 1997 report of the Reid Committee and
is evident from the failure of the Trade Practices
Commission or the ACCC to take a single allegation
of anti-competitive price discrimination to court
since 1974, under either section 49 or section 46.
NARGA supports the recent observation by the
Australian Food and Grocery Council that a whole
of government response is needed to resolve the
issues now facing the food industry.
This would allow governments to engage with the
individual sectors in the supply chain, beginning
with the farming sectors which currently seem most
at risk. NARGA believes Australians need and want a
vibrant and secure farming sector.
Processors and manufacturers require continuous
reinvestment in their Australian facilities. Without
such reinvestment, Australian operations of
international companies are also likely to be at risk
and governments need to understand that and
create a climate of confidence for such investment.
Finally, governments need to understand that
the independent grocery retailing sector is the
major source of competition for the major chains.
Independent grocers offering a wide range of
formats and market specialisations are the best
defence for a competitive industry.
7
8
1. Executive summary
The Australian food and grocery industry is at the Structurally, the “paddock to plate” value chain is
cross roads and is in need of a holistic review and showing clear trends of consolidation across the
response across the “paddock to plate” value-chain board: from farmers through processors through
to forge a path forward. to the concentrated retail end of the value chain.
There is evidence of tension in regards to the
The trends over the last decade paint a picture that balance of power within the value chain between
puts the ability of the local industry to support local the producers, processors and retailers. The case
consumption in question. The three key trends that studies covering the dairy industry and the private
drive this are: label category illustrate and expand on this, and
the effects it may have on the local industry.
1. Food consumption is growing faster than
population The Dairy case study in particular demonstrates
some of tensions in the value chain – where the
2. F ood consumption is growing faster than food
drive by the concentrated supermarket sector to
production (which is in decline)
offer lower private label milk to consumers, has
3. Food imports are growing faster than food exports had negative effects on the viability of producers
and has placed processors into a situation where
Primary production trends are on a decline in “prices of branded products have sometimes been
volume terms overall. The growth of processed increased to offset overall cost increase, both for
and manufactured goods for consumption lags branded and private label products” 1
behind growing local needs. And, although the
retail sector is showing, in contrast, healthy growth, What does remain unresolved is the future direction
its key participants are increasingly meeting the of the industry as a whole in Australia. Its importance
production gap via imports. is undeniable. The trends are self-evident. The
tension is documented.
There seems to be a paradox at play in the industry
– where Australia has a growing population The way forward, if the current patterns hold true,
and growing per capita consumption, which is indicates further dilution of local capacity at both
contrasted with a decrease in local supply of food primary and secondary level, and a corresponding
and grocery products. increased reliance on imports to meet the
consumption-production gap at the retail level. The
The “paddock to plate” value of the food and question remains whether this will be in the best long
grocery industry to Australia is significant. It is term interests for Australia, for Australian industry
estimated that it generates $209 billion in sales. This and for Australian consumers.
makes up more that 20 per cent of Australian GDP. It
employs around 910,000 Australians which is well in
excess of 411,000 workers linked to the grocery retail
portion of the value chain. It also contributed 11.5
per cent of the total value of Australian exports.
1. Report from the Senate Economics References Committee, “Milking it for all its’ worth”, May 2010.
9
10
2. Australian food sustainabity at
the crossroads
The current, wide-ranging debate that focuses on Food Consumption is growing faster than
sustainability of “big” vs. “small” Australia has a Population.
parallel in the local food industry. The trends over Whereas population in Australia has increased by 11
the last decade potentially signal the fact that we per cent over the last decade, our ‘per capita’ food
are facing a significant tension point in regards to consumption value and volumes increased by 58
long term sustainability of local food production per cent and 25 per cent respectively.
that is able to effectively satisfy our consumption
patterns.
Food Consumption is growing faster than
There are three linked trends that, once extended Production.
into a forecast, point to this: Although food production has increased by 21
per cent in value terms since 2000, the volume
1. Food consumption is growing faster than of food production at primary level has actually
population decreased by 11 per cent since 2000. Both of these
are well below the pace of growth of population or
2. F ood consumption is growing faster than food
consumption.
production (which is in decline)
It is evident that the current trends, if allowed
3. Food imports are growing faster than food exports
to continue unabated, may create significant
challenges in regards to the feasibility of local
Fig 1. Australia - Food Supply and Demand Trends and industry effectively supporting the domestic
Outlook demand, as well as creating a potential flow-on
effect to increased reliance on food imports to
Index (base year 2000)
bridge this gap.
350
In fact, this trend of food imports growing faster than
Histroy Trend forecast food exports is already evident in the data from the
300
past decade. Food exports values have actually
slowly eroded (-4 per cent) whilst food imports
250
values have increased by 80 per cent in value
between 2000 and now. This pattern is even more
200
3 2 1 evident with data that is volume based with the
150
imports to exports index gap widening further.
These tension points raise questions as to whether
100
the Australian food industry is optimally positioned
to face these challenges, in view of current changes
50
and trends in regards to its structure. We will now
look in more detail at these cumulative trends that
0
2000-01 2005-06 2010-11 2015-16 2020-21 create this tension point.
Production $ Import $ Population
Consumption $ Export $
Sources: Australian Food Statistics Report 2008, Processed Food
manufacturing. Data have been indexed on year 2000 and linear
trendline have been applied.
112.1 Australian population trends
Between 2000 and 2009, population in Australia Fig 2. Australian population trend (2000-2009)
grew from 19.2 million to just over 22 million, an 11
Population
per cent increase.
