2012 Exporter Guide - Australia

An Expert's View about Agriculture and Animal Husbandry in Australia

Posted on: 27 Aug 2012

The U.S. - Australia Free Trade Agreement has provided some advantages, tariff rates for all U.S. food products exported to Australia dropped to zero.

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: 8/14/2012 GAIN Report Number: AS1214 Australia Exporter Guide 2012 Exporter Guide - Australia Approved By: Joseph Carroll, 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$56,572, among the highest in the world. Australia is the world's 13th largest economy, with nominal GDP of US$1.3 trillion. 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. The unemployment rate is currently 4.9%. Australia’s economic fundamentals are strong with the real GDP growth projected to outperform every major advanced economy in 2012 and 2013. The Australian economy will likely grow by 3.0% in 2012 and 3.5% in 2013. Post: Canberra Section I: Market Overview Americans and Australians have a warm relationship that spans the history of both nations. They 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 20 consecutive years, except for one negative quarter in late 2008 and has an AAA credit rating from all three international ratings agencies. Net government debt will peak at 7.2% of GDP and is falling and the government has pledged to return the federal budget to surplus in 2013. Australia’s central bank reports the economy grew by 2.75% in 2011, and projects rate of 3.0% in 2012. Unemployment fell to 4.9% in April 2012. Australia has a 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, 2010). Four of Australia’s leading banks are currently ranked in the top 12 in terms of world financial security and AA rankings. In 2011, 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 2010, with a growth rate of over 10% over five years. Terms of trade are at historic highs, with strong prices for exports of iron ore and coal and over 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 near or above parity with the U.S. dollar, placing pressure on manufacturing exports and the tourism and education sectors. 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 22.6 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. An FTA with Malaysia has also been concluded and is undergoing the domestic approval process. Australia is also in the process of negotiating FTAs with China, Japan, Korea, the Gulf Cooperation Council; Comprehensive Economic Cooperation Agreements with India and Indonesia; the Trans-Pacific Partnership Agreement; and the Pacific Agreement on Closer Economic Relations (PACER) Plus. 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.S. culture well accepted and similar to Australia Strict quarantine regulations with regard to fresh produce, meat and dairy products N Australia is a significant producer of a wide variety of o language barriers to overcome agricultural products. U.S. products have excellent image and acceptance. ‘Buy Australian’ campaign is significant. The U.S. and Australia have a free trade agreement that Australian labeling & advertising laws are different from removes import tariffs. the U.S. This may require some changes to food labels. Need to produce innovative food products to break into Australian dollar has appreciated against the U.S. dollar m highly competitive retail food sector as most categories aking imports relatively cheaper for Australians. have substantial market leaders. Australian consumers are experimental and desire new and innovative products. This presents an opportunity to trial such products and capture/gain market share. 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 and is becoming increasingly important to consumers. 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/. The FAIRS report mentioned above gives comprehensive guidance on how to use the Food Standards Code. 