potential opportunities for increased production of ...€¦ · australian industry, for the local...
TRANSCRIPT
POTENTIAL OPPORTUNITIES FOR INCREASED PRODUCTION OF PROCESSED ASIAN FOODS IN AUSTRALIA
A report for the Rural Industries Research and Development Corporation
by Barry Lee and Karnig Momdjian Connectica International
RIRDC Publication No 98/64 RIRDC Project No CON-6A
ii
© 1998 Rural Industries Research and Development Corporation. All rights reserved. ISBN 0 642 54082 9 ISSN 1440-6845 "Potential for Increased Production of Processed Asian Foods in Australia”
RIRDC Publication No 98/64 RIRDC Project No CON-6A
The views expressed and the conclusions reached in this publication are those of the author and not necessarily those of persons consulted. RIRDC shall not be responsible in any way whatsoever to any person who relies in whole or in part on the contents of this report. This publication is copyright. However, RIRDC encourages wide dissemination of its research, providing the Corporation is clearly acknowledged. For any other enquiries concerning reproduction, contact the Communications Manager on phone 02 6272 3186.
Researcher Contact Details Barry Lee Connectica International Level 3, 2 Help Street Chatswood NSW 2067 Phone: (02) 94154200 Fax: (02) 9411 8188 Email: [email protected]
RIRDC Contact Details Rural Industries Research and Development Corporation Level 1, AMA House 42 Macquarie Street BARTON ACT 2600PO Box 4776 KINGSTON ACT 2604 Phone: 02 6272 4539 Fax: 02 6272 5877 Email: [email protected] Internet: http://www.rirdc.gov.au Published in July 1998 Printed on environmentally friendly paper by Union Offset
iii
FORWARD This report identifies opportunities to increase the production of Asian processed foods in Australia. Previous research funded by RIRDC has identified that the Australian market for processed Asian foods is a significant and growing market, represented by over $1 billion of retail sales annually. Most importantly, the demand for these processed Asian foods is largely satisfied by imports, and therefore represents potential import replacement opportunities for Australian industry. The report identifies the dual-market nature of Asian foods in Australia, and with case-studies demonstrates key factors and comparative advantages available to the Australian industry, for the local manufacture of Asian foods. Specific opportunities include ready meals (such as the ubiquitous instant noodles), sauces and pastes, snackfoods, sweets, and beverages and drinks. The project collaborated extensively with Australian industry, and culminated in a workshop which was sponsored by RIRDC, Ethnic Affairs Commission of NSW, the Industrial Supplies Office of NSW and key industry players in the processed Asian food industry in Australia. Their support of the workshop and the development of industry strategies in this project is gratefully acknowledged. This report forms part of RIRDC’s Asian Foods Research and Development Program which aims to foster the development of a viable Australian Asian foods industry. Indeed, this report highlights to both investors and industry the viability for the manufacture of many processed Asian foods in Australia. Peter Core Managing Director Rural Industries Research and Development Corporation
iv
FORWARDFORWARD ACKNOWLEDGEMENTS ACKNOWLEDGEMENTSACKNOWLEDGEMENTS Connectica International would like to acknowledge the advice and assistance of many people during this study:
Rural Industries Research and Development Corporation: Dr Jeff Davis.
Ethnic Affairs Commission of NSW: Mr Stepan Kerkyasharian.
Industry Associations: Australian Chinese Business Development Association, Business Australia, Sydney Food Network, Western Sydney Food Network.
Industry researchers: Dr Wendy Morgan, Ms Mandy Chew, Mr Grant Vinning.
Industry consultants: Mr Peter Webster, Industrial Supplies Office.
v
CONTENTS DISCLAIMER ...........................................................................................................................ii FORWARD...............................................................................................................................iii ACKNOWLEDGEMENTS...................................................................................................... iv ABBREVIATIONS .................................................................................................................vii EXECUTIVE SUMMARY ...................................................................................................... ix 1.0 BACKGROUND TO THE PROJECT ..........................................................................1 2.0 OBJECTIVES OF THE PROJECT ...............................................................................3 3.0 INTRODUCTION .........................................................................................................5
3.1 Definitions .........................................................................................................5 3.2 Approach............................................................................................................5
4.0 RESEARCH METHODOLOGY...................................................................................7
4.1 General...............................................................................................................7 4.2 Literature Review ..............................................................................................7 4.3 Data Sources and Data Quality ..........................................................................8
5.0 OVERVIEW OF THE PROCESSED ASIAN FOODS INDUSTRY
IN AUSTRALIA............................................................................................................9..............................................................................................................................
5.1 Market Demand Update - Census 1996.............................................................9 5.2 Growth In the Market For Asian Foods.............................................................9 5.3 Categories Of Imports......................................................................................10 5.4 Importers and Distributors ...............................................................................11 5.5 Australian Manufacturers of Processed Asian Foods ......................................11
6.0 MARKET SURVEY OF THE PROCESSED ASIAN FOODS
INDUSTRY IN AUSTRALIA ....................................................................................13 6.1 General.............................................................................................................13 6.2 Survey Program ...............................................................................................13 6.3 Product Opportunity’s......................................................................................14 6.4 Qualitative Market Issues ................................................................................14 6.5 Market Size Estimates .....................................................................................16 6.6 Supply Chain Estimates ...................................................................................16
vi
7.0 COMMERCIAL FACTORS INFLUENCING PROCESSED
ASIAN FOOD MARKETS IN AUSTRALIA.............................................................17 7.1 Market Issues ...................................................................................................17 7.2 Business Planning Issues .................................................................................21 7.3 Summary ..........................................................................................................24
8.0 AUSTRALIAN INDUSTRY CASE STUDIES FOR PROCESSED
ASIAN FOODS ...........................................................................................................25..............................................................................................................................
8.1 Business Plan Case Studies..............................................................................25 8.2 Comparative Analysis......................................................................................31 8.3 Summary ..........................................................................................................32
9.0 ASSESSMENT OF OPPORTUNITIES AND PRIORITIES......................................33
9.1 General.............................................................................................................33 9.2 Dual Markets And Asian Foods ..............................................................33 9.3 Priority Opportunities ......................................................................................35 9.4 Comment for Processed Fresh Asian Foods ....................................................35
10.0 SUMMARY AND INDUSTRY FEEDBACK............................................................37
10.1 Summary ..........................................................................................................37 10.2 Industry Feedback............................................................................................37
11.0 RECOMMENDED INDUSTRY STRATEGIES ........................................................39
11.1 Product Identification and Market Positioning................................................39 11.2 Market Development .......................................................................................42 11.3 Developing New Products ...............................................................................44 11.4 Manufacturing Viability ..................................................................................45 11.5 Industry Development......................................................................................46
12.0 APPENDICES .............................................................................................................47
REFERENCES ..........................................................................................................114
vii
viii
ABBREVIATIONS ABBREVIATIONSABBREVIATIONS ABARE Australian Bureau of Agriculture and Resource Economics. ABS Australian Bureau of Statistics. DIS Delivered Into Store DPIE Department of Primary Industries and Energy. ISO Industrial Supplies Office MNC Multi-National Corporation QA Quality Assurance R&D Research and Development. RIRDC Rural Industries Research and Development Corporation. SME Small and Medium-scale Enterprise
ix
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
x
EXECUTIVE SUMMARY EXECUTIVE SUMMARYEXECUTIVE SUMMARY During 1994, RIRDC commissioned a study of the Asian foods sector in Australia.
This study confirmed that:
The retail size of the processed Asian foods market in Australia was over $1 billion.
This demand for Asian foods was largely satisfied by imports. These imports would make a negative contribution of up to $800 million to
Australia’s Balance of Payments.
One of the key findings of the study was that there was a significant opportunity to increase the production of processed Asian foods in Australia especially as only about 20% of the processed Asian foods consumed in Australia, were of Australian manufacture.
As a result, RIRDC commissioned this project to identify specific opportunities for
increased manufacturing of Asian foods in Australia. Emphasis has been upon research and economic analyses of specific product or food category opportunities which afford a unique comparative and sustainable manufacturing advantage to the Australian processed food manufacturing industry.
The principal objectives were:
To increase production of Asian processed foods in Australia To identify import replacement opportunities for Asian food products imported
into Australia
The study involved:
Market research to identify priority processed Asian food opportunities.
Business analysis of selected priority opportunities.
Identification of key factors influencing the Asian foods industry.
Strategies involving local Australian food processors and the existing Australian Asian foods industry.
Market research and a comparative analysis has confirmed opportunities for the
Australian manufacture of the following processed Asian food categories:
Noodles and Rice Processed Fresh Food Sauces and Pastes Spices, Condiments and Dry Goods
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
xi
Snacks and Sweets Beverages and Drinks Canned Goods and Soups
The Asian foods market is not one homogeneous market. Rather it is a dual market
structure consisting of the Australian supermarkets and the Asian retail grocery outlets.
A number of business plan case studies were reviewed, and it is noted that the following categories of Asian foods are significant for their positioning in the dual Asian and western markets:
Noodles Sauces and pastes Snacks and sweets Beverages and drinks
The following market factors were identified as the strategic drivers of industry growth
Taste and quality of products Market size and growth Marketing and pricing strategies Brand loyalty Investment capital
The following market factors were identified as constraints to industry growth:
Market size Competition Marketing costs Capital requirements
Priority Asian food opportunities for manufacture in Australia include:
Instant and cup noodles Soy based drinks Biscuits Asian sauces Seaweed products Rice cracker snacks Fried shrimp snacks Soups Asian teas Fresh foods
While fresh foods were not a major focus for this study, it is noted that there is
considerable anecdotal evidence indicating that this is a major area attracting consideration for overseas investment. Investment may be expected in the forms of
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
xii
capital and/or technology transfer.