23,000,000
Latest official ABS projections for population range
from 30 million to 40 million by 2050, depending
on the scenarios (low/high fertility, life expectancy, 22,000,000
overseas migration). This could represent a near
doubling of our current numbers.
21,000,000
This population increase and the future projections
need to be considered in relation to their effects on
our food consumption rates and patterns, as well as
how well the Australian food industry is poised and 20,000,000
structured to support them in the near future.
They also need to be considered holistically across 19,000,000
the “paddock to plate” value chain at production,
processing and retail components, and structure
and trends in the Australian food and grocery 18,000,000
industry. 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Let’s turn our attention first to the food consumption Source: ABS table 3101.0 ‘Australian demographic Statistics’.
patterns.
Fig 3. Australia Projected Population in Millions
(2007 to 2051)
Population in million ('000)
40,086.6 34,213.2 30,306.6
40,000
30,000
20,000
10,000
0
2007 2011 2021 2031 2041 2051
Series A Series B Series C
Series A: assumes Series B: assumes Series C: assumes low
high levels of fertility, medium levels of levels of fertility,
life expectancy, fertility, life life expectancy,
overseas migration expectancy, overseas migration
and interstate overseas migration and interstate
migration flows and interstate migration flows
migration flows
Source: ABS catalogue 31010DO001_200909 Australian Demographic
Statistics, Sep 2009, Table 9 Projected resident population, states &
territories.
122.2 Australian food consumption trends
Our food consumption continues to rise at a pace Fig 4. Grocery Retail Turnover Trend (2000-2009)
that is outstripping the population and GDP growth
rates, thus creating pressure and additional demand Million (A$)
for local fresh and processed foodstuffs. 100,000 40.0%
Australians continue to consume more per capita 90,000 39.5%
and this is reflected in the growth of grocery retail 80,000
39.0%
turnover figures - the best data proxy for our food
consumption - which have increased by 70 per cent 70,000
38.5%
since the year 2000. (Source: ABS catalogue 8501.0 ‘Retail Trade, 60,000
Australia’. Table 11. Retail Turnover, state by industry subgroup) 38.0%
50,000
When we indexed consumption growth trends vs. 37.5%
40,000
population in the last decade, two key insights were
37.0%
uncovered to support this trend: 30,000
20,000 36.5%
• Consumption volumes have grown 12 per cent
faster than population in the same period of time 10,000 36.0%
•C
onsumption values have grown 42 per cent faster 0.0 35.5%
than population in the same period of time 2000 2001 2002 2003 2004 2005 2006 2007 2008
-01 -02 -03 -04 -05 -06 -07 -08 -09
Grocery retail has grown faster than GDP, reflecting
Grocery retail Grocery % of total retail
the fact that the per capita demand for food is on
the rise, but also potentially linked to the diluting Source: ABS catalogue 8501.0 ‘Retail Trade, Australia’. Table 11.
factor that grocery retailers are including more
categories in their portfolio to drive overall demand.
Fig 5. Grocery Retail Share in GDP (2000-2009)
Percentage
9.0
8.4
7.9
8.0 7.6
7.3
6.8 6.9 7.0
7.0 6.6
6.0
5.0
4.0
3.0
2.0
1.0
0.0
2001 2002 2003 2004 2005 2006 2007 2008
-02 -03 -04 -05 -06 -07 -08 -09
Grocery as % of GDP GDP % Growth
Sources: ABS catalogue 8501.0 ‘Retail Trade, Australia’, table 11, Retail
Turnover, state by industry subgroup. ABS catalogue 1350.0, Australian
Economic Indicators, Aug 2009, table 13500DO001_200907.
132.3 Australian primary production trends
Food production volumes are linked to many factors Fig 6. Australia agriculture food production trends
– ranging from weather patterns, through legislative (2000-2008)
and regulatory initiatives to the effects of global $ Millions
Kilo tonnes
trade and commodities demand patterns, as well
120,000 40000
as local demand requirements. As such, isolating
any one of these as the overriding factor that drives 35000
100,000
the end volumes and values is an inexact science at
30000
best.
80,000
25000
What we are focusing on here are the overt facts
related to the observed end patterns in production 60,000 20000
values and volumes and how they relate to the
15000
wider trends in the “paddock to plate” food industry 40,000
in Australia. 10000
20,000
At top line summary, the Australian food production 5000
patterns in the last decade indicate:
0.0 0
2000 2001 2002 2003 2004 2005 2006 2007
• Value rise of 21 per cent over that period in time -01 -02 -03 -04 -05 -06 -07 -08
olume decrease of 11 per cent over that period
•V Agricultural food production (Volume)
in time Agricultural food production (Value)
These trends lag behind population growth trends Source: Australian Food Statistics Report 2008, Agricultural Food
and more importantly consumption volume trends production by commodity.
for Australia. This means that Australian food export
revenues will be negatively impacted to allow
Fig 7. Australia - Agricultural Food Production
for diversion of local production to satisfy local
Volume Trends (2000-2008)
demand.
20%
16%
As indicated, these trends may also reflect drought
conditions and climate variability that have been 10%
5.4% 6.2%
observed in Australia in recent years. [Drought is 1.5%
already over in most places]. At a more detailed 0%
level we can see the patchy volume growth
patterns across some of the key commodities: -10%
-12.5%
• Positive growth – Sugar cane -20%
•M
arginal growth - Fisheries, livestock and -30%
-29%
vegetables -33.1%
-40%
• Negative growth - Grain, oil seeds, fruits and milk
-50%
-49.1%
-60%
Grains Oil seeds
Sugar cane and peanuts Fruits
Vegetables Livestock (production)
Fisheries Milk (litre converted in kt)
Source: Australian Food Statistics Report 2008, Agricultural Food
production by commodity.