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.finefoodaustralia.com.au/ Fine Food Australia 2013 – Sydney Sydney Convention & Exhibition Centre, September 9-12, 2013 Fine Food Australia 2014 – Melbourne Melbourne Convention & Exhibition Centre, September 8-11, 2014 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 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. Demand for healthy food is being boosted by demographic shifts. An aging population and rising birth rates have both had a positive impact on the development of the health and wellness market since 2005. Middle-aged or elderly consumers and parents with young children tend to be better informed about health and dietary matters than other groups, and therefore represent a key target for health and wellness manufacturers. Packaging: Packaging has grown in importance in recent years and innovative packaging is a valuable selling point in the Australian market. It is often the packaging that conveys convenience to the consumer, and snazzy packaging attracts the attention of consumers. Packaging ensures that offerings conform to market trends by communicating unique selling points and offering freshness and convenience. By being lightweight, packaging can reduce the carbon footprint of transportation. Increasingly, consumers expect that packaging will also be recyclable. 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 also Section II above on FAIRS Report). While Australia is a major producer/exporter of both tropical and temperate zone agricultural products, it is also a large 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 good quality and value for money in this market. 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. 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 stores in Sydney & Canberra opening in July 2011. Plans are underway to open a store in Brisbane and additional stores in Melbourne and Sydney in the next couple of years. 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 8.8% rise in value in 2011 following a 5.8% rise in 2010. The ‘adult’ segment of this category experienced a value change of almost 22% in 2011 after a 16% rise in 2010. The rice & grain cakes segment of the biscuits category also continues to experience good growth with a rise of almost 8% in value in 2011 following a 5.4% rise in 2010. Gluten free foodstuffs continue to grow in popularity. In 2011 this segment rose by over 85% in both grocery value & volume in the frozen food category alone. The value of frozen gluten free segment is $24 million. The iced tea segment of the beverages category continues performing well, with overall growth by grocery value of 21% in 2011 after similar rises in 2009 & 2010 (28% & 14% respectively). The energy drinks segment also remains one of the best performing in the cold beverage category with value growth of over 24% in 2011 and 20% 2010. This segment is valued at $280 million. The mineral water category grew by over 14% in 2010 and 6% in 2011 with the non-flavored segment showing the largest growth in 2011 (10%). In hot beverages, roast pure coffee was by far the best performer in 2011 with a rise in grocery value of 16%. Overall the hot tea segment was relatively stable except in the non-mainstream, flavored/health & premium categories, which grew by over 9.5% each. The value of the spices segment of the herbs & spices category grew by just over 8% in 2011 following growth of almost 11% in 2010. This segment is now valued at $70 million overall. Elsewhere in the condiments category ‘wet’ recipe bases (sauces/marinades) grew by 14% in value in 2011 after almost 23% growth in 2010. This segment is now valued at $30 million. Section V: Key Contacts & Other Information Key Contacts Agricultural Counselor U.S. Embassy Moonah Place Yarralumla, ACT 2600 Australia Tel: +61-2-6214-5854 Fax: +61-2-6273-1656 E-mail: AgCanberra@fas.usda.gov Food Standards Australia New Zealand P.O. Box 7186 Canberra BC, ACT 2610 Australia Tel: +61-2-6271-2222 Fax: +61-2-6271-2278 E-mail: info@foodstandards.gov.au Web: http://www.foodstandards.gov.au/ Australian Quarantine & Inspection Service Imported Food Program Web: http://www.daff.gov.au/aqis/import/food Food & Beverage Importers Association 181 Drummond Street Carlton, VIC 3053 Australia Tel: +61-3 9639-3644 