Australia has traditionally placed a lot of focus on its fresh agricultural produce when it comes to exports, in line with the efforts the government has put into its Brand Australia branding, which is aligned with freshness and quality particularly when it comes to food products.
The state of South Australia has decided to expand on this to also pump resources into the value-added foods and beverages category over the next five years until 2027, as evidenced by the recently-announced South Australia Food and Beverage Five Year Export Strategy.
“The goal of this strategy is to leverage on South Australia’s strong heritage of collaboration between national and industry bodies so as to together grow our food and beverage exports to A$3bn (US$2.1bn) by 2027 for value-added brands and products, a 3% CAGR from A$2.64bn (US$1.8) in 2021,” industry body Food South Australia CEO Catherine Sayer told FoodNavigator-Asia.
“We have already seen that categories with the greatest export potential include [traditional fresh items] such as meat, fruits, vegetables, seafood, dairy and so on [but] we have also highlighted three categories with significant emerging potential due to health and convenience trends.
“These are: Prepared Meals, Functional and Fortified Foods, and Meat Substitutes – all these categories are able to attract significant premium, but do also require considerable investment in technology [for South Australia] to be globally competitive.”
According to the five-year strategy report, the value of prepared meals in its 10 priority markets comes in at A$81bn (US$), functional and fortified products comes in at A$220bn (US$) and meat substitutes come in at A$4bn(US$).
“Prepared meals are [primarily driven] by the convenience trend, and meat substitutes and fortified and functional products by health and wellbeing trends,” she added.
“Double digit growth is forecasted for both of the latter categories as well.”
South Australia’s priority export markets over the next five years are the United States, New Zealand, Singapore, Hong Kong, UAE, Japan, Saudi Arabia, South Korea, Malaysia and China – with seven out of these 10 being Asia Pacific countries.
“The United States was found to have large potential due to its size, but local conditions are highly fragmented by state whereas in New Zealand Australian firms may face a key challenge in direct competition from local producers,” the report highlighted.
“Singapore [had the highest interest from industry for new market expansion] as there is limited local production in many categories and the retail scene there is mature, similar to the United Arab Emirates and Japan. Hong Kong also made it onto the list but there is political uncertainty there and short term market access issues.
“There was also a lot of interest in China [due to the consumer base] but of note was that there could be significant market access issues and political uncertainty challenges there as well.”
The United Kingdom was highlighted as a priority market for South Australian spirits industry firms over the next five years due to the high prices of products, lower impact of freight costs, sophistication of the UK market and fewer barriers to entry; but is not within the top 10 choices for the general South Australian food and beverage industry.
Strategy to enter
In order to make this strategy a reality and hit the desired target, local consultancy Xpotential urged South Australian food firms to implement a series of recommended initiatives.
“The first thing would be to establish an industry-led food and beverage export steering group [to manage implementation] and create an industry-led collaborative route to market model for the priority markets,” XPotential Australia New Zealand Managing Director Mike Harley told the floor at the recent Food South Australia 2022 Summit.
“It is also going to be key to develop a unique value proposition for food and beverage exports from South Australia in particular – just like Brand Australia has become so important in helping the exports sector succeed at a national level, [this concept can also be applied here].
“In addition, it will be crucial to establish and maintain an up-to-date export regulations database for the industry, as well as to develop an integrated competency development programme, invest in traceability and environmental sustainability accreditation system [to maximise trust and confidence in the integrity of production].”
These were all in addition to core necessities such as making sea and air freight more available at competitive rates and integrating F&B industry needs into national infrastructure plans – showcasing that a lot of work still needs to be done before South Australia can hit their export growth targets.