The Australian food industry in close-up

12th May 2016

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The Australian food industry is in a vibrant and profitable place currently, as good sentiment and positive financial returns grow steadily around importing, exporting, production and manufacturing. Following the ebbs and flows of such a dynamic industry is crucial in order to stay ahead of developments in new markets, legal developments and advancements in procedure and software.

Demand for Australian products throughout Asia

The Australian Trade and Investment Commission (ATIC) reports that a rise in living standards and a greater diversity of choice are two factors that play into the increased demand for products outside of China. In an interview with the Sydney Morning Herald, Tran Bao Minh, a chief executive of International Dairy Products, said that Australian food suppliers need to move quickly and operate at full efficiency to capture and deliver to the Asian markets.

"Demand is changing fast and consumers are constantly looking for new and better products," Mr. Minh said.

The ATIC reports that the fastest-growing food and beverage market in Asia is China, with an impressive average annual growth rate of 35.4 per cent from 2011 to 2014.

"Demand is changing fast and consumers are constantly looking for new and better products,"

The opportunity is huge; China has a population of over 1.3 billion, as reported by Euromonitor, and is undeniably a strong market for the Australian food industry. Therefore, as demand for Australian products throughout Asia remains strong, Australian food and beverage businesses should be looking to manufacture and deliver in a smooth, timely fashion.

Positivity across the Australian PMI index for food manufacturing

As a sub-index, the food industry has been performing well on the Australian Industry (Ai) Group's Australian Performance of Manufacturing Index (PMI). The index overall slightly dropped by 4.7 points to 53.4 points in April.

This figure means that expansion has been at a slower rate than in March, as results on the Ai PMI that are above 50 points indicate expansion and a reading a below 50 suggests a decline in expansion. The PMI generates results from a monthly rotating sample of around 200 manufacturing companies.

A drop of this size can be ignored for the most part, as it is small and sits within a wider upwards trend, and the PMI April result was the highest since April 2004. This manufacturing trend sits within the longest period of unwavering growth for the Australian PMI as a whole since September 2006.

According to the Australian Trade and Investment Commission, food and beverage is a major industry sector for the Australian economy both because of its employment and its financial contribution. The various players differ in size, which provides the opportunity for niche products and large scale manufacturing of bulk items to both exist in fulfilling local and overseas needs.

Ai Group's chief executive, Innes Willox, said this growth is a positive turn for an industry that has, until recently, been battling the choppy post-global financial crisis (GFC) economic seas.

The Australian food industry in close-upThe Australian food industry is performing well on the PMI index.

"While margins remain tight, recovering domestic market share and building momentum in a variety of export markets provide a strong foundation for the lift in confidence required for the sector to move up another gear. A budget that boosts incentives for business investment and innovation would come at just the right time for manufacturers to capitalise on recent gains," Mr. Willox said.

According to the PMI April release, the Australian dollar as slightly appreciated, but the overall drop in the value of the Australian dollar across recent years is the main reason for the strength seen within the index. This depreciation assists sales in exporting and importing, providing room for growth.

This is a positive outlook for the food industry, which relies on a strong manufacturing sector. Out of the eight subsectors that achieved results in the April PMI that were over 50, the food, beverage and tobacco subsector's result of 74.1 was the most impressive. This is an increase of 3.1 points. Although things are looking good now, the findings suggest this recent strength might be unsustainable if the dollar remains steady or increases in value.

New food labelling reforms

In a joint media release announced by multiple members of parliament, the Australian government has brought in new food labelling reforms that are set to make things a lot easier for consumers to ascertain if their products are local or imported.

The codes, which are enforced by the Australian states and territories and, in New Zealand, by the Ministry for Primary Industries, will bring about great clarity in order to create a more competitive marketplace for food products made in Australia.

In a press release, Minister for Industry, Innovation and Science Christopher Pyne praised the development.

"The new food labelling system will provide Australian consumers with the clarity they deserve, without imposing an overly onerous burden on businesses," said Mr. Pyne.

The new system will include a change that will indicate the proportion of Australian products contained within the food item. Additionally, to indicate something is Australian made, items will be required to display on their packaging a kangaroo within a triangle logo.

This new regulation marks a turn away from the Australia New Zealand Food Standards Code to Australian Consumer Law, a shift that could be set to entail many other aspects of food labelling, such as use by and best before dates.

"Demand is changing fast and consumers are constantly looking for new and better products," Being in control of your businesses food labelling is essential to productivity.

Additionally, when exporting to China, all imported pre-packaged food must be labelled in simplified Chinese - the standard language used in mainland China.

Both locally and internationally, it is usually the food supplier who is responsible for placing a use by or best before date on food, it's best practise to work with reliable, easy-to-use software, such as ABM Manufacturers Package. This software puts you in complete control of labelling and other food manufacturing tasks, allowing your company to maximise productivity and sales.

Advanced Business Manager

Business leaders within the food sector have a lot to be optimistic about as indicators show significant growth across inventories and production. Advanced Business Manager provides solutions for business leaders who want the best tools at their disposal to make the most of the current industry boom.

To see an infographic on how our products can help your business succeed, as well as receive a free demo of Advanced Business Manager, click here.