FreshIncite December 2016

What We’re Seeing

Small format food retail networks under performTop


Small Australian retail food formats, including C-stores and small format supermarkets have struggled to reach the performance of similar formats in other developed retail food markets.

This is despite substantial investments by food retailers into this format size, including embracing petrol offers and expanding some food categories in those networks. Let’s Eat, Foodchain and Macro Foods are some of the more visible attempts in the Australian market in recent years.

In recent weeks more changes are signalled, with Caltex and BP circling to acquire the Woolworth’s fuel site network and speculation that the four remaining Thomas Dux stores will migrate to Woolworth’s Metro in early 2017.

Yet this performance is in contrast to what has been achieved in the UK and also neighbouring Asian capitals. In the UK, the advanced food and ready meals offers has driven performance and in Asian capitals the small format food stores are now the high growth retail food channel.

Why the gap? Is it driven by; population density, an expansive housing footprint, fuel centred site branding or just shortfalls in the offer. We suggest all those factors contribute but the content and quality of the food offer is at the core.

A key question is whether this latent food distribution capacity that exists in so many C-store type formats is now under increased pressure from the breadth of new food channels.

If the disrupter mode is to find and align lazy assets, is there potential for the new emerging food offers to align with the distribution potential of these existing smaller stores?

Amazon to pick partnersTop


The much-anticipated arrival of Amazon in Australia with a locally based offer is confirmed for 2017. There’s also talk of selected bricks and mortar sites to cater for the remote regions.

Warehousing real estate markets are buoyant given the 75,000-square metre facility that Amazon operates in UK.  

There is certain to be a level of impact on the Australian food market, it is significant that the entry timing confirmed is already driving some change in readiness to compete. Online food in Australia lags UK & US by 4-5% of food market share. Given Amazon has shown a willingness to invest to create scale, if they enjoy success they will lift the competitive tension in food retailing to new highs. 

While the Amazon model is clear, how they will resolve the food supply chain they need is yet to be determined. In more recent market entries they have partnered with existing operators, which invites the question of partnering options in Australia.

Amazon will impact this retail market but the extent of their impact on the food market will be shaped by the competency of their food supply chain partners.    

Wild caught seafood now 2nd to AquacultureTop

seafood_combined_final.pngAs Seafood takes the lead role in festive season meals, it's relevant to reflect on the source of our highest value fresh protein.

In 2016 the world moved to consuming more seafood from aquaculture farms than from the wild caught origins. This change has been forecast for years and has been driven by steadily increasing global seafood demand, combined with measures to ensure the long-term viability of natural seafood reserves.

In the Australian market, premiums are being earned for the reducing supply of wild caught seafood, while most of the volume increases are being generated with farmed seafood.   

The demand for the seafood remains strong and welcomes the increasing supply of product from farmed operations.

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Freshincite is a publication prepared by Freshlogic

Freshlogic is a specialised provider of food market insights and analysis, with deep expertise in the dynamics of fresh foods. We deliver a range of services to industry and corporate clients, which aim to interpret market and supply chain conditions, or address challenges faced in food supply chains associated with changes in the preferences of consumers, supply dynamics, and economic settings.

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