FreshIncite March 2016

What We’re Seeing

Cheaper petrol frees up household cashTop


The recent drop in petrol prices has afforded consumers more disposable income which begs the question, how will they spend that extra cash?

In Melbourne the average price for unleaded petrol in February 2014 was $1.53 per litre, compared to $0.96 per litre in February 2016, a fall of more than 37%. This sharp drop in price is large enough to make more money available for discretionary spending. If the 8.3 million occupied households in Australia purchase an average usage of 40 litres of petrol per week and can now do so for $0.50c per litre less, that equates to $20 per week per household and $166m of additional available national expenditure per week. The freshlogic Mealpulse panel confirms that the average household is spending $30 a week on fruit & vegetables, so this additional $20 is a significant amount. 

Since this insight has been compiled, the petrol prices have eased back up to $1.10 litre, but most forecasts are expecting strong global supply to maintain the pressure on prices and generate the expected household savings.    

While the petrol retailing Convenience stores will get the first chance to capture this additional cash it is also likely to find its way into other retail and food service channels. 


The Food Consumer

China’s Retail Evolution Top


Rapid online shopping uptake in China is driving change that signals potential growth in other markets.   

Modern retail formats, like hypermarkets and supermarkets, have expanded rapidly in China over the last 20 years. However, these retailers are now dealing with a rapidly escalating level of competition from online providers.

E-commerce sales in China now account for 15.9% of total retail sales, compared to 7.5% in the US and UK and an estimated 4.5% in Australia. The value of  E-commerce sales in China has rapidly increased to US$472.1 billion, which is now higher than the US E-commerce market at US$304.1 Billion. Incomparison to recent years, hypermarkets sales have decreased by 1.8% while supermarket sales increased only 3.2%.

As a result, some retailer chains are closing poor performing stores, with over 7,000 supermarkets and hypermarkets closing between 2011 and 2014,  while others are rapidly refocusing their resources toward online. Walmart recently bought a controlling share of Yihaodian, China’s largest online retailer of food and beverages, and many convenience store chains have signed deals with online retailers to act as pick-up points.

Several different drivers are combining to increase the online sales in China, including: the increasing difficulty to commute across rapidly expanding metro areas; the density of housing that affords economies of scale to deliveries and the high level of patronage of wet markets, which hold approximately 60% market share of fresh food, leaving a need for consumers to purchase other shelf stable items, which are easily accessible online.

The lessons and strategies employed in China, however, could provide a template for online sale impact in other developed retail markets.

Technology Frontier

Ad-blocking software has Google & publishing heavyweights concernedTop


Google is working with major Australian publishers including Fairfax, News and Ninemsn to help combat the growing tide of consumers using ad-blocking. In the 12 months to August 2015, ad-blocking software increased 41% globally to 198 million users. Consumers are using adblockers because of the amount of data used by ads and the time it takes to load them – particularly on mobile devices, which face lower data caps.

This is a major problem for publishers and Google who are heavily dependent on income from advertising. In comments that reflect the gravity of the situation, Google head of news Richard Gingras said "Frankly, I think, at this point, the mobile web is in crisis".

"All of us today in using our phones, we're on these things 150 times per day, three hours a day on average, an outrageous amount of time, but if we encounter a link to something on the web, often we think twice because we think it might take 10 to 15 seconds to load, we don't know what it is, we pause." Too many annoying ads are seen as driving mobile users to ad-blockers, or quick views or reader views that challenge the standard business model entirely.

Google and others have invested in an open source project to enable improved data use and a more user centric advertising model. In the fine print it alludes to changing website architecture, which is a scary scale of change.  

Perhaps due to the rapid adoption of mobile phones, we have overlooked that their use may evolve just as quickly in new directions.   

There's more!

Subscribe to Freshincite to view all stories.

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.

For more information on any of our products and services, please contact us on phone (03) 9818 1588 or email