Industry comments at an Asian foods workshop highlighted that:
1. The Australian market is an integrated market where many Asian foods have been Australianised.
2. Australian consumers have a high propensity to try new products. However, price
and quality are major issues for the Australian Asian and non-Asian consumer.
i. Branding and marketing shall be the critical success factor for the commercial viability of Asian foods in Australia; especially for the development of the market for the ‘new’ generation of younger consumers.
ii. Raw materials in Australia are generally a relatively small proportion of
manufacturing costs; rather labour and other manufacturing costs are the more significant costs especially for small and medium size enterprises. Niche or specialty products marketing is often used as a strategy to overcome such cost ‘impediments’.
3. Asian food products in Australia may be characterised as new products, or mature
products which are able to be integrated into other standard categories of foods.
4. As processed Asian foods in Australia ‘strides two cultures’, there is a need to employ local Asian product development experience.
5. Australian food companies often do not recognise that the skills for Asian food
development are available in the Australian Asian communities. There is a significant opportunity to network and work together with this resource.
6. Australia is not often perceived by consumers to be an ‘authentic’ manufacturing
source of processed Asian foods and therefore requires industry promotion and marketing. This is especially a relevant issue for exports of Australian manufactured Asian foods.
7. Australian manufactured Asian foods require to be differentiated in Australia.
Different packaging formats can form the basis for this differentiation. Recommended Industry Strategies 1. Product Identification and Market Positioning Strategy 1: Expand Australian Bureau of Statistics Product CategoriesStrategy 1:
Expand Australian Bureau of Statistics Product CategoriesStrategy 1: Expand Australian Bureau of Statistics Product Categories
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
xiii
Objective: To expand the ABS statistical product sub-codes to provide more detailed product within category information for imports of processed Asian foods.
Issues:
The ABS statistical codes (suffix of the Australian Customs tariff number) can be expanded to define more detailed Asian food import listings.
More accurate monitoring of imports of Asian foods and opportunities for increasing local production.
This information should provide input to an industry database. Strategy 2: Develop an Industry DatabaseStrategy 2: Develop an Industry
DatabaseStrategy 2: Develop an Industry Database Objective: To provide market and technical support resources for industry. Issues:
Formal industry development of a database of all Asian food items available at a retail level in Australia. This study may form the basis for the development of the database.
This may be further extended to the food service and food manufacturing industries so as to maximise the size of any given market sector for an Asian food product.
Consolidation of other available sources of market information and reports.
Strategy 3: Disseminate Industry Database Information Strategy 3: Disseminate
Industry Database Information Strategy 3: Disseminate Industry Database Information
Objective: To ensure that Australian rural producers and food manufacturers have access to
information which facilitates business decision making. Issues:
Industry communication of market opportunities is fundamental. Identification of opportunities from the database, and communication to
industry may be achieved through existing industry networks; many of which have been previously established through the support of Government agribusiness programs.
Conduct keynote presentations of the Australian Asian food industry. Communications should be developed through food media columns and
regular features on Asian food opportunities Strategy 4 Develop a Communication Strategy with Rural Producers for the Ownership
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
xiv
and Development of Asian Food Marketing StrategiesStrategy 4 Develop a Communication Strategy with Rural Producers for the Ownership and Development of Asian Food Marketing StrategiesStrategy 4 Develop a Communication Strategy with Rural Producers for the Ownership and Development of Asian Food Marketing Strategies
Objective: To develop ownership of product development through production and supply
management. Issues:
Liaison with marketing organisations for various agricultural commodities e.g. AMLC, AHC, ADC.
Quality Assurance and food safety. Development of integrated supply systems (‘plate to paddock’).
Strategy 5: Develop Sector-Specific Communication Strategies For The Food Industry and Business Networks
Objectives Utilisation of the industry database by sector for both Small and Medium Size
Enterprises (SME’s) and Multi-National Corporations (MNC’s). Issues:
For SME’s, support management in the development of outsourced product development and market research resources.
For MNC’s, liaise with their in-house product development management and assist with product development priorities.
Ausindustry Business Networks and industry organisations may be practical industry communication channels.
Strategy 6: Develop Asian Food Networks to Interface with MNC’s and SME’sStrategy 6: Develop Asian Food Networks to Interface with MNC’s and SME’sStrategy 6: Develop Asian Food Networks to Interface with MNC’s and SME’s
Objective: Encourage the formation of networks or alliances for product development and
utilise the resources and experience of Australian Asians. Issues:
Liaise with trade development and industry organisations such as Business Australia and State Government groups e.g. Supermarkets To Asia (STA), NSW Ethnic Affairs Commission, Australia - Asian Chambers of Commerce.
Improve industry communications in Asian foods - through networks and industry associations which link into Asia.
Make use of the local Asian background resources in assisting with
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
xv
policy development and priorities. Strategy 7: Identify Products from Current International ExperienceStrategy 7:
Identify Products from Current International ExperienceStrategy 7: Identify Products from Current International Experience
Objective: Develop product identification and development processes through liaison with
food industry suppliers e.g., equipment and ingredient suppliers. Issues:
Minimise ‘re-invention of the wheel’ and duplication of effort. Monitor existing and future product releases as a source of ideas.
Strategy 8: Identify Target Market Segment Position for the Asian Food
OpportunityStrategy 8: Identify Target Market Segment Position for the Asian Food OpportunityStrategy 8: Identify Target Market Segment Position for the Asian Food Opportunity
Objective: Assess market dynamics for Asian food market segments of ‘Asianised’
Australian foods and ‘Australianised’ Asian foods. Issues: Develop marketing strategies based on the following issues:
Market demand. Market segmentation. Market share. Competition. Market access.
2. Market Development Strategy 1: Develop Australian Market Demand for the Priority Asian Foods . Objectives: Promote Australian manufactured Asian foods through consumer education
relevant to the specific market segments of Australian foods in Asian markets, and Asian foods in Australian markets.
Issues:
The Australian market while small can form the basis for the development of an export strategy for processed Asian foods.
Australian and Asian consumers are not generally aware of the availability of Australian processed Asian foods.
The high quality of Australian products can support the development of a targeted market segment education and merchandising program.
Strategy 2: Develop Export Market Opportunities.Strategy 2: Develop Export
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
xvi
Market Opportunities.Strategy 2: Develop Export Market Opportunities. Objective: Grow export market demand by using locally manufactured Asian foods which
have been developed through the local Australian market. Issues:
Opportunities identified in Strategy 1 above can form the basis for export market development.
Capitalise upon market research to define the emerging Asian food opportunities and those which favour Australia with a competitive advantage of supply and manufacture.
Study tours and trade missions to priority export markets in association with government trade development organisations.
Improve manufacturing viability through increasing market opportunity size using the small Australian market as a pilot test market.
Such pilot strategies are used by MNC’s e.g. Australia and New Zealand are often used as pilot markets prior to international product development launches.
Strategy 3 Increase Market Profile for Australian Asian Processed FoodsStrategy 3
Increase Market Profile for Australian Asian Processed FoodsStrategy 3 Increase Market Profile for Australian Asian Processed Foods
Objective Network with Australian agribusiness and trade development groups by
developing an Australian Asian foods promotion strategy. Issues
Identification of priority Asian markets and foods. Network with Asian industry food organisations and co-operatives. Development of promotional strategy and material. Liaison with Asian food media groups.
Strategy 4 Develop Strategies to Address Overseas CompetitionStrategy 4 Develop
Strategies to Address Overseas CompetitionStrategy 4 Develop Strategies to Address Overseas Competition
Objectives Differentiate Australian Asian processed foods from imported products. Issues
Brand development. Local sourcing of raw materials. Higher levels of service. Quality and food safety.
Strategy 5: Utilise Distribution Infrastructure to Enhance Market Access Strategy 5:
Utilise Distribution Infrastructure to Enhance Market Access
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
xvii
Strategy 5: Utilise Distribution Infrastructure to Enhance Market Access Objective: Usage of existing distribution channels for processed Asian foods as necessary. Issues:
Access to well established distribution networks servicing over 600 Asian stores in Australia.
Strategy 6: Brand DevelopmentStrategy 6: Brand DevelopmentStrategy 6: Brand
Development Objective: Development of a brand name to enable SME’s to compete against larger more
established brand names. Issues:
Co-branding and effective marketing for SME’s. QA. Feedback. Trust and co-operation. Marketing co-operation. SME brands positioning and MNC brand positioning. Price positioning.
3. Developing New Products Strategy 1: Multi National Corporation (MNC) and Small and Medium Size Enterprises
(SME) Product DevelopmentStrategy 1: Multi National Corporation (MNC) and Small and Medium Size Enterprises (SME) Product DevelopmentStrategy 1: Multi National Corporation (MNC) and Small and Medium Size Enterprises (SME) Product Development
Objective: Development of Asian foods strategy. Issues:
For MNC’s, support of their in-house product development and market research resources.
For SME’s, support of outsourced product development and market research resources.
Employ Asian background staff in senior market and product development positions.
Develop business networks with the existing Australian Asian food processing industry.
Strategy 2: Asian Food Product Opportunities Strategy 2: Asian Food Product
Opportunities Strategy 2: Asian Food Product Opportunities
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
xviii
Objective: Development of Asian foods for specific market segments and consumers. Issues:
Develop company specific business plans for the priority Asian food opportunities identified in this study.
Strategy 3: Utilisation of Australia’s Comparative Advantage for Manufacturing Asian
Foods.Strategy 3: Utilisation of Australia’s Comparative Advantage for Manufacturing Asian Foods.Strategy 3: Utilisation of Australia’s Comparative Advantage for Manufacturing Asian Foods.
Objective: Link new product development opportunities to Australia’s comparative
advantage for manufacture. Issues:
Direct sourcing from manufacturer thereby reducing costs. Overcoming price disadvantage. Perception of better manufacturing quality. Quality packaging. Marketing and after sales service.
4. Manufacturing Viability Strategy 1: For Specific Asian Food Opportunities, Attract Foreign Investment into
Local Australian Manufacturing of Asian FoodsStrategy 1: For Specific Asian Food Opportunities, Attract Foreign Investment into Local Australian Manufacturing of Asian FoodsStrategy 1: For Specific Asian Food Opportunities, Attract Foreign Investment into Local Australian Manufacturing of Asian Foods
Objective: Improve access to capital for manufacturing investment. Issues:
Strategic investment issues. Investment time frames. Production of finished product. Production of minimally or partly processed products.
