From Singapore to Australia – Insights into the Packaged Food & Beverage Market (Part-2)

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In this second half of the two-part blog, we share the key insights gleaned on key food and beverage channels, food and grocery landscape, at home spend vs out of home spend and the impact of the escalation in online food and grocery sales in Australia.

With more similarities than you may imagine, the import market between Singapore and Australia is strong and growing. Despite Australia having five times the population of Singapore, there are plenty of key characteristics that the two countries share which makes it a more rounded option for Singaporean food manufacturers looking to enter the packaged food and beverage market in Australia.   

These similarities and changes to the sector around COVID-19 were discussed in a recent webinar held by Export Connect in conjunction with Enterprise Singapore, Singapore Food Manufacturers’ Association (Export Connect’s first international partner), Woolworths and Shopability.

The webinar saw over 160 participants come together, with 40% being Australian food and agribusiness and 42% being Singaporean food and agribusiness. 65% of participants are current exporters, and there was a right mix between large business and SME’s, including San Remo, Bertocchi, Twisted Healthy Treats, Mekhala, and Eng Bee.

Key Food and Beverage Channels

As part of this webinar, Peter Huskins looked at the key food and beverage channels in Australia and Singapore. The population difference certainly plays into the value difference in the channels, but it is interesting to note that E-commerce or online shopping is trending faster in Singapore.

The other significant difference is that, within Australia, grocery retailing values are more than double that of food service values; however, in Singapore, food service is of higher value than grocery retailing. Huskins’ figures were pre-covid, so there have been plenty of changes to these channels’ value now.

Australian Food and Grocery Landscape

Both Huskins and Macaulay noted the big changes to the Australian packaged food and beverage market since March. Huskins noticed a growing focus around convenience stores and developing small store formats and exploring opportunities under the fuel banners. There are opportunities for the right product in the right format.

Macauley also spoke on this area and noted that delivering food products, particularly own brand products to fuel stations has been a big growth platform. She noted as well that the March-May period saw a lot of surge buying or panic buying. Woolworths and other grocery retailers struggled to keep up with demand and tested their logistics network as far as they could.

“We were brought closer to our suppliers because we needed to provide real-time info and observations at the store level and how they would need more support.”

Many manufacturers went from one shift a day to three shifts a day, running operations 24/7 to meet needs. There were double the number of trucks on the road, and “we were getting Christmas weeks’ – $1 billion spend on groceries a week – multiple weeks in a row.”

At Home Spend vs Out of Home Spend

One of the biggest changes across the world has been the re-calibration of at-home spend vs out-of-home spend; people are cooking more at home, eating more at home, and looking for more convenience products as well as ready to eat meals.

Huskins said that “the impact has been catastrophic on food service, but the beneficiary has been retail.” Out of home spend has fallen consistently within Australia since March, which retail spend has grown consistently. Those food service businesses that have started to do online orders and home deliveries have done well.

Macaulay added that more shoppers were going to local supermarkets because they don’t want to go to large centres. Of those customers still going to stores, there may be less of them, but basket sizes are increasing. Pre-COVID, the average basket size sat at $30, but now, it is closer to $70.

 Impact of Online Food and Grocery Sales

Click and collect has undoubtedly grown in popularity over the pandemic; grocery retailing was sitting around 3% online prior and doubled to about 6%. Non-food retailing was slightly lower. Huskins noted that food service would likely continue to suffer as growth rates continue with online shopping without an exact rebound timeframe. 

Macaulay said that at points, the Woolworths online shopping rate rose to 12% and there was a growth of 16.9% in own-brand products.

What Should Singaporean Exporters Be Aware Of?

When exporting to any country, it is wise to be across the current and future trends. Singaporean food manufacturers need to be aware of the growing trend of at-home spending, and that supermarkets are expected to outperform food service until food service can bounce back. 

Huskins noted that it is essential to be aware of local shopping vs destination shopping – that is the resurgence in shopping at smaller stores locally rather than going to a supermarket. He also noted that it is vital to be aware of the on-going awareness into health – change in pharmacy products, the increase in purchasing fresh, local “good for me” foods.

Macaulay notes that health shopping became more important after the March-May period, not just through vitamins, minerals, and hand sanitisers. Products such as apple cider vinegar, ginger and turmeric were in high demand.

She also notes that consumers are trying new brands and that the international section in supermarkets is growing,with more people interested in authentic Asian products.

Ms Macaulay was asked as to which categories represent the strongest opportunities within the Woolworths brand, which came with some surprising answers. Categories that have seen over 30% growth and are sustaining that growth including biscuits (crackers and crispbreads), frozen fish, sausage rolls and pies, vitamins, Asian foods, rice, canned vegetables, dried fruit and nuts, relishes and pickles and desserts like ice cream cones and toppings.

 Australia is an exciting market to export to, and with a growing and diverse population, Singaporean food manufacturers will likely find a good market within the packaged food and beverage channels. It’s all about getting the right product into the right places and making consumers aware of the benefits.

This is the end of the second part of a two-parter insights series. We hope you’ve found this overview of our recent online forum on the Australian market helpful. As always, if you’ve got any questions or want to discuss export opportunities for your company, feel free to drop us a line at Export Connect – we’d love to hear from you.