Australia’s agricultural industry is well-established as a global leader. Australia’s beef is eaten in Tokoyo’s most upmarket restaurants, oranges devoured by the kilo in Hong Kong and wine consumed by the Chinese middle class. A country rich in land resources and strategic proximity to Asia means Australia’s food and beverage industry has infinite growth possibilities.
Foreign investment can help propel startups and SMEs’ products into the global spotlight. It is these firms that often have difficulty sourcing finance, but have the most growth potential. The food and beverage industry is one set to bear the hard effects of climate change and a growing global population. Now, the opportunity to innovate and future proof an industry exists. We examine the food and beverage industry in Australia and look at potential opportunities for businesses in growing sectors.
Opportunity – The Australian Food and Beverage Industry
Food and beverage (F&B) is a huge industry in Australia that contributes significantly to its powerhouse economy. Meat, grains, dairy, seafood and wine are significant categories. Multinationals, as well as local niche producers, have cemented their place in the sector and their products have helped solidify Australian’s reputation as a premium global F&B supplier. Australia’s multicultural population and large climatic variance have helped to diversify the nation’s F&B offerings.
Given Australia’s seasons are the opposite to the northern hemisphere, this provides the opportunity to provide ripe summer fruits during the northern hemisphere winter. As the agriculture industry is a top contributor to employment as well as the economy, international business opportunities are endless for the industry. Identified areas for opportunities by Austrade include:
- Food packaging: long distance solutions, biodegradable options
- Functional food: food that provides health benefits, reduces disease, “free-from” and “low-in” foods
- Wholefood and organics: Australia has the largest area of certified organic land in the world
- Dairy industry: innovative technologies that can extract and purify proteins
- Wine, beer and cider: technologies that innovate production processes.
The World’s Growing Population
By 2050, estimates put 9 billion people on earth. In order to meet the growing population’s consumption needs, food production must increase by 70%. The mix of food and beverages demanded will also change. As middle classes grow and consumers become more educated about health, demand for protein and vegetables is growing. Australia’s food and beverage industry will need significant extra capital to increase its production capacities.
Productivity will be more important than ever for firms to manage changes in input and market prices. This means extensive investment in research and development, to provide the right technical support. Businesses will also need to seek out solid and reliable relationships throughout the supply chain. These suppliers will be spread out domestically and internationally. Continuous updates to free trade agreements means Australian companies have better access to competitively priced foreign inputs.
Asia will house the majority of the world’s middle class by 2030: 3.2 billion people with higher purchasing power who demand high-quality produce. Australia’s proximity to Asia makes export opportunities too lucrative to ignore. Most export demand growth comes from South East Asia and China. Food and beverage companies need to capitalise on that demand. Australia’s meat and dairy is already popular in Asia. Diversifying product ranges and offering more high-quality food and beverage options will put the country in a great position to serve their neighbours to the north.
An extensive range of free trade agreements covers most Asian countries. Another two agreements with Indonesia and Hong-Kong will soon enter into force. Reduced barriers to international trade will further encourage investment within food and beverage companies looking to export. Therefore, firms need to set targets to increase the proportion of export sales within their total product sales. Increasing investment in logistics by the online retailer in China means Australia can satisfy Asian demand for exported fresh produce.
Case Study: Ricci’s Bikkies, a small food producer that creates preservative-free crisp breads has found success in Singapore and China. Free trade agreements have been key in the company’s journey to export. Reduced tariffs allow small businesses to export while maintaining low prices.
FoodTech in Australia
The agriculture industry has a strong history of innovation and commitment to research and development. Over the past 25 years, Australian rural industries have doubled their productivity. Intellectual property is strongly protected and regulated in Australia, further supporting investment in technology and research. The introduction of Deliveroo and other FoodTech startups are changing the way Australians consume and produce food and beverages.
There is a growing market for food that caters to allergies such as coeliac disease and low FODMAP diets. Demand for meat-free alternatives that provide sufficient dietary protein is also growing. Through research and innovation, food scientists are able to create new products that taste good, as well as providing sufficient dietary nutrients. Australia currently produces a wide range of products fortified with calcium, antioxidants and omega-3. As consumers start to modify their preferences in the direction of healthier foods, more people will seek fortified and health-function food and beverages.
Case study: PERKii, a juice beverage that contains 1 billion microencapsulated probiotics. It is lactose-free, gluten-free, GMO-free, contains no added sugar and only 37 calories. The company collaborated with the University of Queensland to create a world-class coating that maintains the living probiotics’ effectiveness and subdues their taste.
Work Together with Experts to Get Started
At Biz Latin Hub, we’ve helped businesses around the world enter new markets and expand their businesses in today’s competitive times. Australia’s food and beverage industry provides exciting opportunities for firms and investors alike.