Strategy 2: Capitalise Upon Existing Industry Facilities and Plant CapacityStrategy 2:
Capitalise Upon Existing Industry Facilities and Plant CapacityStrategy 2: Capitalise Upon Existing Industry Facilities and Plant Capacity
Objectives: Improved capital and plant utilisation. Issues:
Many Australian organisations have an installed base of large and
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
xix
diversified manufacturing equipment and facilities capable of the (customised, lower volume) production of Asian foods.
Batch production may in some cases be undertaken on a joint venture/contractual basis or as a separate business activity for the company.
Strategy 3: Supply Chain Management Strategy 3: Supply Chain Management
Strategy 3: Supply Chain Management Objective: Capitalise on the integration of raw materials, competitive Australian
manufacturing, distribution and marketing to customers. Issues: Strategic supply alliances for:
Raw materials. Manufacturing and distribution. Marketing.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
xx
5. Industry Development Strategy 1 Industry Co-ordinationStrategy 1 Industry Co-ordinationStrategy 1
Industry Co-ordination Objectives: Promote Australia as a investment opportunity for Asian food manufacturing. Issues:
As this is a new and emerging industry, industry issues should be developed in a co-ordinated approach which supports: - Industry ownership. - Communication of strategic issues such as food safety and QA. - Development of industry promotion. - Promotion of successful case studies in Australia.
Promotion of ethnic community organisation initiatives e.g., NSW Ethnic
Affairs Commission.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
1
1.0 BACKGROUND TO THE PROJECT 1.0 BACKGROUND TO THE PROJECT1.0 BACKGROUND TO THE PROJECT During 1994, RIRDC commissioned a study of the Asian foods sector in Australia. This study confirmed that: - The retail size of the processed Asian foods market in Australia was over $1 billion. - This demand for Asian foods was largely satisfied by imports. - These imports would make a negative contribution of up to $800 million to Australia’s
Balance of Payments. Since the 1970's, changes in the Australian demography has been a catalyst for the spread of Asian food tastes into the wider community of Australia. The demand for processed Asian foods has grown during the 1980's, and in the most recent industry retail survey (Retail World, 1996) the demand for processed Asian foods had increased by up to 16% during 1996. Processed Asian foods are now in demand from consumers of both Asian and non-Asian background. One of the key findings of the previous RIRDC study was that there was a significant opportunity to increase the production of processed Asian foods in Australia especially as only about 20% of the processed Asian foods consumed in Australia, were of Australian manufacture. With the exception of a few cases, larger Australian food processors did not appear to be investing to meet the growing demand for processed Asian foods in Australia. It was also noted that small-scale manufacturers of Asian foods could not be expected to replace many of the imports due to the global size of overseas manufacturers. It is considered that the current Asian population in Australia (and over 600 Asian food retail outlets), and other Australian consumers increasingly influenced by Asian cuisine, represent a significant ‘local market’ business opportunity. Moreover, this local market may well be used as a product development ‘test bed’ for the development of an export strategy into Asian markets. As a result, RIRDC commissioned this project to identify specific opportunities for increased manufacturing of Asian foods in Australia. Emphasis has been upon research and business analyses of specific product or food category opportunities which afford a unique comparative and sustainable manufacturing advantage to the Australian processed food manufacturing industry.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
2
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
3
2.0 OBJECTIVES OF THE PROJECT .0 OBJECTIVES OF THE PROJECT.0 OBJECTIVES OF THE PROJECT The principal objectives are: - To increase production of Asian processed foods in Australia - To identify import replacement opportunities for Asian food products imported into
Australia Specifically the key issues to be addressed in this study include:
Market research to identify priority processed Asian food opportunities.
Business analysis of selected priority opportunities.
Identification of key factors influencing the Asian foods industry.
Strategies involving local Australian food processors and the existing Australian Asian foods industry.
The study aims to collaborate with industry and define priority opportunities and strategies to increase the manufacture of processed Asian foods in Australia.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
4
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
5
3.0 INTRODUCTION .0 INTRODUCTION.0 INTRODUCTION 3.1 DEFINITIONS .1 DEFINITIONS.1 DEFINITIONS RIRDC’s previous report reviewed the difficulty in determining a concise definition of Asian foods. Asian foods were considered to include those ‘cultural’ processed food products from east and south-east Asia which pre-dated European influence. Chinese, Korean, Japanese and Vietnamese foods were the major focus and included products ranging from fresh and dried noodles, frozen snack foods, preserved, dried or canned meat and vegetable products, confectionery, Asian drinks, juices, teas and beverages through to spices, condiments and sauces. Fresh fruit, vegetables, meat and seafood were not considered processed food. Fresh foods have a natural inherent advantage to be supplied fresh due to proximity of location. Accordingly, fresh food was not the major focus of this study. Industry discussions during the early stages of the project has shown that the Australian market for processed Asian foods may be defined as the following ‘priority’ categories of foods:
Noodles and Rice Processed Fresh Food Sauces and Pastes Spices, Condiments and Dry Goods Snacks and Sweets Beverages and Drinks Canned Goods and Soups
Accordingly, in view of the origins of this project, and for the purposes of consistency, the working definition of Asian foods from the previous RIRDC study has been adopted for this study. 3.2 APPROACH .2 APPROACH.2 APPROACH The Asian foods market in Australia is not one homogeneous market. Rather it is a collection of markets especially as consumers of processed Asian foods may be found in a range of Asian and non-Asian food outlets such as major supermarkets. As this study has a major focus upon markets and products, Figure 1 below details a market segmentation approach to Asian food products. Figure 1 Market Segmentation of Processed Asian Foods
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
6
Asian
1
4
Western
2
3
M a r k e t s
Western
Asian
Processed Foods In this study, Asian processed foods and markets have been further analysed in market segments 1, 3 and 4 in Figure 1. This study seeks to identify those production, supply and marketing factors which link the industry to the market. What are the market expectations of retailers, distributors, manufacturers and producers?
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
7
4.0 RESEARCH METHODOLOGY .0 RESEARCH METHODOLOGY.0 RESEARCH METHODOLOGY The methodology aims to provide practical strategies for further development by the industry. 4.1 GENERAL .1 GENERAL.1 GENERAL The research involved an extensive program of industry consultation and was conducted in four stages:
Stage 1.
Market research of processed Asian foods in Sydney and Melbourne.
Stage 2.
Liaison with Asian food distributors/wholesalers and Australian food manufacturers.
Stage 3.
Case Studies of market and business analyses of selected Asian foods.
Stage 4.
Identification of Asian food processing opportunities and strategies. 4.2 LITERATURE REVIEW .2 LITERATURE REVIEW.2 LITERATURE REVIEW Information searches were conducted through reviews of world-wide databases, the Internet, Australian import statistics, industry organisations and related research organisations. The purpose of the literature review was to assist with the:
Identification of processed Asian food categories, products and trends from which market research may be developed.
Identification of major international and Australian Asian food traders and wholesalers. Key references have been identified from the literature consisting of reports from:
Australian Government organisations. Australian industry groups. International consultants Trade publications. Food directories.
Similarly the Internet review assisted with the literature review, and identified a number of major international and Australian Asian food traders.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
8
4.3 DATA SOURCES AND DATA QUALITY .3 DATA SOURCES AND DATA QUALITY.3 DATA SOURCES AND DATA QUALITY The primary source of secondary data was from the Australian Bureau of Statistics (ABS). This data was used to assist with:
Identification of categories of processed Asian food imports from which market research may be developed.