142.4 Australian processed food production trends
The trend of lagging behind consumption demand Figs. 8 and 9. Processed Food Manufacturing
growth gets more pervasive when we shift our (Index Value)
attention to the processed food sector in Australia. Index (year base 2000)
Only two categories seem to be keeping up with 250
consumption growth rates in regards to production
rates. As such, the overall 37 per cent growth in
200
value between 2000 and 2009 for food production
is not high enough to sustain local consumption
growth rates. This signals the slowdown in the rate of 150
expansion of local manufacturing capacity as well as
the slowdown of production efficiency and product
innovation rates to keep up with local consumption 100
trends.
As such, local production may need to be supported 50
by further imports to close the gap with projected
consumption levels.
0
When we extend the current index patterns forward, 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
and use the consumption growth rate as the Meat processing Seafood processing
Source: Australian Food Statistics Report 2008, Processed Food
reference point, further detail emerges: manufacturing (values
Dairy products have been indexed Fruit
processing on year 2000).
& veg processing
Oil & fat processing Grain mill cereals processing
• Sugar & confectionary and bakery products are
Bakery products processing Sugar and confectionary
the only two groups that are growing at a faster Outlook
rate than consumption Other food processing Beverages
Index (year base 2000)
Consumption
• Oil & fats manufacturing is declining not only 450
in regards to keeping up with the growth of Histroy Trend forecast
400
consumption but also in absolute terms
350
• The remaining commodities are not keeping up
300
with the growth of consumption and will need to be
supported by imports to satisfy local consumption 250
growth.
200
These trends once again underline the apparent
150
divergence between local consumption growth rates
and the changing way that the industry is currently 100
poised to support it locally.
50
The last piece of the trends puzzle – the imports 0
vs exports trend - suggests that if these patterns 2000 2005 2010 2015 2020
continue the solution to this divergence will not lie in
Meat processing Seafood processing
increasing local capacity, but rather on increased
reliance on imports. The question remains whether Dairy products processing Fruit & veg processing
this is the right solution for our market and industry. Oil & fat processing Grain mill cereals processing
Bakery products processing Sugar and confectionary
Other food processing Beverages
Consumption growth baseline
Sources: Australian Food Statistics Report 2008, Processed Food
manufacturing. Data have been indexed on year 2000 and linear
trendline have been applied.
152.5 Australian food exports and imports trends
Over the last decade – there has been a clear Fig 10. Food Imports and Exports Trend
divergence in food exports and imports patterns:
Kilo tonnes $ (million)
• F ood Exports are in decline – decrease in value 35,000 30,000
(-4 per cent) and volume (-40 per cent) between
2000 and 2009 30,000 25,000
• F ood Imports are on the rise – increase in value
25,000
(+80 per cent) and volume (+94 per cent) 20,000
between 2000 and 2009
20,000
Further analysis reveals that the contribution of 15,000
food exports value to total Australian exports has 15,000
declined from 18 per cent in 2000 to 8 per cent in 10,000
2009 – this is a 55 per cent share decrease in one 10,000
decade.
5,000
5,000
As such, it is evident that the current trends and
projections for population growth and increasing
0 0
consumption, combined with local food
2000 2001 2002 2003 2004 2005 2006 2007
production that is declining in volume terms have -01 -02 -03 -04 -05 -06 -07 -08
the effect of:
Food imports (volume) Food exports (volume)
• T ransferring some of the potential export volumes Food imports (value) Food exports (value)
to local consumption
Source: ABS catalogue 5368.0 International Trade in Goods and Services,
Australia, table 12a and 13a used for export & import value. ABS
• Increasing the import volumes to close the unpublished catalogue used for import and export volume.
consumption gap
In addition, current Australian currency strength is Fig 11. Australia - Food Products Imports Trends
putting further pressure on local producers to stay
Kilo tonnes $ (million)
competitive with imported foods.
6,000 10,000
Lastly, it suggests that overseas sourcing for food
9,000
products is increasingly used as a long term
5,000
alternative by the food processing and grocery 8,000
retail industry in order to maintain all year long
7,000
supply in the market and bridge the gap to 4,000
growing consumption. 6,000
3,000 5,000
4,000
2,000
3,000
2,000
1,000
1,000
0 0
2000 2001 2002 2003 2004 2005 2006 2007
-01 -02 -03 -04 -05 -06 -07 -08
Food imports (volume) Food imports (value)
Source: ABS catalogue 5368.0 International Trade in Goods and Services,
Australia, table 13a used for imports value. ABS unpublished catalogue
used for imports volume.
162.6 Food industry sustainability dilemma
As demonstrated, the Australian market is displaying • How important is the food industry to the
a number of trends that are putting pressure on the Australian economy?
long term sustainability of the “paddock to plate”
food industry in this country. • What is the current size and structure of the
industry at primary, manufacturing and retail
We are facing a paradox where we have a level?
growing population and growing per capita food
consumption that is contrasted with decrease in • What is the level of concentration and competition
local primary as well as processed food production across the food chain ?
and exports, resulting in growing imports to bridge
• What are the current trends and issues faced by
the consumption gap. It seems that the local
the players in the food chain in Australia?
industry is not responding to the demand growth
signals of a market economy, in fact it seems to be • Is concentration in the retail sector also resulting in
going in the opposite direction. concentration in other sectors of the food chain?
