… enormous potential in the ‘land of dreams’?
Despite competition from emerging economies and a slow population growth rate (the slowest since 1937), the United States of America remains the country with the most financial backing, globally. As one of Australia’s most important trade and investment partners, this is no small-change. In 2016, Uncle Sam was Australia’s most significant investor by far; our largest foreign investment destination; and was ranked fourth as an Australian export destination.
For such a significant relationship, how well do we really know our Pacific neighbour?
- The USA is undergoing a huge change, and experiencing a shift towards online retail sales
- In 2013, the foot traffic in US stores fell by half, compared to three years earlier
- Shipping costs are lowering, increasing the affordability of exported goods
- This change has meant much easier penetration of the US market as a whole, as there is less need to negotiate sales avenues in each state and region
- As a massive economy, the USA’s food and beverage import market (while the smallest in the consumer goods sector), is still worth over $130 billion USD each year
- Around 20% of US food supply is imported
- Healthy diets are of increasing concern to this market, driving consumer choices
- More than two-thirds of all adults and nearly one-third of all children and youth in the United States are either overweight or obese
- This is creating a trend toward healthier eating, as people seek more information on diet, and awareness grows from necessity
- Non-Genetically Modified foods are a major growth area for this reason. According to research firm Nielsen, sales of food labelled “Non-GMO” grew more than $8 billion USD from 2012 to 2016, reaching nearly $21.1 billion USD in total sales
- In addition to Non-GMO, 2016 trends included increased uptake of organic, free-from and all-natural foods and this is a theme set to continue into the future
- Certain states are hotbeds for health food consumption
- In the organic health food market, the following 10 states are responsible for a massive 78% in sales: California, Washington, Pennsylvania, Oregon, Wisconsin, Texas, New York, Colorado, Michigan and Iowa
- 41% of total organic food is sold in California alone
- Many importers choose to target specific states, which helps keep their business scope and costs down
- Australia enjoys the benefits of this strong relationship in both legal and practical ways
- Our Free Trade Agreement with the USA gives Australians an advantage in exports, making these exchanges more affordable
- According to the Australian Department of Agriculture and Water Resources, Australian exporters are also in a significantly stronger position as preferred suppliers of safe, high quality food to the USA after signing a bilateral Food Safety Recognition Agreement in 2017
While on the surface the US market may seem one of the less attractive due to the maturity of its industries and the high volume of competitors; the figures above tell a different story. If you are an Australian business with a health food product. whether organic or free-from, the USA offers a potential export market that is growing substantially. In addition, we enjoy relative ease-of-access as a result of legal arrangements between the two countries and a high standing in that market. Dream big, we say.