Identification of major Australian food commodity manufacturers. The distribution of ethnic and non-ethnic Asian populations from the latest census
survey. Published data from the Australian Bureau of Statistics (ABS) were found to provide insufficient detail on Asian food imports. In particular, it was considered that the ABS statistical codes (suffix of the Australian Customs tariff number) could be expanded to define more detailed Asian food import listings. This would facilitate a more accurate understanding of demand and imports of Asian foods,
and hence opportunities for increasing local production.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
9
5.0 OVERVIEW OF THE PROCESSED ASIAN FOODS INDUSTRY IN AUSTRALIA
.0 OVERVIEW OF THE PROCESSED ASIAN FOODS INDUSTRY IN AUSTRALIA.0 OVERVIEW OF THE PROCESSED ASIAN FOODS INDUSTRY IN AUSTRALIA ‘Asian foods are not for Asian consumers only’ 5.1 MARKET DEMAND UPDATE - CENSUS 1996 .1 MARKET DEMAND UPDATE - CENSUS 1996.1 MARKET DEMAND UPDATE - CENSUS 1996 RIRDC’s previous study has estimated that in 1994 there was a market demand for processed Asian foods of some $1 billion per annum. Using the recent ABS 1996 census data, the same rationale as the RIRDC study has been applied to update the nature and extent of demand for processed Asian foods in Australia. Accordingly, in 1997 the demand for processed Asian foods in Australia is estimated to have grown to over $1.4 billion. This trend is further corroborated by the ABS 1996 Census (Appendix A) which shows that there has been a 23% increase in the number of immigrants of Asian origin since the 1991 Census. In addition, the spending propensity of this group has also increased with 55% of the immigrants having an annual income band of $15,600 - $20,748 compared to only some 46% in 1991. Table 1 Asian Immigration and Income 1991-1996
1991
1996
Number of Migrants from Asian Countries
577,350
710,648
% of Asian Migrants with Annual Incomes Greater than $15,600 - $20,748
46%
55%
(Source: ABS, 1997) 5.2 GROWTH IN THE MARKET FOR ASIAN FOODS .2 GROWTH IN THE MARKET FOR ASIAN FOODS.2 GROWTH IN THE MARKET FOR ASIAN FOODS The total Asian foods market including retail and food service is estimated to be over $1 billion, however the major growth segment is considered to be the retail sector (RIRDC, 1996, Retail World, 1996). The food service market is difficult to survey and analyse for Asian foods due to the wide and
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
10
diverse nature of the industry. However, while the major trade channel for Asian foods is Asian restaurants, BIS Shrapnel’s recent survey shows that Asian restaurants have declined in number since 1994. BIS Shrapnel’s 1996 Food Service survey has shown that the number of Asian restaurants has decreased by 39% since its 1994 survey, although many of these restaurants may now be grouped as ‘Modern Australian with an Asian influence’. Data on the retail market for Asian foods market is more readily available. ‘Western’ supermarkets and grocery stores are estimated to represent a market of $37 million annually and is growing at an annual rate of 26.6% according to AC Nielsen. The demand for Asian foods is supported by recent industry research which indicated that at least 40% of all Australian households own a wok, and that 64% of users stir-fry at least twice a week. Similarly, Retail World’s 1996 Annual Report shows that the market value for Asian food products such as Instant Noodles have increased in annual value by over 7%, and Oriental Sauces have increased its category value by over 16% since 1995. The number and growth in Asian food retail outlets provides an indirect measure of the market demand for processed Asian foods in Australia. It is difficult to determine the exact number and location of Asian retail outlets throughout Sydney and Melbourne. The most recent available information for Asian retail outlets occurs in a RIRDC (1994) report. The report estimates that there are over 400 Asian outlets in Sydney and Melbourne, and that 86% of Australia’s retail Asian outlets are located in Sydney and Melbourne, with some 60% in Sydney and 26% in Melbourne. However, further discussions with other industry sources estimate that the market has grown to over 600 Asian grocery retail outlets throughout Australia in 1997. 5.3 CATEGORIES OF IMPORTS .3 CATEGORIES OF IMPORTS.3 CATEGORIES OF IMPORTS Not withstanding the ‘broadness’ of the ABS data, an initial assessment of the major categories of processed Asian food imports is shown at Table 2.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
11
Table 2 Selected Major Asian Food Imports 1992-1996
Import Value ($A mill)
Import/ Category
Example Australian Products
1992/93
1993/94
1994/95
1995/96
Average Annual Increase (%)
Soy Sauce
Soy Sauce
9.0
10.0
11.4
11.0
5.6
Other Sauces
Oyster Sauce
34.2
42.6
45.1
50.4
11.8
Pasta
Instant noodles Rice Noodles
27.3
36.9
41.8
54.9
25.3
Tea
Green Tea
2.2
1.8
1.7
1.7
0
Soups
Chicken Broth
8.2
8.5
9.5
10.4
6.7
5.4 IMPORTERS AND DISTRIBUTORS .4 IMPORTERS AND DISTRIBUTORS.4 IMPORTERS AND DISTRIBUTORS A survey of Sydney and Melbourne identified that there are a significant number of import and distribution organisations for Asian foods. Estimates indicate that there are over 30 firms in Sydney and over 20 in Melbourne. A listing of these organisations is shown at Appendix B. 5.5 AUSTRALIAN MANUFACTURERS OF PROCESSED ASIAN FOODS .5 AUSTRALIAN MANUFACTURERS OF PROCESSED ASIAN FOODS.5 AUSTRALIAN MANUFACTURERS OF PROCESSED ASIAN FOODS The survey of Sydney and Melbourne identified that there are a small number of Australian manufacturers of processed Asian foods. The majority of these manufacturers focussed principally upon processed, fresh foods with a relatively short shelf-life. There are however, an estimated number of some 50 manufacturers in Sydney and Melbourne who are manufacturing or processing shelf-stable foods. A listing of these organisations is shown at Appendix C.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
12
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
13
6.0 MARKET SURVEY OF THE PROCESSED ASIAN FOODS INDUSTRY IN AUSTRALIA
.0 MARKET SURVEY OF THE PROCESSED ASIAN FOODS INDUSTRY IN AUSTRALIA.0 MARKET SURVEY OF THE PROCESSED ASIAN FOODS INDUSTRY IN AUSTRALIA Some 105 Asian food stores have been surveyed in Sydney and Melbourne to determine the ‘priority’ processed Asian foods in the market . 6.1 GENERAL .1 GENERAL.1 GENERAL The overall purpose of the market research was to identify the initial specific product opportunities to increase processed Asian food production in Australia. It is important to recognise that the purpose of the survey was not to conduct a comprehensive quantitative market survey of the processed Asian food market in Australia. Rather the purpose of the market research was to identify by value, ‘priority’ categories of processed Asian food, and specific products within these categories. The survey should identify those major food opportunities which may form the basis for further review and analysis with industry groups, such as distributors and manufacturers. 6.2 SURVEY PROGRAM .2 SURVEY PROGRAM.2 SURVEY PROGRAM The program involved:
Surveys of over 105 Asian store retail outlets in Sydney and Melbourne with a focus on Chinese, Vietnamese, Japanese, Korean and Thai ethnic cuisines.
Confirmation of the survey results with importers and distributors.
Review of the supply chain for processed Asian foods.
Identification of the priority (higher value) processed Asian foods.
The survey form was based upon a format developed during previous studies of Asian foods (RIRDC, 1996) during which the University of New South Wales provided input on form design and biometrics. The survey form (Appendix H) was also developed in conjunction with Asian food wholesalers and distributors, and was presented in English and Chinese to clearly identify the Asian food products. Within defined ethnic Asian population centres (Chinese, Vietnamese, Japanese, Korean and Thai), a random sample of food retail outlets were chosen. On average the response rate to the survey was over 60%, and 105 actual surveys were completed in Sydney and Melbourne as shown in Table 3.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
14
Table 3 Number of Surveys in Sydney And Melbourne
Outlets
Sydney
Melbourne
Total
Asian Grocery Stores
85
20
105
Supermarket Chains (*)
4
3
7
Total
89
23
112
(*) - These supermarket surveys were conducted at the Head offices/State offices for the supermarket chains. 6.3 PRODUCT OPPORTUNITY’S .3 PRODUCT OPPORTUNITY’S.3 PRODUCT OPPORTUNITY’S As a result of the survey, the top 3 ‘ranking’ Asian food products (based upon value) are shown in Table 4. In general, the results of the surveys showed that the Asian food markets in Sydney and Melbourne were relatively similar in terms of products. 6.4 QUALITATIVE MARKET ISSUES .4 QUALITATIVE MARKET ISSUES.4 QUALITATIVE MARKET ISSUES In consultation with industry groups, the following market issues were also recommended to be included in the survey:
Consumer issues Retail outlet issues Market positioning Price Brand loyalty Changing tastes of the new generation of Asian food consumer
It was considered that these were important issues especially in identifying the ‘market factors and drivers of industry growth’ in both the Asian retail outlets and Australian supermarket groups. The survey results for these issues and the assessment of the ‘drivers and constraints’ to industry growth is discussed in Chapter 7.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
15
Table 4 Sydney - Top 3 Ranking Asian Food Products Rank
Noodles & Rice
Processed Fresh Foods
Sauces & Pastes
Condiments & Spices
Snacks & Sweets
Beverages & Drinks
Canned Goods & Soups
1 Instant noodles
Beancurd (tofu)
Soy sauce (light)
Bean curd sheet
Biscuits
Soya based drinks
Longan fruit
2
Cup noodles
Rice noodles (fresh)
Oyster sauce
Bean curd stick
Rice cracker snacks
Jasmine tea
Soup - chicken
3
Rice noodles (Dry)
Fish balls/ sausages
Soy sauce (dark)
Seaweed dried sheets
Fried shrimp crackers
Coconut extract/ milk
Soup - beef
Melbourne - Top 3 Ranking Asian Food Products Rank
Noodles & Rice
Processed Fresh Foods
Sauces& Pastes
Condiments & Spices
Snacks & Sweets
Beverages & Drinks
Canned Goods & Soups
1 Instant noodles
Beancurd (tofu)
Fish sauce
Rice flour
Fried shrimp crackers
Coconut extract/ milk
Lychees
2
Verm’clli
Fish balls /sausages
Soy sauce (light)
Bean curd stick
Biscuits
Soya based drinks
Champignons
3
Nil
Rice noodles (fresh)
Oyster sauce
- Seaweed - Dried mushrooms - Shrimp seasoning
Peanuts
Nil
Straw Mushrooms
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
16
6.5 MARKET SIZE ESTIMATES .5 MARKET SIZE ESTIMATES.5 MARKET SIZE ESTIMATES The estimated wholesale market size for these above Asian food product categories (ie, Table 4) are shown at Appendix D. However, Table 5 lists those products and market sizes which are considered to be of more significant value. Table 5 Estimated Australian Wholesale Market Size (Selected Retail Products)
Product
Estimated Market Size ($Mill)
Instant Noodles (Dry)
70 - 80
Soya Based Drinks
60-70
Cup Noodles
15 - 20
Soy Sauce
15-25
Champignons - Canned
10-20
Biscuits - Asian
10-15
Oyster Sauce
5-10
Seaweed products
5-10
6.6 SUPPLY CHAIN ESTIMATES .6 SUPPLY CHAIN ESTIMATES.6 SUPPLY CHAIN ESTIMATES Supply chain costings are obviously product specific, however an indication of the ‘typical’ costs are shown in Table 6 below. Table 6 Supply Chain Cost Estimates
High Volume
Low Volume
CIF into Australia Product specific
Product specific
Customs duty 0-5%
0-5%
Sales tax Product specific
Product specific
Custom clearance $95 per shipment
$95 per shipment
Cartage to warehouse 1%
2%
Distributor’s margin 3-10%
10-15%
Distribution cost - to retail outlet 5-10%
7.5-15%
Retailer’s margin 3-15%
25-50%
Recommended Retail Price Product specific
Product specific
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
17
7.0 COMMERCIAL FACTORS INFLUENCING PROCESSED ASIAN FOOD MARKETS IN AUSTRALIA
.0 COMMERCIAL FACTORS INFLUENCING PROCESSED ASIAN FOOD MARKETS IN AUSTRALIA.0 COMMERCIAL FACTORS INFLUENCING PROCESSED ASIAN FOOD MARKETS IN AUSTRALIA 7.1 MARKET ISSUES .1 MARKET ISSUES.1 MARKET ISSUES 7.1.1 Consumer Issues The market survey identified a number of key consumer issues as shown in Table 7, influencing the Asian foods market in Sydney and Melbourne. Table 7 Consumer Buying Factors For Asian Food Products Sydney & Melbourne
Sydney
Melbourne
What would encourage your customers to buy more Australian made processed Asian foods?