There are questions that come to mind as to what is
driving these patterns and why it is happening:
1718
3. Australian grocery industry -
context and structure
The grocery industry is the key channel for food ‘Retail Trade, Australia’. Table 11). It has registered
distribution and consumption. It is the single biggest a 70 per cent growth in the last decade and forms
retail sector and makes up 39.6 per cent of total 8.4 per cent of the total Australian GDP, 27 per cent
retail turnover in 2008-2009 (ABS Catalogue 8501.0 share growth in one decade.
Fig 12. Grocery Retail Turnover Trend (2000-2009)
Million (A$)
100,000 40.0%
90,000 39.5%
80,000 39.0%
70,000
38.5%
60,000
38.0%
50,000
37.5%
40,000
37.0%
30,000
20,000 36.5%
10,000 36.0%
0.0 35.5%
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Grocery retail Grocery % of total retail
Source: ABS catalogue 8501.0 ‘Retail Trade, Australia’. Table 11.
Fig 13. Grocery Retail Growth (2000-2009)
Growth (%)
10
9
8
7
6
5
4
3
2
1
0
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Grocery retail % growth GDP % growth Total retail % growth
Source: ABS catalogue 8501.0 ‘Retail Trade, Australia’. Table 11. Retail Turnover, state by industry subgroup. ABS catalogue 1350.0, Australian
Economic Indicators, Aug 2009, table 13500DO001_200907.
19Thus, the importance of the grocery industry and It has grown 62 per cent over the 2000-2009 period
channel has increased in the last decade and (note that this is slightly slower than the food centric
its growth has outpaced that of both GDP and grocery sector at 70 per cent growth in the same
the overall retail sector in the second half of the period). It also registered $230 billion in turnover
decade. in 2008-2009 financial year. The retail sector as
a whole, now forms over 20 per cent of the total
Similar trends are observed in the wider retail sector, Australian economy.
which similarly has outpaced the GDP growth in
Australia and is now a cornerstone of the Australian Australian retail has a more stable growth pattern
economy. when compared to other countries. The patterns
are much less “peaky” than those of other countries,
such as France, Canada or Japan that oscillated
between growth and stagnation. This may be
indicative of reduced competition. However, the
retail industry provides a steady growth “engine
room” to the Australian economy and the other
related industries that depend on it.
20Fig 14. Grocery Retail Share in GDP (2000-2009) Fig 15. Retail Turnover Trend (2000-2009)
Percentage Millions (A$)
9.0 250,000 25%
8.4
7.9
8.0 7.6
7.3
6.8 6.9 7.0 200,000
7.0 20%
6.6
6.0
150,000 15%
5.0
4.0
100,000 10%
3.0
2.0 50,000 5%
1.0
0.0 0 0%
2001 2002 2003 2004 2005 2006 2007 2008 2001 2002 2003 2004 2005 2006 2007 2008
-02 -03 -04 -05 -06 -07 -08 -09 -02 -03 -04 -05 -06 -07 -08 -09
Grocery as % of GDP GDP % Growth Retail turnover Retail turnover as a % of GDP
Sources: ABS catalogue 8501.0 ‘Retail Trade, Australia’, table 11, Retail Source: ABS catalogue 8501.0 ‘Retail Trade, Australia’. Table 11. Retail
Turnover, state by industry subgroup. ABS catalogue 1350.0, Australian Turnover, state by industry subgroup.
Economic Indicators, Aug 2009, table 13500DO001_200907.
Fig 16. Retail Turnover Growth (2000-2009) Fig 17. Retail Growth (per cent): Global Comparison
Growth (%) Growth (%)
10 25
9 20
8
15
7
10
6
5 5
4
0
3
-5
2
1 -10
0 -15
2001 2002 2003 2004 2005 2006 2007 2008 2001 2002 2003 2004 2005 2006 2007 2008
-02 -03 -04 -05 -06 -07 -08 -09 -02 -03 -04 -05 -06 -07 -08 -09
GDP growth Retail industry growth Australia US Canada Germany
Australia GDP UK France Japan
Source: ABS catalogue 8501.0 ‘Retail Trade, Australia’. Table 11. Retail
Turnover, state by industry subgroup. ABS catalogue 1350.0, Australian
Economic Indicators, Aug 2009, table 13500DO001_200907. Sources: ABS catalogue 8501.0 ‘Retail Trade, Australia’. Table 11. Retail
Turnover, state by industry subgroup. ABS catalogue 1350.0, Australian
Economic Indicators, Aug 2009, table 13500DO001_200907. Planet Retail.
213.1 An employment perspective on the retail, grocery
and food industries
The retail Industry is the single biggest employer The grocery component of this value chain has
in the Australian Economy – with over 1.5 million shown healthy employment trends between 2000-
Australians being part of the industry. The grocery 2008:
sector on its own is in the top ten of the usual
industry classifications and employs 411,000 people. • Overall employment grew 33 per cent , from
300,000 to 411,000 people
An additional interesting perspective relates to
the combined workforce that works in the grocery • Full time employed grew 25 per cent- from 131,700
sector as well as the upstream manufacturing to 164,000 people
and primary production sectors. These form the
• Grocery increased its share of total retail
“paddock to plate” value chain, which employs
employment to 27 per cent
just over 912,000 Australians and ranks as the sixth
biggest employer of its own accord. • Grocery increased its share of total employment to
five per cent.
