2011 Exporter Guide

An Expert's View about Business Environment in Australia

Last updated: 11 Jul 2011

The U.S. - Australia Free Trade Agreement has provided some advantages for U.S. products. For example, tariff rates for all U.S. food products exported to Australia dropped to zero upon implementation of the agreement in January 2005.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 6/22/2011 GAIN Report Number: AS1119 Australia Exporter Guide 2011 Exporter Guide Approved By: Grant Pettrie, Agricultural Counselor Prepared By: Lindy Crothers, Agricultural Marketing Specialist Report Highlights: Australia is a prosperous, politically and economically stable, industrialized nation. Per capita GDP is approximately US$41,982, among the highest in the world. Australia is the world's 13th largest economy, with nominal GDP of US$1.3 trillion and one of the highest levels of per capita GDP in the world. The Australian economy has grown for the past 19 years, except for one negative quarter in late 2008. The government has pledged to return the federal budget to surplus in 2013. Australia?s central bank projects the economy to grow 4.25% in 2011 and at a similar rate in 2012. The unemployment rate is currently 4.9%. In 2010, Australia was ranked as the second easiest place in the world to start up a business, according to the World Bank. It ranked tenth in terms of 'ease of doing business,' and was the sixth easiest place to obtain business credit. Post: Canberra Section I: Market Overview Americans and Australians have a warm relationship that spans the history of both nations. Australia and the United States share a common heritage, culture and language and have supported each other in every major international crisis of the past century. Australia is a prosperous, politically and economically stable, industrialized nation. It enjoys an enormous natural resource base of agriculture and minerals; a highly developed human resource base; modern legal and financial systems; and a physical and service infrastructure to support complex business and industry. Its state-of-the-art transportation and telecommunications systems (both internal and international) support a well-developed, economically diversified market. Australia is the world's 13th largest economy, with nominal GDP of US$1.3 trillion and one of the highest levels of per capita GDP in the world. It has a large services sector (80% of GDP) but is also a major exporter of resources, energy, and food. The Australian economy has grown for the past 19 years, except for one negative quarter in late 2008. The government and central bank implemented a combination of fiscal stimulus and monetary easing to help counteract the impact of the global financial crisis. Net government debt peaked at 6.4% of GDP and is falling. The government has pledged to return the federal budget to surplus in 2013. Australia?s central bank projects the economy to grow 4.25% in 2011 and at a similar rate in 2012. Unemployment stood at 5.0% in early 2011. Australia has a deep and sophisticated financial market, regulated in accordance with international norms. In terms of global turnover, Australia's foreign exchange market is the seventh largest in the world, and the Australian dollar/U.S. dollar currency pairing is the fourth-most traded globally (BIS, Triennial Central Bank Survey, December 2010). Australia?s four leading banks are currently ranked in the top 12 in the world in terms of financial security and AA rankings. In 2010, Australia was ranked as the second easiest place in the world to start up a business, according to the World Bank. It ranked tenth in terms of 'ease of doing business,' and was the sixth easiest place to obtain business credit. Australia?s trade with the world exceeded US$500 billion in 2009, with trend growth of 11% over 5 years. Terms of trade are at historic highs, with booming prices for exports of iron ore and coal, although there is a diverse mineral and energy production portfolio. Energy exports will expand further as large LNG projects in northern Australia (such as the Chevron- Exxon-Shell Gorgon project) export gas to East Asia. The Australian dollar has been trading at or near all-time highs versus the U.S. dollar, placing pressure on manufacturing exports and the tourism and education sectors. Australia?s financial system was one of the most resilient throughout the Global Financial Crisis and its four leading banks are currently ranked in the top 12 in the world in terms of financial security and AA rankings. Australia's foreign exchange market is the seventh largest in the world (in terms of global turnover). The Australian/U.S. dollar is the fourth most traded currency pair globally, according to the December 2010 BIS Triennial Central Bank Survey. In 2009, the Australian Stock Exchange (ASX) was the 13th largest in the world