Fax: +61-3) 9639-0638 E-mail: admin@fbia.org.au Web: http://www.fbia.org.au Other Information The home page for the Foreign Agricultural Service is located at: http://www.fas.usda.gov. Recent Reports from FAS/Canberra: These reports may be downloaded at the FAS Attaché Reports page at: http://www.fas.usda.gov/scriptsw/AttacheRep/default.asp. Title of Report Date Biofuels Annual 2012 06/27/12 Retail Sector Report 06/11/12 Dairy and Products Semi Annual 2012 05/07/12 Sugar Annual 2012 04/10/12 Cotton and Products Annual 2012 03/29/12 Grain and Feed Annual 2012 03/20/12 Wine Annual 2012 03/15/12 Livestock and Product Semi-annual 2012 03/13/12 Grain & Feed Lock-Up – February 2012 01/24/12 Appendix: Statistics Table A: Key Trade & Demographic Information Agricultural Imports from All Countries ($m/%US market share) 2011 $10,587 11% Consumer Food Imports from All Countries ($m/% US market share) 2011 $7,793 12% Edible Fishery Imports from All Countries ($m/% US market share) 2011 $1,340 3% Total Population (millions)/Annual Growth Rate (%) 2012 22.7 1.4% Urban Population (millions)/Annual Growth Ra 1/te (%) 2011 14.7 1.8% Number of Major Metropolitan Areas 2/ 2012 5 Per Capita Gross Domestic Product (US$) 2012 56,572 Unemployment Rate (%) 2012 5.1% Per Capita Food Expenditure (US$) 2012 $3,520 Percent of Female Population Employed (%) 2012 59% Exchange Rate (Average for Calendar Year) 2011 A$1.00 = US$1.03 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) 2009 2010 2011 2009 2010 2011 2009 2010 2011 CONSUMER-ORIENTED AGRICULTURAL TOTAL 5,541 6,453 7,793 600 668 931 11 10 12 Snack Foods (Excl. Nuts) 547 613 734 24 23 34 4 4 5 Breakfast Cereals & Pancake Mix 45 44 59 3 2 3 7 5 5 Red Meats, Fresh/Chilled/Frozen 396 448 468 100 133 180 25 30 38 Red Meats, Prepared/Preserved 54 78 105 11 11 18 20 15 17 Dairy Products (Excl. Cheese) 182 258 309 7 16 23 4 6 7 Cheese 264 375 407 3 22 43 1 6 11 Eggs & Products 9 11 10 2 1 1 20 12 11 Fresh Fruit 180 194 261 90 83 110 50 43 42 Fresh Vegetables 44 64 73 6 8 11 14 12 15 Processed Fruit & Vegetables 732 814 1,084 79 85 150 11 10 14 Fruit & Vegetable Juices 154 147 218 29 21 22 19 15 10 Tree Nuts 151 199 247 4 5 8 3 2 3 Wine & Beer 554 642 726 17 8 9 3 1 1 Nursery Products & Cut Flowers 40 42 53 0 0 0 0 0 1 Pet Foods (Dog & Cat Food) 154 178 189 68 75 95 44 42 50 Other Consumer-Oriented Products 2,034 2,344 2,850 157 174 226 8 7 8 F ISH & SEAFOOD PRODUCTS 1,003 1,171 1,340 35 37 44 3 3 3 Salmon 68 78 88 25 24 28 36 31 32 Crustaceans 297 348 404 2 4 6 1 1 2 Groundfish & Flatfish 14 13 17 0 0 0 0 0 2 Molluscs 95 121 150 2 3 5 2 2 3 Other Fishery Products 528 611 682 6 6 4 1 1 1 AGRICULTURAL PRODUCTS TOTAL 7,654 8,787 10,587 838 938 1171 11 11 11 AGRICULTURAL, FISH & FORESTRY TOTAL 9,659 11,319 13,700 929 1,060 1311 10 9 10 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 PR ODUCTS IMPOR TS ($000) 2009 2010 2011 ($000) 2009 2010 2011 New Zealand 1,163,080 1,542,189 1,812,633 Thailand 267,123 301,866 357,900 Uni ted States 600,443 668,124 931,140 China 130,626 169,385 220,939 S ingapore 67,031 237,944 620,097 New Zealand 165,535 197,880 203,346 China 384,568 423,878 530,011 Vietnam 126,215 154,714 162,173 Italy 317,414 328,004 380,866 Malaysia 50,188 62,807 75,924 F rance 195,686 249,560 290,025 United States 34,691 37,278 43,994 Tha iland 188,935 230,650 282,115 Taiwan 29,272 37,292 36,775 Ne therlands 170,420 169,958 231,353 Indonesia 31,308 28,768 30,194 Denmark 229,544 241,681 224,050 South Africa 20,740 27,501 28,956 Ge rmany 164,603 175,219 205,598 Norway 17,388 23,970 28,534 Swi tzerland 78,147 96,480 171,909 Denmark 17,427 17,873 25,020 Canada 179,893 169,946 157,642 Japan 14,357 13,367 15,847 Uni ted Kingdom 97,534 104,352 139,355 Canada 12,506 11,970 14,728 Vie tnam 78,296 102,812 124,044 Myanmar 6,642 8,277 7,751 Mexico 88,385 102,299 108,315 Argentina 8,293 5,924 6,284 O ther 1,537,148 1,610,087 1,583,846 Other 70,435 71,730 81,639 Wo rld 5,541,127 6,453,183 7,792,998 World 1,002,745 1,170,602 1,340,004 Sour ce: Global Trade Atlas
Posted: 27 August 2012

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