This is the sector that is, as a whole, being affected
by the trends that we have observed in the first part As a side note - Woolworths and Coles, the two
of this report. These are the trends that are currently key retail grocery chains employ 53 per cent of the
indicating that its sustainability is at risk. grocery workforce vs. their market share of 79 per
cent.
Fig 18. Total Employment by industry in 2008
Persons employed ('000)
1,600
1518
1,400
1,200
1,000
912.3
800
600
411.5
400
200
0
Retail Manufacturing Construction Education Gov. admin. Wholesale Finance and Agriculture, Comm. Electricity,
trade and trade insurance forestry and services gas and
defence fishing water
supply
Property Health and "Paddock Accom, Transport Grocery Personal and Cultural Mining
and business community to Plate" cafes and and storage retail other services and
services services restaurants recreational services
Source: ABS catalogue 6105.0 ‘Australian Labour market Statistics’.
22Fig 20. Grocery Retail Employment Growth (2000-2009) Fig 21. Grocery Retail Employment Profile (2008-09)
16%
14%
12%
Coles
10%
113,000, 27%
8% Other
191,500, 47%
6%
4%
Woolworths
2% 107,000, 26%
0%
-2%
-4%
2000 2001 2002 2003 2004 2005 2006 2007 Sources: Coles and Woolworths annual reports 2009, ABS catalogue
-01 -02 -03 -04 -05 -06 -07 -08 6105.0 ‘Australian Labour market Statistics’ table 4. ‘other’ category
includes employed persons in independents supermarkets and
discounters, convenience & forecourts retailers, other specialized
Grocery retail employment growth grocery retailers.
Total retail employment growth
Total employment growth
Source: ABS catalogue 6105.0 ‘Australian Labour market Statistics’ table 4.
Fig 19. Grocery Retail Employment Trend
Persons ('000)
450 30%
400
25%
350
300 20%
250
15%
200
150 10%
100
5%
50
0 0%
2000 2001 2002 2003 2004 2005 2006 2007 2008
Grocery retailing total employed Total employed in grocery versus total employed in retail (%)
Grocery retailing full time employed Total employed in grocery versus total employed (%)
Source: ABS catalogue 6105.0 ‘Australian Labour market Statistics’ table 4.
233.2 Retail and grocery sectors
– cross industry perspectives
It is also relevant to provide some additional cross- Fig 22. Employment Industry Comparison, 2008
industry perspective to the nature of the retail and Employees ('000)
grocery sectors. 1,600 1518.0
1,400
Overall, retail is the largest employer in the 1,200 1090.2 1085.3
Australian economy. Grocery as a sector of retail 1,000
employs more people than the mining industry. 800
600
Taking the comparisons further than employment 411.5
400
and in the context of turnover figures, although 168.5
200
trailing the combined manufacturing sector, retail
0
has a turnover nearly twice that of the mining Retail Manufacturing Health Grocery Mining
sector. trade industry retail
Industry
Lastly, with regard to the number of businesses, retail
has twice as many as the manufacturing sector – Source: ABS catalogue 6105.0 ‘Australian Labour market
Statistics’ table 4.
signaling higher level of dispersal, although not to
the same degree as the construction sector (which
is populated by a large number of sole-trader Fig 23. Industry Turnover Comparison 2008
type businesses) , reflecting the need for grocery
Turnover ($A billion)
retail outlets to service widely distributed local 450
communities. 395.8
400
350
300
250 230.6
200
150 120.9
100 85.3
54.0
50
0
Manufacturing Retail Mining Grocery Health
retail
Industry
Source: ABS: 81550DO001_200708 Australian Industry, 2007 -08 (Additional
Data Cubes) Table 1
Fig 24. Industry Comparison: Number of Businesses
(2007)
No of businesses
350,000
322,404
300,000
250,000
219,273
200,000
150,000
106,565 92,318
100,000
50,000 31,560 7,205
0
Construction Retail Manufacturing Health Grocery Mining
trade retailing
Industry
Sources: ABS Businesses by Industry Division 2003-2007 and catalogue
8165.0 counts of Australian businesses June 2003 to June 2007.
243.3 Grocery sector - size, shares and stores context
Looking at the trends across the key channels in the Fig 25. Turnover by Grocery Channel (2000-2009)
grocery sector provides additional perspective as
Million (A$)
to the dynamics of the industry. There, the patterns
vary across the three key channels of: supermarkets, 120,000
specialist grocery retailers and convenience and
100,000
forecourt retailers2.
80,000
Across these key channels in grocery, supermarkets 68%
66.2% 67.4%
have been the key growth drivers for this sector, with 60,000 $65.3
64.9% 65.1%
their share of the sector rising from 63.5 per cent 63.5%
to 68 per cent (from $43 billion to $62billion in the 40,000
23% 23%
period 2003 to 2009, a total of 43 per cent growth). 24.4% 23.3% 23.7% 23.7% 23.4%
12,000
12.1% 11.8% 11.2% 11% 10.4% 9.6% 9%
Smaller operators, such as specialist grocery retailers 0
and convenience and forecourt retailers registered 2003 2004 2005 2006 2007 2008 2009
slower or patchy growth rates.
Supermarkets
The convenience sector has in fact shrunk in Specialist grocery retailers
Convenience & forecourts retailers
importance and registered negative growth in the
Grocery retailing
last three years of the decade, coinciding with
the overall economic slowdown and increased Source: Euromonitor International: Retailing in Australia 2009.
competitive pressures from other Grocery channels.