Sample 82
%
Sample 20
%
Price
59
28
17
40
Availability
27
13
1
2
Customer demand
29
14
2
5
Product and packaging quality
25
12
9
21
Industry marketing
20
9.5
2
5
Taste quality
50
23
10
24
Other
1
0.5
1
2
Totals
211
100
42
100
While price is clearly a determining factor, the ‘taste quality’ of the Asian food product was a major issue. Both Asian food retail outlets and Australian supermarket groups cited authenticity of their Asian foods, and the propensity of consumers to try ‘new Asian food tastes’ as a key issue affecting consumer loyalty.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
18
7.1.2 Retail Outlet Issues The survey showed that both the Asian food retailers and the Australian supermarket groups were generally positive in respect to increasing the local Australian production of processed Asian foods. As Table 8 shows, the importers and Asian food retailers specifically highlight the benefit of local manufacture in terms of better quality, ready access to manufacturers, ability to return spoilage, and shorter lead times for delivery. Table 8 Asian Retail Buying Factors For Asian Food Products Sydney & Melbourne
Sydney
Melbourne
What would encourage you to buy more Australian made processed Asian foods?
Sample 82
%
Sample 20
%
Price
53
24.5
7
33
Availability
25
11.5
0
0
Customer demand
38
17.5
13
65
Product and packaging quality
24
11
7
33
Industry marketing
17
8
4
20
Taste quality
58
27
9
45
Other
1
0.5
1
1
Totals
216
100
41
100
Further discussions with Australian supermarket groups highlighted the importance of:
Quality and hygiene of the food products. The balance of positioning products as either Asian foods or ‘mature’ food items. Differentiation of products based upon packaging.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
19
7.1.3 Market Positioning As Figure 1 highlights, there are at least two broad market positions for Asian foods in Australia. Industry feedback generally considered that these two consumer market segments were inherently different. In Asian food retail outlets, the consumer market is predominantly of Asian background, and their product knowledge is relatively well-developed. In general, the products are positioned and marketed as relatively mature market products. By comparison, consumers in Australian supermarkets are relatively less familiar and less aware of many processed Asian foods. Depending upon the maturity of the Asian food product in Australian supermarkets, the issues of marketing, promotion, positioning within categories, and consumer education were considered most important for the success of the products. In addition to the ‘Asian foods sections’, the Australian supermarkets positioned Asian foods in a variety of other consumer market segments including:
Convenience foods eg, instant noodles. Prepared meals eg, fresh noodles. Frozen foods eg, spring rolls. Drinks and beverages, eg soy milk. Snack foods eg, prawn/rice crackers. Ingredients and condiments eg, oyster sauce. Health foods eg, Asian teas.
7.1.4 Price In all the surveys and industry discussions, price was a major determining factor for consumer acceptance of any locally manufactured Asian food products. However, this does not necessarily mean that the products must be low priced. Rather, the products must be competitive with similar or other competitive food products for the various consumer market segments. It was emphasised by Australian supermarket groups that well-planned pricing strategies were necessary for products to succeed.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
20
7.1.5 Branding and Marketing Support With increasing competition in the Asian foods market, branding and marketing support are considered essential factors for market success. The marketing issues and significant marketing budgets associated with brand development is well-established in the Australian food industry. These issues are no different in the Asian foods market, and branding is considered to be a point of major differentiation in both the Asian food retail outlets and the Australian supermarkets. The growth of brand loyalty was considered to be dependent upon the local success of promotion and marketing by both established overseas brand names and more recent market entrants from Australia. Brand loyalty for the overseas products may be more established with the older generation or more elderly migrants, however the newer or younger generation consumer markets shall be developed as a result of Australian ‘customised’ merchandising programs. 7.1.6 Changing Tastes of the New Generation Asian foods have had a ubiquitous impact on Australian food consumers. It is commented that there is not one Australian food outlet which has not had to change its menu or food product range due to the influence of Asian foods. ‘It is reported that even the humble meat pie now competes with Asian noodles in many pubs in Sydney and Melbourne’ Food Market Research Analyst, Melbourne With Australia’s ethnic diversity, and the propensity for consumers to try new products, many Asian foods are being ‘Australianised’ and many Australian/Western foods are being ‘Asianised’. An interesting comment received from some manufacturers and importers was that the new generation of younger Asians have adapted to the western tastes, and find some of the ‘authentic’ spicy Asian tastes as unpalatable. The ability of Asian food manufacturers and marketers to respond to these ‘changing tastes’ of new generation consumers is a key element of any Asian foods market development strategy.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
21
7.2 BUSINESS PLANNING ISSUES .2 BUSINESS PLANNING ISSUES.2 BUSINESS PLANNING ISSUES 7.2.1 Market Size Many large volume manufacturers expressed concern that the size of the Australian Asian foods market was relatively small when compared to their manufacturing capacity. These manufacturers considered that their competitive advantage for manufacture was in their investment in volume or large scale production, technology and packaging. However, such competitive advantages are capital intensive, and can only be justified based upon large market sizes. For example, a sauce manufacture stated that in a one and a half week production run, they could produce one years supply of some Asian food products for the Australian domestic market. These manufacturers feel that increased local production is often limited by the size of the Australian market, and large scale manufacturing necessitates the development of larger export markets for Australian manufactured Asian foods. 7.2.2 Marketing Costs One of the major concerns of local small manufacturers was the high marketing costs required to increase market awareness and market share for their Asian food products in order to compete with established overseas products. In addition to the increasing competitive pressures in the Asian foods market, Australia is not readily perceived by consumers and distributors as a quality source of (Australian) manufactured Asian foods. 7.2.3 Capital Requirements Whilst smaller Australian manufacturers expressed support of manufacturing Asian foods their major barrier was capital establishment costs. As indicated above, returns on investment may not be feasible if the market size and revenues are insufficient. Essentially large capital investments, required larger markets and revenues. However, it was considered that this issue could be addressed by:
Utilisation of available or excess capacity in existing manufacturing systems. Joint ventures with overseas companies, not only for capital investment but also for
technology transfer and expertise, and access to overseas markets. Fresh processed foods were cited as an example for such strategies.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
22
7.2.4 Availability of Raw Materials and Supplies With a few exceptions, the Australian manufacturers considered that in general there was no major impediment or constraint associated with raw materials or manufacturing supplies. The exceptions were those products which were difficult to procure or manufacture cost-effectively. For example, seaweed product is not a readily available commercial resource for manufacture, and while soy beans are available, the fermentation technology and recipes for the manufacture of soya sauce are closely guarded and highly valued as intellectual property. (Wells, 1993) With the exception of seaweed, Table 9 highlights the general availability of the raw materials for those selected products in Table 5 which were considered to be of more significant market value. Table 9 General Availability of Raw Materials
Product
Source of Availability
Instant Noodles (Dry)
Noodle Wheats from Western Australia, Victoria, NSW
Soy Based Drinks
Soy Beans from Australia & imported
Cup Noodles
Noodle Wheats from Western Australia, Victoria, NSW
Soy Sauce
Soy Beans from Australia & imported
Champignons - Canned
Champignons from Australia
Biscuits - Asian
Australian wheats/flour and other Australian ingredients
Oyster Sauce
Oyster sauce food ingredients and concentrates from Australian imports
Seaweed products
Dried seaweed from Australian imports
Most materials were either available from within Australia (eg, noodle wheats), or other materials were available as imported world commodity products (eg, soy beans). Specific issues of continuity of supply and quality of the materials is reviewed in Chapter 8.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
23
Manufacturers cited that the key measurement for the viability of manufacture was the ex-factory price of the product rather than the price or availability of raw materials. This price had to be at least competitive with equivalent products imported from overseas. 7.2.5 Competition from Overseas Imports Overseas manufactured products gain from the advantage that they are usually able to supply exports to Australia based on a developed consumer market in Asia. Their scale of manufacture may accordingly confer upon them an advantage to supply at very competitive unit prices. Australian manufacturers acknowledged their advantage of Australian market knowledge, and the need for effective marketing strategies. However, Australian manufacturers expressed concern that overseas manufacturers may establish and expand in Australia following on from the success of Australian manufacturers. 7.2.6 Lack of Australian Industry Awareness of the Asian Foods Market During discussions with Australian food manufacturers, it was often clear that many of these organisations had not considered the local Asian retail outlets as potential markets (it is estimated that today there are some 600 Asian retail outlets and such numbers are broadly equivalent to some of the major supermarket groups such as Woolworths, Coles or Franklins). One major manufacturer conceded that their strategy should take into account the local Asian market, and should initially develop and test products for these local Asian stores as a strategic platform. This may then form the basis for expansion into the major Australian supermarket groups and the Asian export markets.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
24
7.3 SUMMARY .3 SUMMARY.3 SUMMARY Market Factors and Drivers of Industry Growth
Taste and quality of products
Market size and growth
Marketing, branding and pricing strategies
Investment capital and technology
