Freshincite October 2014

What We’re Seeing

More upside in $200m retail categoriesTop

100-200m_categories.jpgAustralia’s fresh produce retail market is dominated by a group of larger categories that each generate over $600m in retail sales, such as berries, apples, bananas, tomatoes or potatoes, and which make up more than 30% of the market and rightly get most of the attention. However, these categories are mature and their growth prospects are shaped quite differently to other categories of lower value.

There are 16 fruit and vegetable categories with annual retail sales of $100m-200m, however, which represented more than 20% of total fresh produce retail sales in the 12 months to June 2014. This group includes products such as cauliflower, sweet potatoes, kiwifruit and cherries. Importantly, the growth prospects for these categories are different, as they typically have lower household penetration, less consumption occasions or limited product ranges and at times an approach to promotion that is not generating growth.

To realise these gains a sound understanding of category dynamics is required, and in many respects generating growth in these smaller categories is a simpler, more manageable proposition than the larger categories. While larger categories reflect examples of successful development, frequently lessons can also be learned from other small and medium-sized categories which are already on a growth trajectory.

The numerous sub-$200m fruit & vegetable categories offer a wide range of growth prospects with potential to add significant incremental value to the market.

Direct channel promise in ChinaTop

sina_weibo_logo.jpgThe Chinese market has a complicated retail landscape with a large number of regional players, posing challenges for foreign suppliers developing sales there. Two Australasian exporters have been working around this hurdle by communicating directly with consumers. Dairy supplier Bellamy’s Australia has taken to local social media sites Weibo and Weixin, which has allowed the company to target specific consumer groups.

Meanwhile, New Zealand meat exporter Silver Fern Farms has experimented with Chinese home shopping TV. The company sold 12.5 tonnes of prime beef and lamb cuts direct to consumers during one half-hour TV slot.

There is serious business happening through these channels now in China, which present opportunities for Western suppliers to sell direct to consumers and bypass the country’s complicated retail landscape.

The Food Consumer

Beverages point to premium fizzTop

Beverages continue to be a frontier for new product development, and several recent launches point to interesting trends in consumer demand. Beverages experience a high level of NPD, and suppliers compete for finite shelf space where old products must make room for new introductions. These are not conditions seen in the fresh food space yet.

bundaberg-apple-cider.jpgAustralia’s Bundaberg Brewed Drinks has launched new non-alcoholic apple cider, traditional lemonade and pineapple & coconut varieties. Chief executive John McLean says consumers are looking for ‘adult premium’ beverages distinct from standard soft drinks.

snapple_lemon_tea.pngPremium iced tea brand Snapple has entered the Australian market. Snapple is one of the largest iced tea brands in the US, and has been experiencing growth around 2% per annum against a backdrop of falling carbonated beverage sales.

american_born_moonshine.jpgThe American Born Moonshine distillery company has expanded its offering into Texas, the latest entry into a new state for the US company. ABM markets a range of unaged corn whiskey bottled in glass jars, harking back to the country’s long history of illicit moonshine distilleries.

The expansion of ‘adult premium’ beverage ranges, particularly those with nostalgic retro styling, point to demand for quality products with ‘wholesome’ ingredients from consumers with more disposable income.

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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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