Fig 26. Turnover Growth by Grocery Retail Channel
(2000-2009)
Million (A$)
10%
8% 8.8%
6.8%
6% 6.6% 6.7%
5.7% 4.4% 5.4% 5.6%
4% 4.2% 4.3% 4.8% 4.6% 5.1% 4.6%
4% 4.2% 4.3%
2% 1.5% 2.0%
0% -1.6% -1.5%
-0.5% -0.2%
-2% -0.9%
2003-04 2004-05 2005-06 2006-07 2007-09 2008-09
Supermarkets (% growth)
Specialist grocery retailers (% growth)
Convenience & forecourts retailers (% growth)
Total grocery retail turnover (% growth)
Source: Euromonitor International: Retailing in Australia 2009.
2. “Supermarket outlet” indicates the ‘majors’ (Coles & Woolworths), and the ‘independents’ (IGA, Foodland, FoodWorks, Franklins and other bannered
stores and limited assortment stores such as Aldi and SPAR). According to Euromonitor, these are retail outlets selling groceries with a selling space of
between 400 and 2,500 square metres. ”Specialist grocery retailers” indicates the retail outlets specialising in the sale of mainly one category of food,
drinks stores and tobacconists and includes bakers (bread and flour confectionery), butchers (meat and meat products), fishmongers (fish and seafood),
greengrocers (fruit and vegetables), drinks stores (alcoholic and non-alcoholic drinks), tobacconists (tobacco products and smokers’ accessories),
cheesemongers, chocolatiers and other single food categories (Euromonitor). The convenience and forecourt retailers category is an aggregation of
convenience stores, independent small grocers and forecourt retailers (chained and independent). (Euromonitor).
25Market share statistics and trends across the
grocery channels and even within the key
supermarket channel, are hard to stabilize, due to
different methodologies and data coverage across Fig 27. Market Shares: Supermarkets (2009)
different sources. As such, the focus is on range of
market share as opposed to exact measures. Coles
0.03%
1.4%
Market share rankings in the supermarket sectors 14.4% Woolworths
2.2%
are quite consistent, with Woolworths, Coles 3.7%
IGA
and IGA being the order of the major players.
Combined market share of Woolworths and Coles
FoodWorks
ranges between 77 and 80.4 per cent. Shares for 46.2% 31.8%
IGA banners range from 11.3 per cent (various Franklins
publication and estimates from Metcash) to 14.4
per cent (Euromonitor). Spar
The market share discussion in the supermarket Aldi
sector gives rise to the much-discussed level of
Source: Euromonitor, retailing in Australia 2009.
industry concentration in this sector. Indeed,
Australia has the most concentrated supermarket
sectors in the world - whether one takes the top
two or top three or top five players into account in
the analysis.
Fig 28. 2009 Turnover by supermarkets players (incl. Liquor sales)
Turnover ($ billion) Cumul Market share
incl. excl. incl. excl. incl. Liquor excl. Liquor
Liquor Liquor sales Liquor Liquor sales sales sales
sales sales
Woolworths $32.8 $27.6 $32.8 $27.6 47.4 % 45.6 %
Coles $22.5 $20.1 $55.3 $47.7 32.7 % 33.2 %
IGA retail $8.2 $7.7 $63.5 $55.4 11.9 % 12.7 %
FoodWorks $1.7 $1.6 $65.2 $57.0 2.5 % 2.6 %
Franklins $0.9 $0.9 $66.1 $57.9 1.3 % 1.4 %
Aldi $2.3 $2.3 $68.4 $60.2 3.3 % 3.8 %
Spar $0.4 $0.4 $68.8 $60.6 0.6 % 0.7 %
Total $68.8 $60.6
Sources: Company reports 2009, Euromonitor and other publications.. Convenience & forecourts retailers and specialist grocery retailers are excluded.
Fig 29. Grocery retailing market shares – country comparison
Country Market share Major players
Top 2 No 3,4,5 Top 5
Australia 79.6 % 18 % 97 % Woolworths, Coles, IGA, Foodworks, Franklins
UK 48 % 35.5 % 83.5 % Tesco, Asda, Sainsbury, Morrissons, Co-op Group
USA 20 % 22 % 42 % Wallmart, Kroger, Target, Walgreens, Costco
Source: Euromonitor and Planet Retail.
26There has been continual dialogue and debate as With regard to the number of stores across the key
to the impacts that such industry structure may have banners and groups, Woolworths, Coles and IGA
on the wider industry and the “paddock to plate” take the top three spots.
value chain. The facts that we are facing state that,
since the mid 1970’s, Coles and Woolworths have When the supermarkets are broken out of the total
consistently increased their market shares, going grocery numbers, IGA has around 25 per cent of
from a combined 35 per cent in 1975 to 79 per store numbers, followed by Woolworths at 17 per cent
cent combined in 2009 and only recently levelling and Coles at 16 per cent. FoodWorks, ALDI, SPAR and
out. Australia has become the most concentrated Franklins complete the rankings for supermarkets.
grocery market in the world. When compared to
Caution should be taken when comparing store
other countries, Australia is the only market where
numbers, especially stores in a metropolitan area
two players have close to 80 per cent of the market.
versus stores in regional Australia (IGA, FoodWorks).