Market Factors and Constraints to Industry Growth
Market size
Recognition of Australia as a supplier or manufacturer of Asian foods
Commercial viability of the manufacturing capacity
Competition
Marketing costs
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
25
8.0 AUSTRALIAN INDUSTRY CASE STUDIES FOR PROCESSED ASIAN FOODS
.0 AUSTRALIAN INDUSTRY CASE STUDIES FOR PROCESSED ASIAN FOODS.0 AUSTRALIAN INDUSTRY CASE STUDIES FOR PROCESSED ASIAN FOODS 8.1 BUSINESS PLAN CASE STUDIES .1 BUSINESS PLAN CASE STUDIES.1 BUSINESS PLAN CASE STUDIES Business plan case studies have been developed to provide demonstration cases of the commercial viability of selected categories and products of processed Asian foods. These case studies have been conducted for three processed Asian food products as shown in Table 10. The business plans have been prepared consistent with the approach accredited by the Ausindustry Business Networks Program, and it is emphasised that the companies and products have not been identified for reasons of commercial confidentiality. Table 10 Business Plan Case Studies Case Study
Processed Asian Food
1
Instant Noodles
2
Oyster Sauce
3
Champignon Mushrooms
The detailed business plans for theses case studies are shown at Appendices J, K and L and summaries of the case studies are shown below. 8.1.1 Summary of Case Study 1 - Instant Noodles There are many types of noodle products made from both wheat flour and rice flour. Wheat flour based noodles include Chinese noodles, wet and dry noodles, wet or boiled (Hokkien style) noodles, steamed and dried noodles, Japanese or white noodles, and modern instant noodles. The instant noodle has become very popular in Australia, and continues to increase in popularity. The noodles are produced by kneading wheat flour, additives, salt and water together, and the resultant dough is passed through pairs of rollers of progressively finer clearance, after which the thin dough sheets are cut, steamed or fried and dried for packaging with a sachet of flavouring. Case Study 1: Instant Noodles
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
26
Introduction Deep fried noodles can be made from a flour of lower protein content than raw noodles. Australia has a natural advantage for the availability and quality of existing exports of noodle wheats which are grown in Western Australia, Victoria and southern NSW. Major noodle wheat varieties include Cadoux, Eradu, Gamenya and Rosella. Multi-national groups such as Nestle with their Maggi brand have already demonstrated the commercial viability for the manufacturing of noodles in Australia. This case study demonstrates the opportunity for other groups to further develop the instant noodle market in Australia. The dry and fresh noodle market is estimated to have a market size of almost $100 million, and this market has the potential to increase further due to the market growth in noodles and Asian foods in supermarkets. It is anticipated that a significant amount of this growth shall occur from the growth of the Home Meal Replacement market and the introduction of ‘instant noodle’ meals. A key issue shall be the development of ‘instant noodle’ meals with accompanying products (eg, sauces and vegetables) which have a long shelf-life of up to 5 weeks. The Opportunity To expand the instant noodle market size by increasing Australian production of premium packaged dry noodles targeting the family meal or Home Meal Replacement market in supermarkets. Critical Success Factors The business plan at Appendix J shows the cost effectiveness, availability and quality of noodle materials for manufacturing is viable and is also well demonstrated by existing industry investment. The marketing and distribution of the noodles were considered to be the critical success factors for the commercial viability of the product, and accounted for almost 20% of the budgeted revenues. Conclusion The estimated wholesale unit price for the product is $1.50, and it is considered that this is competitive with other noodle products due to product differentiation with long shelf life meal ingredients. Market development is considered to be the critical success factor for this product.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
27
8.1.2 Summary of Case Study 2 - Oyster Sauce Asian sauces are a rapidly growing and mature category of Asian foods. ABS statistics (1996) show that imported sauces as a category (excluding soy and tomato sauces) are valued at $50.4 million and have been growing at an annual rate of 15.7% since 1994. Similarly in Retail World’s 1996 annual survey publication, it was estimated that the oriental sauces market in retail outlets was valued at $25.2 million per annum, and was growing at an annual rate of 16%. Asian sauces are often referred to as a classic example of how Asian foods may be marketed as either authentic or Australianised products in Australian supermarkets. Indeed, the growth in demand for Asian sauces is often linked to not only the influence of Asian cuisine in Australia, but also to recent research (Retail World, 1997) that shows that some 65% of Australians own a wok and cook stir-fry at least twice a week. In many supermarkets, Asian sauces have become sufficiently ‘mature’ and well-established, that they are no longer marketed within the Asian foods sections, but are rather positioned as an integrated and mature product within the overall category of sauces. Industry discussions emphasised that the commercial viability of (Asian) sauces in Australia was related to the availability of the following:
Food ingredients and technology. Recipe formulations. Manufacturing capacity which matched the market demand. Branding and marketing.
The following case study reviews the opportunity for an existing manufacturer of branded sauce products to extend their product range to Oyster sauce.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
28
Case Study 2: Oyster Sauce Introduction The key objective is to focus on the strategic development of products for the Asian markets using the Australian market as a ‘pilot market’. The company is currently manufacturing a range of sauce products for main meal foods. It has some 6% retail market share in the oriental sauces segment, and its brand recognition, and manufacturing and marketing resources, provides a competitive advantage for product range extension and export development into Asia. The Opportunity To utilise available company plant capacity to extend the current range of branded sauce products to include oyster sauce. Critical Success Factors The business plan at Appendix K shows that the availability of food ingredients, technology and sauce recipe are the key factors for the success of manufacture. The business plan provides an ex-factory unit price for the product and is inclusive of raw material ingredient and manufacturing costs. The key commercial measure is the competitiveness of the ex-factory unit price compared to comparable imported products. The company plans to utilise its existing marketing network, and would use its brand recognition to target ‘oyster sauce for main meals’ in both supermarkets and Asian retail outlets. Conclusion The estimated wholesale unit price of the product is $2.50 and this would be competitive with similar imported products.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
29
8.1.3 Summary of Case Study 3 - Canned Champignon Mushrooms Mushrooms are used extensively in Asian cuisine to bring out flavours of other food components. In addition, mushrooms are a primary source of dietary nutrition for vegetarians which has become a growing consumer segment for retailers. There are a wide variety of mushrooms as shown in a RIRDC study (Vinning, 1995) which lists 18 types used in Asian cuisine. Mushrooms are used in a wide range of forms including fresh whole, dried, canned, brined, granulated, powdered and smoked. Mushroom production occurs under near-factory conditions and is a capital and technology intensive process. French mushrooms or champignons are grown in China, Thailand and Taiwan, and are processed in brine, and canned for export to world markets including Australia. Retail World’s annual survey lists the canned champignon market size at over $10 million, and industry sources estimate that the market size in Asian retail outlets is $5 - 8 million.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
30
Case Study 3: Canned Champignons Introduction This Australian organisation contract manufactures Australian canned champignons for a major Australian brand which is distributed in mainstream Australian supermarkets. There is an opportunity to re-package the product for the Asian supermarkets in Australia. The point of difference is that the Australian A-grade button mushroom is greatly superior in flavour to imported champignons. The Opportunity The objective is to pack champignons under the organisation’s brand, and market the product as a premium price product for distribution into Asian retail outlets in Australia. Critical Success Factors The business plan at Appendix L shows that the availability of champignons is not a key issue, rather the cost effectiveness of manufacturing is critical. The business plan provides an ex-factory unit price for the product and is inclusive of raw material ingredient and manufacturing costs. The key commercial measure is the competitiveness of the ex-factory unit price compared to comparable imported products. The company plans to utilise its existing marketing network and would use its brand recognition to market it product as a premium product in Asian retail outlets. Conclusion The estimated wholesale unit price of the product is over $1.70, and it is considered that this price is at too high a premium for the Australian product to be competitive with imported products which range in wholesale unit price of $0.38 - $0.60.
In summary, Tables 11 and 12 below show the comparison of the above ‘case study’ products on a financial and non-financial basis.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
31
Table 11
Financial Comparison for the Three Processed Asian Foods Products
Processed Asian Food Products
Australian
Manufactured DIS Unit Cost ($)
Imported
DIS Unit Cost ($)
nstant Noodles
1.50
1.10 - 1.50 *
yster Sauce
2.50
1.80 - 3.00
hampignons
1.70
0.38 - 0.60
* No comparable imported product exists, consequently this is an estimated price to allow
for additional manufacturing costs. Based upon financial comparisons, the instant noodles and oyster sauce products are commercially competitive. However, despite the above results, further discussions and feedback from industry collaborators (and other groups) confirmed that Australia=s competitive advantage for manufacture of Asian foods could not always be based upon ‘traditional’ financial costing parameters alone. Industry considered that Australia could improve its commercial competitive advantages based upon other factors such as marketing, distribution, branding and quality of product. For example,
Instant Noodles The Australian product is differentiated from the imported product by including sauces and vegetable sachets and positioning the product as a main meal rather than a snack food product.
Champignons The Australian product is differentiated from
the imported product by the high quality of taste and texture of product.