and the ASX market capitalization of domestic companies was US$1.3 trillion, the fourth largest in the Asia-Pacific region. Australia is one of the most urbanized societies in the industrialized world, even though its land mass is the size of the continental United States. Of its 22.4 million people, more than 85 percent live in the large urban areas of Sydney, Melbourne, Adelaide, Brisbane and Perth and in smaller cities and towns within 100 miles of the ocean. The center of the continent is flat, dry, mineral rich and largely unpopulated, while the coastal areas are wet, mountainous, and densely forested. The interior plains are rich and fertile, supporting great varieties of agriculture. The society is increasingly multi-cultural, with the traditional Anglo-Celtic majority now joined by immigrants from Southern and Eastern Europe, the Middle East, Latin America and Asia, who are all making their cultural influences felt more vibrantly, including in the restaurant and food processing industries. The U.S. - Australia Free Trade Agreement has provided some advantages for U.S. products. For example, tariff rates for all U.S. food products exported to Australia dropped to zero upon implementation of the agreement in January 2005. Australia also has free trade agreements in place with New Zealand (closer economic relations treaty), Singapore, Thailand, Chile and ASEAN & New Zealand. Australia is also in the process of negotiating FTAs with China, Japan, Malaysia, Korea, the Gulf Cooperation Council, the Trans-Pacific Partnership Agreement and a Pacific Agreement on Closer Economic Relations (PACER) Plus. Free trade agreements under consideration by Australia include India and Indonesia. Details of these agreements and negotiations are available on the Australian Department of Foreign Affairs and Trade website at: http://www.dfat.gov.au/fta/index.html. Advantages Challenges U Strict quarantine regulations with regard to fresh produce, meat and .S. culture well accepted and similar to Australia dairy products N lia is a significant producer of a wide variety of agricultural o language barriers to overcom Austrae products. U.S. products have excellent image and ?Buy Australian? campaign is significant. acceptance. The U.S. and Australia have a free trade Australian labeling & advertising laws are different from the U.S. agreement that removes import tariffs. This may require some changes to food labels. Section II: Exporter Business Tips Agents/distributors are key components in developing exports of U.S. consumer-ready foods to Australia. Australia is a sophisticated market that is interested in new-to-market food products. An increasingly multicultural society creates opportunities for ethnic food products. After sales services, such as cooperative advertising, is an important aspect of successfully entering the market. Innovative packaging has an advantage. Most of the major Australian importers visit the United States at least once a year to see what is available and to place orders if the items are appealing. The Food and Agriculture Import Regulations and Standards (FAIRS) Country Report for Australia contains detailed information on Australia?s food standards, labeling requirements, import regulations, etc. This report can be viewed/downloaded at the following Internet site: http://gain.fas.usda.gov/Pages/Default.aspx or requested from this office (AgCanberra@fas.usda.gov). We recommend that U.S. exporters use this report extensively if planning to enter the Australian market. Exporters should also work very closely with their importers/distributors to ensure that all requirements are met before any product is shipped. The Australian Quarantine and Inspection Service (AQIS) also maintains an online database, called ICON, of the import conditions for all agricultural products coming into Australia. U.S. exporters should make use of this database to ensure that they are going to be able to meet all the relevant quarantine conditions. The database is available at: http://www.aqis.gov.au/icon/asp/ex_querycontent.asp The Food Standards Code is developed and updated by Food Standards Australia New Zealand (FSANZ). The Code applies to both Australia and New Zealand. The joint Code came into final effect in December 2002. More information, and a copy of the Code, is available on the FSANZ web site at the following address: http://www.foodstandards.gov.au/. Food safety and plant and animal health import regulations can be found on the AQIS Internet site at: http://www.aqis.gov.au/ or through links in the FAIRS report mentioned above. Trade Shows There is one major food show in Australia, Fine Food Australia, which is held each year (usually in September) alternating between the cities of Sydney and Melbourne. Major buyers and importers from all over the country and region attend. Due to Australia?s large