We will now turn to provide additional context to Independents have 40 per cent of the grocery
the grocery sector in regards to the store numbers. stores in Australia overall with only 20 per cent of the
Across all the grocery retail stores, the single largest market, due to the fact that they serve many small
sector in regards to store numbers - with over 3000 regional and rural communities, with stores smaller
stores is the “Other” category which relates to small than those operated by the big chains in major
independent grocery retailers, in the convenience & urban centres.
forecourt retailing sector.
Fig 31. Grocery Retail Number of Stores (2009) Fig 32. Supermarkets Store Numbers (2009)
Coles Coles
1388 Woolworths 802 Woolworths
(16%) 17%
IGA
763 IGA
3033 FoodWorks 16% 1147
1215 FoodWorks
(35%) 25%
(14%) Franklins
Franklins
844
Spar
18%
1278 Spar
Aldi 710
(15%)
15%
Aldi
7 Eleven
250
(3%) Others
476 NightOwl
(5%) 410
55 89 85
(5%) Caltex
231 88 (1%) 2%
(0.1%) 89
(3%) (1%) BP 231
198 2%
5%
(2%) Others
Source: Euromonitor, Retailing in Australia 2009. Companises annual Source: Euromonitor, Retailing in Australia, 2009, companies annual
reports 2009 olso includes Bi-Lo and Coles Express. IGA includes IGA reports 2009.
Express. Spar includes Spar Express.
Fig 30. Growth in Market Share of Woolworths & Coles (1975-2009)
90%
80%
70%
60% 46.2%
44% 45% 46%
50% 42%
35%
40% 29% 32%
26% 28%
20%
30% 20%
16% 18%
20%
33% 34% 34.5% 34% 33.4%
26% 26%
10% 18% 18% 20% 22% 24% 22% 24%
0%
1975 1978 1981 1984 1987 1990 1993 1996 1999 2005 2006 2007 2008 2009
Coles Woolworths Source: AC Nielsen, Euromonitor.
2728
4. Australian food and grocery
industry & "paddock to plate"
context and structure
The impact of the food industry stretches beyond Fig 33. Grocery Retail Departments Turnover ($ million)
the retail end of the value chain and encompasses 2008
the “paddock to plate” eco-system of businesses
that grow, process, reprocess and then sell the food
in Australia and beyond. We will look at the structure $9,955.6,
and the components of this eco-system more $20,382.4, 11%
23%
closely in this part of the report. Fresh foods
We will start, however, by delving a bit deeper first $23,045.4, Processed
26% packaged foods
into the make up of the retail side of the food story,
to provide additional detail as to the nature of the Other non foods
$35,938.8,
mix of goods and the role of food categories at the 40% manufactured
goods
end of the value chain. In the following pages, we
set out the turnover of each grocery category and
Tobacco
the value added at each step in the supply chain.
Taken together, they account for a large part of the Sources: consolidated data from various sources: Euromonitor Data, ABS,
and other official statistics from industry associations.
Australian economy.
They also reflect the purchasing choices of
Australian supermarket customers on a daily and
weekly basis.
When we look a typical breakdown of total grocery
figures across the key departments - fresh foods,
processed and packaged foods, other non-
foods and manufactured goods and tobacco
- it becomes apparent that food still is the major
component of the total value of goods sold through
this channel – making up 66 per cent of the total.
29Processed packaged goods (40 per cent) and Fig 35. Grocery Retail Departments Turnover ($ million)
fresh foods (26 per cent) - that is food-based by Grocery Channel (2008)
departments - are the two biggest contributors to
$ million
overall sales value. In terms of categories, drinks and
confectionary (16.6 per cent), general merchandise 40,000
(11.7 per cent) and tobacco (11.1 per cent) are the 35,000 8%
top three key value categories. [Fig. 34] 11%
30,000
It can also be observed that the goods have 25,000
different sales patterns across channels, reflecting 20,000 18%
shoppers’ preferences and shopping occasions and 8% 31%
15,000 81% 2%
missions:
22%
10,000 74%
• Supermarkets dominate the processed packaged 68% 26%
5,000
goods and non foods areas 53%
0
Fresh foods Processed Other non Tobacco
• Specialist grocery retailers are still key for fresh packaged foods
foods food manufactured
goods
• Convenience and forecourt retailers play a key Supermarkets Convenience & forecourts retailers
part for tobacco. [Fig 35]
Specialists grocery retailers
Sources: consolidated data from various sources: Euromonitor Data, ABS,
and other official statistics from industry associations.
Fig 34. Grocery Retail Departments Turnover ($ million) 2008
Drinks & confectionary 16.6%
General merchandise & other 11.7%
Tobacco 11.1%
Dry grocery 10.3%
Health, beauty & personal care 9.0%
Fresh meat/poultry/fish 8.4%
Bakery products 8.0%
Dairy 7.5%
Fresh vegetables 5.2%
Frozen foods 4.4%
Fresh fruits 4.2%
Household products 2.2%
Chilled processed foods 0.9%
Eggs 0.5%
0% 2% 4% 8% 10% 12% 14% 16% 18%
Share of grocery turnover (%)
Sources: consolidated data from various sources: Euromonitor Data, ABS, and other official statistics from industry associations.