8.2 COMPARATIVE ANALYSIS .2 COMPARATIVE ANALYSIS.2 COMPARATIVE ANALYSIS Accordingly, the following Table 12 outlines industry feedback on the comparative advantages for the above three Asian food products:
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
32
Table 12
Australian Competitive Advantages for the Manufacture of Processed Asian Foods
Competitive Advantage
Products Raw Material
Labour
Manufactg
Freight/ Distrib’ n
Packaging
Quality
Sales & Market’g
Instant Noodles
High
Low
High
High
High
High
High
Oyster Sauce
High
Low
High
High
High
High
High
Champignons
High
Low
Low
High
High
High
High
8.3 SUMMARY .3 SUMMARY.3 SUMMARY In summary, when the comparison includes the non-financial analysis as shown in Table 11, industry considered both instant noodles and oyster sauce to be competitive with overseas manufactured product. Similarly for the “2 minute” instant noodle products, this view is further supported by the Australian manufacturing operations of Nestle, where instant noodles manufactured in Australia are reported to be cost competitive with Nestle’s Asian manufactured noodles. However, champignons appear to be excluded as a potentially competitive local manufactured product. It is considered that the local product’s superior quality would be insufficient to justify the price differential when compared to the imported product.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
33
9.0 ASSESSMENT OF OPPORTUNITIES AND PRIORITIES .0 ASSESSMENT OF OPPORTUNITIES AND PRIORITIES.0 ASSESSMENT OF OPPORTUNITIES AND PRIORITIES 9.1 GENERAL .1 GENERAL.1 GENERAL An evaluation of the comparative advantage of the Asian foods has been conducted using a 3-dimensional semi-quantitative approach which integrates the factors of:
Market demand Capability to manufacture Competition (from imports)
This approach is shown in Figure 2, and provides the framework to allow for non-financial factors such as quality of product and sales and marketing infrastructure, rather than simply the lowest cost of raw material or lowest cost manufacturing. The shaded section in Figure 2 shows conceptually the products which would be evaluated as higher priority. 9.2 DUAL MARKETS AND ASIAN FOODS .2 DUAL MARKETS AND ASIAN FOODS .2 DUAL MARKETS AND ASIAN FOODS Dual markets for Asian foods - Supermarkets and Asian retail outlets The market for processed Asian foods in Australia is a dual market structure comprising Australian supermarkets and Asian retail outlets. As shown earlier in Figure 1, processed Asian foods are a range of foods covering a broad range of market segments and retail outlets. Accordingly, it is more appropriate to identify the opportunities in terms of these various market segments. The major categories or products have been shown in Figure 3 relative to their market size and market position based upon industry feedback. It is noted that the following categories of Asian foods are significant for their positioning in both the supermarket and Asian retail markets:
Noodles Sauces and pastes Snacks and sweets Beverages and drinks
Figure 2
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
34
Figure 3
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
35
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
36
This above approach provides the basis for the further assessment of the Asian food opportunities using the model of the case studies from Chapter 8. The further assessment as shown in Appendix E consisted of a further ranking of all the Asian foods for their competitiveness for manufacture in Australia. The factors reviewed in the competitiveness analysis included:
Availability of raw materials Labour Manufacture Freight/distribution Packaging Quality Sales and marketing
9.3 PRIORITY OPPORTUNITIES .3 PRIORITY OPPORTUNITIES.3 PRIORITY OPPORTUNITIES The higher ranking Asian food opportunities for manufacture in Australia is shown in Table 13 and include:
Instant and cup noodles Soy based drinks Biscuits Asian sauces Seaweed products Rice cracker snacks Fried shrimp snacks Soups Asian teas Fresh foods
9.4 COMMENT FOR PROCESSED FRESH ASIAN FOODS .4 COMMENT FOR PROCESSED FRESH ASIAN FOODS.4 COMMENT FOR PROCESSED FRESH ASIAN FOODS While fresh foods were not a major focus for this study, it is noted that there is considerable anecdotal evidence indicating that this is a major Australian area attracting consideration for overseas investment. This is consistent with the observation that compared to processed Australian fresh foods, there are few MNC’s involved with processed fresh Asian foods in Australia. Future investment may be expected in the forms of capital and/or technology transfer.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
37
Table 13 Priority Rankings for Asian Food Opportunities
Market Segment
Processed Asian Food Products
Australian Foods in Asian Markets
Asian Foods in Australian markets
Asian Foods in Asian Markets
Instant/cup noodles
-
High
High
Soy based drinks -
High
High
Biscuits High
Low
High
Oyster/fish sauce -
High
High
Fried shrimp snacks -
High
High
Rice cracker snacks -
Moderate
High
Seaweed -
Moderate
Moderate
Soup - Chicken/beef -
Moderate
Moderate
Asian teas -
Moderate
-
Longan/Lychees - Can -
Low
Moderate
Soy sauce -
Low
Low
Mushrooms Champignon -
Low
-
Mushrooms Straw -
Low
-
Mushrooms Shiitake - dry -
Low
-
Beancurd sheets -
Low
-
Shrimp seasoning -
Low
-
Coconut extract/milk -
Low
-
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
38
10.0 SUMMARY AND INDUSTRY FEEDBACK .0 SUMMARY AND INDUSTRY FEEDBACK.0 SUMMARY AND INDUSTRY FEEDBACK It would be marketing short-sightedness for Australian food companies to ignore the Asian foods opportunity in Australia 10.1 SUMMARY .1 SUMMARY.1 SUMMARY The Asian foods market is not one homogeneous market. Rather it is a dual market structure consisting of the Australian supermarkets and the Asian retail grocery outlets. This fundamental market characteristic is fundamental to the identification of opportunities and strategies for processed Asian foods in Australia. The following processed Asian foods were assessed to be of a higher priority for manufacturing in Australia:
Instant and cup noodles Soy based drinks Biscuits Asian sauces Seaweed products Rice cracker snacks Fried shrimp snacks Soups Asian teas Fresh foods
10.2 INDUSTRY FEEDBACK .2 INDUSTRY FEEDBACK.2 INDUSTRY FEEDBACK On 1 October 1997, an industry workshop was conducted to review the draft results of the study. The workshop was supported by RIRDC, Ethnic Affairs Commission of NSW and the Industrial Supplies Office, and was attended by manufacturers, distributors and retailers of Asian foods. The following industry comments were provided as feedback to the study:
The Australian market is an integrated market where many Asian foods have been Australianised.
Australian consumers have a high propensity to try new products. However, price
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
39
and quality are major issues for the Australian Asian and non-Asian consumer.
Branding and marketing shall be the critical success factor for the commercial viability of Asian foods in Australia; especially for the development of the market for the ‘new’ generation of younger consumers.
Raw materials in Australia are generally a relatively small proportion of
manufacturing costs, rather labour and other manufacturing costs are the more significant costs especially for small and medium size enterprises. Niche or specialty products marketing is often used as a strategy to overcome such cost ‘impediments’.
Asian food products in Australia may be characterised as new products, or mature
products which are able to be integrated into other standard categories of foods.
As processed Asian foods in Australia ‘strides two cultures’, there is a need to employ local Asian product development experience.
Australian food companies often do not recognise that the skills for Asian food
development are available in the Australian Asian communities. There is a significant opportunity to network and work together with this resource.
Australia is not often perceived by consumers to be an ‘authentic’ manufacturing
source of processed Asian foods and therefore requires industry promotion and marketing. This is especially a relevant issue for exports of Australian manufactured Asian foods.
Australian manufactured Asian foods require to be differentiated in Australia.
Different packaging formats can form the basis for this differentiation.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
40
11.0 RECOMMENDED INDUSTRY STRATEGIES .0 RECOMMENDED INDUSTRY STRATEGIES.0 RECOMMENDED INDUSTRY STRATEGIES 11.1 PRODUCT IDENTIFICATION AND MARKET POSITIONING .1 PRODUCT IDENTIFICATION AND MARKET POSITIONING.1 PRODUCT IDENTIFICATION AND MARKET POSITIONING Strategy 1: Expand Australian Bureau of Statistics Product
CategoriesStrategy 1: Expand Australian Bureau of Statistics Product CategoriesStrategy 1: Expand Australian Bureau of Statistics Product Categories
Objective: To expand the ABS statistical product sub-codes to provide more
detailed product within category information for imports of processed Asian foods.
Issues:
The ABS statistical codes (suffix of the Australian Customs tariff number) can be expanded to define more detailed Asian food import listings.
More accurate monitoring of imports of Asian foods and opportunities for increasing local production.
This information should provide input to an industry database.
Strategy 2: Develop an Industry DatabaseStrategy 2: Develop an Industry
DatabaseStrategy 2: Develop an Industry Database Objective: To provide market and technical support resources for industry. Issues:
Formal industry development of a database of all Asian food items available at a retail level in Australia. This study may form the basis for the development of the
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
41
database. This may be further extended to the food service and food
manufacturing industries so as to maximise the size of any given market sector for an Asian food product.
Consolidation of other available sources of market information and reports.
Strategy 3: Disseminate Industry Database Information Strategy 3:
Disseminate Industry Database Information Strategy 3: Disseminate Industry Database Information
Objective: To ensure that Australian rural producers and food manufacturers
have access to information which facilitates business decision making.
Issues:
Industry communication of market opportunities is fundamental.
Identification of opportunities from the database, and communication to industry may be achieved through existing industry networks; many of which have been previously established through the support of Government agribusiness programs.
Conduct keynote presentations of the Australian Asian food industry.
Communications should be developed through food media columns and regular features on Asian food opportunities
Strategy 4 Develop a Communication Strategy with Rural Producers for
The Ownership and Development of Asian Food Marketing StrategiesStrategy 4 Develop a Communication Strategy with Rural Producers for The Ownership and Development of Asian Food Marketing StrategiesStrategy 4 Develop a Communication Strategy with Rural Producers for The Ownership and Development of Asian Food Marketing Strategies
Objective: To develop ownership of product development through production
and supply management. Issues:
Liaison with marketing organisations for various
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
42
agricultural commodities e.g. AMLC, AHC, ADC. Quality Assurance and food safety. Development of integrated supply systems (‘plate to
paddock’).
Strategy 5: Develop Sector-Specific Communication Strategies for the Food Industry and Business Networks
Objectives Utilisation of the industry database by sector for both Small and
Medium Size Enterprises (SME’s) and Multi-National Corporations (MNC’s).
Issues:
For SME’s, support management in the development of outsourced product development and market research resources.
For MNC’s, liaise with their in-house product development management and assist with product development priorities.
Ausindustry Business Networks and industry organisations may be practical industry communication channels.
Strategy 6: Develop Asian Food Networks to Interface with MNC’s and SME’sStrategy 6: Develop Asian Food Networks to Interface with MNC’s and SME’sStrategy 6: Develop Asian Food Networks to Interface with MNC’s and SME’s
Objective: Encourage the formation of networks or alliances for product
development and utilise the resource experience of Australian Asians. Issues:
Liaise with trade development and industry organisations such as Business Australia and State Government groups e.g. Supermarkets To Asia(STA), NSW Ethnic Affairs Commission, Australia - Asian Chambers of Commerce.
Improve industry communications in Asian foods - through networks and industry associations which link into Asia.
Make use of the local Asian background resources in assisting with policy development and priorities.
Strategy 7: Identify Products from Current International
ExperienceStrategy 7: Identify Products from Current
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
43
International ExperienceStrategy 7: Identify Products from Current International Experience
Objective: Develop product identification and development processes through
liaison with food industry suppliers e.g., equipment and ingredient suppliers.
Issues:
Minimise ‘re-invention of the wheel’/duplication of effort.