geographic size and the high cost of internal airfares and transport, we believe that attending and/or exhibiting at Fine Food is the most cost-effective way for U.S. companies to meet potential partners and customers for consumer-oriented food products in Australia. This show is endorsed by FAS and U.S. Pavilions are planned at Fine Food each year. Fine Food is an international exhibition for the food, drink, and equipment industries and is the largest food industry event in the region. The event also incorporates the hotel industry show. It enjoys the support of major industry organizations and is the only event that allows companies to reach the retail, food service and hospitality industries at one venue. As well as exhibitors from Australia, regular exhibitors include groups from Asia, the Pacific, Europe and the Americas. Visitors from all over the Asia Pacific region also attend the show. Admission to Fine Food and the Supermarket and Hotel shows is "trade only" and is restricted to persons in the food, drink, equipment, and hotel and supermarket trades. CONTACT: Ms. Minnie Constan, Exhibition Director Diversified Exhibitions Australia Pty Ltd Illoura Plaza 424 St Kilda Road Melbourne, VIC 3004 AUSTRALIA Tel: +61-3-9261-4500 Fax: +61-3-9261-4545 E-mail: food@divexhibitions.com.au Web site: http://www.foodaustralia.com.au/ Fine Food Australia 2011 ? Sydney Sydney Convention & Exhibition Centre, September 5-8, 2011 Fine Food Australia 2012 ? Melbourne Melbourne Convention & Exhibition Centre, September 10-13, 2012 Fine Food Australia 2013 ? Sydney Sydney Convention & Exhibition Centre, September 9-12, 2013 This information is provided for informational purposes only. No endorsement should be implied unless specifically stated. Terms and conditions of participation are the responsibility of the activity organizer. Please contact the organizer directly for further information. Section III: Market Structure & Trends Trends - 2011 Positive nutrition: The drive to make food and beverages healthier continues to gain momentum in Australia. Recent research found that 61% of Australian consumers are tired of being told what not to eat and are instead looking for more constructive guidance to assist their food and beverage purchases. This encompasses a movement from food avoidance (such as products with reduced fat and sugar) to positive nutrition and the inclusion of healthy food and ingredients. Healthy indulgence: Australians aren?t really interested in strict diet plans but there is a huge spike in people trying to control their portion sizes. They don?t want to cut out certain food groups or flavors, but they are willing to control the amount they eat. Therefore, the quality over quantity mentality is an important consideration for marketers. Claim terms such as ?portioned indulgence? or ?treat size? convey the message that sensory benefits have not been foregone for the sake of health. Packaging: Innovative packaging is a valuable selling point in the Australian market. A recent study found that 50% of Australians think food and drink products are over-packaged and 69% would consider boycotting a product if it didn?t meet their environmental criteria. Market Structure Australia has well-educated, affluent consumers, willing to try new products. Consumer-oriented foods and ingredients for further processing continue to dominate the import market for foodstuffs. Tariffs on imported foods have been reduced to zero under the U.S./Australia Free Trade Agreement. Very strict sanitary and phytosanitary standards are an impediment to the import of many fresh products. Australia has strict food standards and labeling requirements that are set out in the Australia New Zealand Food Standards Code. If U.S. products can meet these standards, they may have good market potential in Australia (see Section II above on FAIRS Report). While Australia is a major producer/exporter of both tropical and temperate zone agricultural products, it is also an importer of further processed and consumer-ready products. ?Healthy?, ?clean?, ?green? and ?organic? and ?natural? are currently very important selling points amongst a growing segment of the market. Some of the U.S. success in this market has been providing off-season fresh fruit (such as table grapes and cherries) to Australian consumers. Success, however, is very much tied to good consumer promotion efforts and being able to meet quarantine requirements. U.S. products are well regarded as value for money in this market and the U.S. is the number two supplier (after New Zealand) of imported ?consumer oriented? food products. It is estimated that over 85 percent of the products on Australian supermarket shelves are imported, made from imported ingredients or produced locally by foreign owned companies. The United Kingdom and other EU countries are important competitors