30Looking at the break down of the figure further Fig 36. Fresh Foods Categories
we can profile the relative importance of specific Turnover ($ million) 2008
categories within each of the departments:
• Within fresh foods – fresh meat/poultry/fish is the
key component (33 per cent), followed by dairy
$6,701 $4,620
(29 per cent) and fresh vegetables (20 per cent). (29%) (20%)
[Fig 36]
Fresh vegetables
$3,780
• For processed packaged goods – drinks and Fresh fruits
(16%)
confectionary makes up 41 per cent of the
Eggs
value, followed by dry grocery (26 per cent) and $7,500
packaged bakery (20 per cent). [Fig. 37] (33%) Fresh meat/
poultry/fish
$445
• For non foods – general merchandise dominates (2%) Dairy
at 51 per cent followed by Health and Beauty at
39 per cent. [Fig. 38] Sources: consolidated data from various sources: Euromonitor Data,
ABS, IBIS (fruit & vegetable retailing in Australia 2009 and ‘meat, fish &
poultry retailing in Australia’) and other official statistics from industry
associations.
Fig 37. Processed Packaged Foods Categories Turnover
($ Million) 2008
$7,133
(20%)
Chilled processed
foods
$9,224
(26%) Frozen foods
$14,871
(41%)
Dry grocery
$3,948 Bakery products
(11%)
Drinks &
confectionary
$763
(2%)
Sources: consolidated data from various sources: Euromonitor Data, ABS,
and other official statistics from industry associations.
Fig 38. Non Food Manufactured Goods Categories
Turnover ($ Million) 2008
$1,946
(10%)
Household
products
$10,420 $8,017 Health,
(51%) (39%) beauty
& personal
care
General
merchandise
& other
Sources: consolidated data from various sources: Euromonitor Data, ABS,
and other official statistics from industry associations.
31The data and analysis presented above profiles Fig 39. Employment across the Chain in 2008
the Australian retail end of the “paddock to plate”
grocery industry value chain, one that is much 450,000
411,500
bigger and wider in regard to its impact on the 400,000
Australian economy than grocery retail on its own. 290,850
350,000
The contribution of the value-add component to 300,000
209,920
the economy, across the primary, manufacturing 250,000
and retail steps in the value chain, is worth $126 200,000
billion – 61 per cent of the total turn-over value.
150,000
These figures make the grocery “paddock to plate”
value chain eco-system a mission critical part of the 100,000
Australian economy. 50,000
0
As hinted in the section where we explored the
Produce Make Sell
employment profiles of the key industries in Australia
– the “paddock to plate” grocery value chain Employment across the chain in 2008
employs more than 912,000 Australians, which is
Source: ABS catalogue 6105.0 ‘Australian Labour market statistics’ table 4.
well in excess of the 411,000 that are employed
by the retail portion of the value chain. Overall,
the grocery ”paddock to plate” value chain is Fig 40. Number of Businesses (2007)
worth approximately $209 billion to the Australian
economy in turn-over - close to 20 per cent of the 200,000
total economy. It is made up of more than 218,000 180,000 179,493
businesses. It contributed around $25 billion in export
160,000
income to the Australian economy in 2008 – 11.5 per
140,000
cent of total exports for Australia.
120,000
100,000
80,000
60,000
31,560
40,000
20,000
7,035
0
Produce Make Sell (Grocery retail)
Number of businesses (2007)
Source: ABS catalogue 8165.0 counts of Australian businesses June 2003
to June 2007.
Fig 41. Exports & Imports overview 2008 (A$ billion)
Exports Imports
$25.64 $18.74
58% 42%
Source: ABARE, Australian Food Statistics 2008.
32At the same time, the current trends of lowered Fig 42. Australia - "Paddock to Plate" value chain
production put into question the industry’s ability values in $ Billion
to continue to generate added value to Australian
$ billion
GDP, and the feasibility of effectively addressing
current consumption demands from Australian 250
consumers.
209
Looking at the values for the grocery "paddock to 200
plate" value chain across its key product categories
provides additional insights into the structure of this
150
industry in Australia:
126
104
• Fresh categories make up 25 per cent of total
100
value chain value at $52 billion, and contribute
$30 billion in value-add creation for the value 52 58 53 39
chain. This is a ratio of 57 per cent for value add 50
30
component to the overall value.
0
• Processed packaged foods make up 50 per cent Grocery total Fresh Processed Non-food
of total value chain value and represent the categories packaged manufactured
largest component of the grocery value chain foods categories categories
with $104 billion. Processed packaged goods
Value chain value Value add value
contribute with $58 billion in value-add creation
for the value chain. This is a ratio of 56 per cent for
Sources: ABS, ABARE, Euromonitor (retailing in Australia, Packaged Foods
the value added component to the overall value. Australia, soft drinks Australia, chilled processed foods Australia Pet
food/care Australia, cosmetics & toiletries Australia, households care
• Non food categories make up 25 per cent of total Australia, consumer health Australia), Industry associations, Australian
Food Statistics Report 2008, AFGC state of the industry report 2009, IBIS
value chain with $53 billion, and with $39 billion (supermarkets and other grocery stores in Australia).
in value-add. This is a ratio of 73 per cent for the
value add component to the overall value – the
highest ratio across the three areas. Fig 43. Australia - "Paddock to Plate - Comparative
Rates of Value add components
80%
73%
61%
60%
57% 56%
40%
20%
0
Grocery Fresh Processed Non-food
total categories packaged manufactured
foods categories
categories
Sources: ABS, ABARE, Euromonitor (retailing in Australia, Packaged Foods
Australia, soft drinks Australia, chilled processed foods Australia Pet
food/care Australia, cosmetics & toiletries Australia, households care
Australia, consumer health Australia), Industry associations, Australian
Food Statistics Report 2008, AFGC state of the industry report 2009, IBIS
(supermarkets and other grocery stores in Australia).
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