in the value added import market in Australia. Strong historic ties and foods that match the tastes of the majority of the population are helpful in maintaining this position. With the Australian population becoming more multi-cultural, imports are rising from other countries such as Greece, Italy and Spain, as well as Southeast Asian countries. The Treaty of Closer Economic Cooperation with New Zealand makes that country a strong player in the imported food market. The high degree of urbanization, the high ratio of females in the workforce and the relative prosperity of Australia, makes food consumption a very competitive field. The use of microwaves is firmly established in Australia. This, plus the large number of women in the workforce, has led to an increase in more oven or microwave ready meals. Fast foods and "take-away" foods are also very popular. It is estimated that 50% of Australians aged 18-34 years old eat a meal ?on-the-go? at least once a week. The restaurant sector has also benefited from this demographic trend, as away-from-home consumption continues to grow. Australians are active international travelers and are exposed to new cuisines when traveling. Australian food manufacturers have been consolidating, which has led to greater competition by brands for shelf space in supermarkets. Two chains dominate Australian grocery sales - Woolworths and Coles. Both these companies are national in scope and are also organized along state lines. They have recently been involved in a campaign to acquire smaller independent chains to maintain their market shares. In recent years, these food-retailing giants have increasingly become their own importers, bypassing more traditional importers. Metcash is a supplier/distributor to independent chains and is the third largest player in the packaged grocery market. Aldi, the German-owned supermarket chain, have made strong inroads into the Australian market in recent years. In 2009, Costco opened their first store in Melbourne, Australia with plans to open more in the coming years with stored in Sydney & Canberra opening in July 2011. All these supermarket chains have central warehouses for each state of operation and have sub-warehouses depending on the concentration of stores in an area. The domestic food-processing sector in Australia is large and more sophisticated than the population base of 22+ million would indicate. Many Australian companies export processed products to Southeast Asia. In addition, several multinational companies use manufacturing/processing facilities in Australia as a spearhead in penetrating the Southeast Asian market. This is a trend that will continue to expand in the near term. Section IV: Best High-Value Product Prospects The organic, healthy and natural products market in Australia is growing rapidly. Although Australia is a large producer of organic raw products, it does not have the manufacturing capacity to satisfy demand for the processed segment. Prospects are excellent for organic and natural ingredients as well as consumer-ready processed foods and beverages. Examples of this are the nutritious snacks category which experienced an overall 5.8% rise in value in 2010. The ?adult? segment of this category experienced a value change of almost 16%. The rice crackers and rice & grain cakes segments of the biscuits category also continue to experience growth with a 6.2% and 5.4% rise in value respectively in 2010. The iced tea segment of the beverages category is still performing well, with overall growth by grocery volume of 14% in rise in value in 2010 following a 29% rise in 2009. The energy and sports drinks segments remain some of the best performing in the cold beverage category with value growth of 20% and 12% respectively in 2010. These segments are now valued at $225 and $120 million respectively. The functional segment of the beverage category, which is relatively new to this market, grew very quickly in the past couple of years but has leveled off in 2010. The mineral water segment, however, grew by over 14% in 2010 with the segment split evenly between non-flavored and flavored varieties. The value of the spices segment of the herbs & spices category grew by almost 11% in 2010 with a grown of 14% by volume. This segment is now valued at $21 million overall. Elsewhere in the condiments category ?wet? recipe bases (sauces/marinades) grew by almost 23% by value in 2010. This segment is now valued at $26 million. Section V: Key Contacts & Other Information Key Contacts Agricultural Counselor U.S. Embassy Moonah Place Yarralumla, ACT 2600 Australia Tel: +61-2-6214-5854 Fax: +61-2-6273-1656 E-mail: AgCanberra@fas.usda.gov Food Standards Australia New Zealand P.O. Box 7186 Canberra BC, ACT 2610 Australia Tel: +61-2-6271-2222 Fax: +61-2-6271-2278 E-mail: info@foodstandards.gov.au Web: http://www.foodstandards.gov.au/ Australian Quarantine & Inspection Service Imported Food Program Web: http://www.daff.gov.au/aqis/import/food Food & Beverage Importers Association 181 Drummond Street Carlton, VIC 3053 Australia Tel: +61-3 9639-3644 Fax: +61-3) 9639-0638 E-mail: admin@fbia.org.au Web: http://www.fbia.org.au Other Information The home page for the Foreign Agricultural Service is located at: http://www.fas.usda.gov. Recent Reports from FAS/Canberra: These reports may be downloaded at the FAS Attaché Reports page at: http://www.fas.usda.gov/scriptsw/AttacheRep/default.asp. Title of Report Date Dairy Semi Annual 2011 05/09/11 Testing of Food from Japan - Update 04/14/11 Sugar Annual 2011 04/13/11 Additional Testing Required for Japanese Food Products 04/08/11 Cotton and Products Annual 04/04/11 Grain and Feed Annual 2011 03/29/11 Livestock and Products Semi-annual 2011 03/18/11 Wine Annual 2011 03/10/11 Public Attitudes Towards Agricultural Biotechnology in Australia 03/08/11 Review of Food Labeling & Policy 02/24/11 Grain & Feed Lock-Up ? February 2011 02/01/11 Appendix: Statistics Table A: Key Trade & Demographic Information Agricultural Imports from All Countries ($m/%US market share) 2010 $8,787 11% Consumer Food Imports from All Countries ($m/% US market share) 2010 $6,453 10% Edible Fishery Imports from All Countries ($m/% US market share) 2010 $1,170 3% Total Population (millions)/Annual Growth Rate (%) 2010 22.6 1.7% U /rban Population (millions)/Annual Growth Rate (% 1) 2010 14.3 1.8% Number of Major Metropolitan Areas 2/ 2010 5 Per Capita Gross Domestic Product (US$) 2011 55,366 Unemployment Rate (%) 2011 4.9% Per Capita Food Expenditure (US$) 2011 $3,620 Percent of Female Population Employed (%) 2011 59% Exchange Rate (Average for Calendar Year) 2010 US$1.00 = A$1.09 1/ Those living in capital cities 2/ Centers with population over 1,000,000 Sources: Global Trade Atlas; Australian Bureau of Statistic; Reserve Bank of Australia Table B: Consumer Food & Edible Fishery Product Imports Australia Imports Imports from the World Imports from the U.S. U.S Market Share (Millions of U.S. Dollars) 2008 2009 2010 2008 2009 2010 2008 2009 2010 CONSUMER-ORIENTED AGRICULTURAL TOTAL 5,705 55,541 6,453 622 600 668 11 11 10 Snack Foods (Excl. Nuts) 503 547 613 21 24 23 4 4 4 Breakfast Cereals & Pancake Mix 34 45 44 3 3 2 10 7 5 Red Meats, Fresh/Chilled/Frozen 366 396 448 94 100 133 26 25 30 Red Meats, Prepared/Preserved 48 54 78 10 11 11 20 20 15 Dairy Products (Excl. Cheese) 247 182 258 19 7 16 8 4 6 Cheese 357 264 375 33 3 22 9 1 6 Eggs & Products 10 9 11 1 2 1 10 20 12 Fresh Fruit 168 180 194 85 90 83 50 50 43 Fresh Vegetables 42 44 64 7 6 8 17 14 12 Processed Fruit & Vegetables 794 732 814 86 79 85 11 11 10 Fruit & Vegetable Juices 190 154 147 27 29 21 14 19 15 Tree Nuts 181 151 199 5 4 5 3 3 2 Wine & Beer 591 554 642 14 17 8 2 3 1 Nursery Products & Cut Flowers 47 40 42 0 0 0 0 0 0 Pet Foods (Dog & Cat Food) 144 154 178 65 68 75 45 44 42 Other Consumer-Oriented Products 1,984 2,034 2,344 151 157 174 8 8 7 FISH & SEAFOOD PRODUCTS 1,008 1,003 1,170 32 35 37 3 3 3 Salmon 78 68 78 26 25 24 33 36 31 Crustaceans 263 297 348 0 2 4 0 1 1 Groundfish & Flatfish 17 14 13 0 0 0 0 0 0 Molluscs 88 95 121 1 2 3 1 2 2 Other Fishery Products 562 528 611 4 6 6 1 1 1 AGRICULTURAL PRODUCTS TOTAL 7,870 7,654 8,787 819 838 938 10 11 11 AGRICULTURAL, FISH & FORESTRY TOTAL 10,068 9,659 11,319 909 929 1,060 9 10 9 Source: Global Trade Atlas Table C: Top 15 Suppliers of Consumer Foods & Edible Fishery Products Australia - Top 15 Suppliers CONSUMER-ORIENTED AGRICULTURAL IMPORTS FISH & SEAFOOD PRODUCTS IMPORTS ($000) 2008 2009 2010 ($000) 2008 2009 2010 New Zealand 1,270,965 1,163,080 1,542,189 Thailand 286,678 267,123 301,866 United States 621,700 600,443 667,897 New Zealand 169,555 165,535 197,880 China 387,030 384,568 423,878 China 116,563 130,626 169,385 Ireland 427,547 434,842 382,858 Vietnam 126,465 126,215 154,714 Italy 320,207 317,414 328,004 Malaysia 56,388 50,188 62,807 France 237,248 195,686 249,560 Taiwan 24,999 29,272 37,292 Denmark 224,434 229,544 241,773 United States 31,639 34,691 37,278 Singapore 71,720 67,031 237,944 Indonesia 20,834 31,308 28,768 Thailand 181,811 188,935 230,650 South Africa 20,904 20,740 27,501 Germany 158,070 164,603 175,219 Norway 17,885 17,388 23,970 Canada 148,700 179,893 170,188 Denmark 18,782 17,427 17,873 Netherlands 180,452 170,420 169,958 Japan 13,558 14,357 13,367 United Kingdom 95,473 97,534 104,353 Canada 11,545 12,506 11,970 Vietnam 85,603 78,296 102,812 Myanmar 9,291 6,642 8,277 Mexico 68,599 88,385 102,299 Namibia 6,112 5,714 8,056 Other 1,225,139 1,180,453 1,323,734 Other 76,584 73,014 69,598 World 5,704,695 5,541,127 6,453,315 World 1,007,782 1,002,745 1,170,602 Source: Global Trade Atlas
Posted: 11 July 2011, last updated 11 July 2011

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