Monitor existing and future new product launches. Strategy 8: Identify Target Market Segment Position for the Asian Food
OpportunityStrategy 8: Identify Target Market Segment Position for the Asian Food OpportunityStrategy 8: Identify Target Market Segment Position for the Asian Food Opportunity
Objective: Assess market dynamics for Asian food market segments of
‘Asianised’ Australian foods and ‘Australianised’ Asian foods. Issues: Develop marketing strategies based on the following issues:
Market demand. Market segmentation. Market share. Competition. Market access.
11.2 MARKET DEVELOPMENT .2 MARKET DEVELOPMENT.2 MARKET DEVELOPMENT Strategy 1: Develop Australian Market Demand for the Priority Asian Foods
. Objectives: Promote Australian manufactured Asian foods through consumer
education relevant to the specific market segments of Australian foods in Asian markets, and Asian foods in Australian markets.
Issues:
The Australian market while small can form the basis for the development of an export strategy for processed Asian foods.
Australian and Asian consumers are not generally aware of the availability of Australian processed Asian foods.
The high quality of Australian products can support the
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
44
development of a targeted market segment education and merchandising program.
Strategy 2: Develop Export Market Opportunities.Strategy 2: Develop
Export Market Opportunities.Strategy 2: Develop Export Market Opportunities.
Objective: Grow export market demand by using locally manufactured Asian
foods which have been developed through the local Australian market.
Issues:
Opportunities identified in Strategy 1 above can form the basis for export market development.
Capitalise upon market research to define the emerging Asian food opportunities and those which favour Australia with a competitive advantage of supply and manufacture.
Study tours and trade missions to priority export markets in association with government trade development organisations.
Improve manufacturing viability through increasing market opportunity size using the small Australian market as a pilot test market.
Such pilot strategies are used by MNC’s e.g. Australia and New Zealand are often used as pilot markets prior to international product development launches.
Strategy 3 Increase Market Profile for Australian Asian Processed
FoodsStrategy 3 Increase Market Profile for Australian Asian Processed FoodsStrategy 3 Increase Market Profile for Australian Asian Processed Foods
Objective Network with Australian agribusiness and trade development groups
by developing an Australian Asian foods promotion strategy. Issues
Identification of priority Asian markets and foods. Network with Asian industry food organisations and co-
operatives. Development of promotional strategy and material. Liaison with Asian food media groups.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
45
Strategy 4 Develop Strategies to Address Overseas CompetitionStrategy 4 Develop Strategies to Address Overseas CompetitionStrategy 4 Develop Strategies to Address Overseas Competition
Objectives Differentiate Australian Asian processed foods from imported
products. Issues
Brand development. Local sourcing of raw materials. Higher levels of service. Quality and food safety.
Strategy 5: Utilise Distribution Infrastructure to Enhance Market Access
Strategy 5: Utilise Distribution Infrastructure to Enhance Market Access Strategy 5: Utilise Distribution Infrastructure to Enhance Market Access
Objective: Usage of existing distribution channels for processed Asian foods as
necessary. Issues:
Access to well established distribution networks servicing over 600 Asian retail outlets in Australia.
Strategy 6: Brand DevelopmentStrategy 6: Brand DevelopmentStrategy 6:
Brand Development Objective: Development of a brand name to enable SME’s to compete against
larger more established brand names. Issues:
Co-branding and effective marketing for SME’s. QA. Feedback. Trust and co-operation. Marketing co-operation. SME brands positioning and MNC brand positioning. Price positioning.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
46
11.3 DEVELOPING NEW PRODUCTS .3 DEVELOPING NEW PRODUCTS.3 DEVELOPING NEW PRODUCTS Strategy 1: Multi National Corporation (MNC) and Small and Medium Size
Enterprises (SME) Product DevelopmentStrategy 1: Multi National Corporation (MNC) and Small and Medium Size Enterprises (SME) Product DevelopmentStrategy 1: Multi National Corporation (MNC) and Small and Medium Size Enterprises (SME) Product Development
Objective: Development of Asian foods strategy. Issues:
For MNC’s, support of their in-house product development and market research resources.
For SME’s, support of outsourced product development and market research resources.
Employ Asian background staff in senior market and product development positions.
Develop business networks with the existing Australian Asian food processing industry.
Strategy 2: Asian Food Product Opportunities Strategy 2: Asian
Food Product Opportunities Strategy 2: Asian Food Product Opportunities
Objective: Development of Asian foods for specific market segments and
consumers. Issues:
Develop company specific business plans for the priority Asian food opportunities identified in this study.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
47
Strategy 3: Utilisation of Australia’s Comparative Advantage for Manufacturing Asian FoodsStrategy 3: Utilisation of Australia’s Comparative Advantage for Manufacturing Asian FoodsStrategy 3: Utilisation of Australia’s Comparative Advantage for Manufacturing Asian Foods
Objective: Link new product development opportunities to Australia’s
comparative advantage for manufacture. Issues:
Direct sourcing from manufacturer thereby reducing costs.
Overcoming price disadvantage. Perception of better manufacturing quality. Quality packaging. Marketing and after sales service.
11.4 MANUFACTURING VIABILITY .4 MANUFACTURING VIABILITY.4 MANUFACTURING VIABILITY Strategy 1: For Specific Asian Food Opportunities, Attract Foreign
Investment into Local Australian Manufacturing of Asian FoodsStrategy 1: For Specific Asian Food Opportunities, Attract Foreign Investment into Local Australian Manufacturing of Asian FoodsStrategy 1: For Specific Asian Food Opportunities, Attract Foreign Investment into Local Australian Manufacturing of Asian Foods
Objective: Improve access to capital for manufacturing investment. Issues:
Strategic investment issues. Investment time frames. Production of finished product. Production of minimally or partly processed products.
Strategy 2: Capitalise Upon Existing Industry Facilities and Plant
CapacityStrategy 2: Capitalise Upon Existing Industry Facilities and Plant CapacityStrategy 2: Capitalise Upon Existing Industry Facilities and Plant Capacity
Objectives: Improved capital and plant utilisation.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
48
Issues:
Many Australian organisations have an installed base of large and diversified manufacturing equipment and facilities capable of the (customised, lower volume) production of Asian foods.
Batch production may in some cases be undertaken on a joint venture/contractual basis or as a separate business activity for the company.
Strategy 3: Supply Chain Management Strategy 3: Supply Chain
Management Strategy 3: Supply Chain Management Objective: Capitalise on the integration of raw materials, availability of
competitive Australian manufacturing, distribution and marketing to customers.
Issues: Strategic supply alliances for:
Raw materials. Manufacturing and distribution. Marketing.
11.5 INDUSTRY DEVELOPMENT .5 INDUSTRY DEVELOPMENT.5 INDUSTRY DEVELOPMENT Strategy 1 Industry Co-ordinationStrategy 1 Industry Co-
ordinationStrategy 1 Industry Co-ordination Objectives: Promote Australia as a investment opportunity for Asian food
manufacturing. Issues:
As this is a new and emerging industry, industry issues should be developed in a co-ordinated approach which supports: - Industry ownership. - Communication of strategic issues such as food safety and QA. - Development of industry promotion. - Promotion of successful case studies in Australia.
Promotion of ethnic community organisation initiatives
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
49
e.g., NSW Ethnic Affairs Commission.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
50
12.0 APPENDICES .0 APPENDICES.0 APPENDICES
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
51
APPENDIX A Australian Bureau of 1996 Census of Population and Housing Including Weekly Individual Income for Persons Born in SE Asia NE Asia
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
52
Australian Bureau of Statistics 1996 Census of Population Weekly Individual Income for Persons Born in SE Asia ad NE Asia
Total Australia
Vietnam
Rest of SE Asia
Total SE Asia
China (excl TWN)
Honk Kong
Japan
Korea
Rest of NE Asia
Total NE Asia
Total
Negative Income
816
2,325
3,141
875
490
478
694
333
2,870
6,011
Nil Income
10,571
36,162
46,733
14,891
13,234
5,545
6,500
6,676
46,846
93,579
$1-$39
2,531
7,796
10,327
2,451
2,178
482
448
766
6,325
16,652
$40-$79
6,854
10,917
17,771
2,948
2,770
486
863
975
8,042
25,813
$80-$119
8,268
11,393
19,661
4,334
2,953
567
1,061
1,295
10,210
29,871
$!20-$159
32,648
27,371
60,019
14,123
3,615
747
1,902
1,158
21,545
81,564
$160-$199
12,555
16,330
28,885
8,057
2,333
707
1,229
747
13,073
41,958
$200-$299
11,007
24,135
35,142
10,057
4,275
1,554
2,337
1,342
19,565
54,707
$300-$399
17,191
28,057
45,248
12,686
4,378
1,422
2,221
1,044
21,751
66,999
$400-
13,629
26,530
40,159
10,514
4,148
1,329
1,902
915
18,808
58,967
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
53
Total Australia
Vietnam
Rest of SE Asia
Total SE Asia
China (excl TWN)
Honk Kong
Japan
Korea
Rest of NE Asia
Total NE Asia
Total
$499 $500-$599
8,007
21,461
29,468
6,663
3,667
1,370
1,465
720
13,885
43,353
$600-$699
4,353
13,746
18,099
3,616
2,811
963
883
447
8,720
26,819
$700-$799
2,900
9,998
12,898
2,544
2,336
741
607
297
6,525
19,423
$800-$999
2,570
11,511
14,081
2,693
3,021
844
667
359
7,584
21,665
$1000- $1499
1,602
8,991
10,593
1,708
2,965
848
550
316
6,387
16,980
$1500 or more
575
4,117
4,692
798
1,298
1,152
261
153
3,662
8,354
Not Stated
6,314
12,136
18,450
4,061
1,761
1,252
1,843
1,203
10,120
28,570
Not Applicable
8,667
32,431
41,098
7,987
10,196
2,526
4,663
2,893
28,265
69,363
Total
151,058
305,407
456,465
111,006
68,429
23,013
30,096
21,639
254,183
710,648
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
54
APPENDIX B Major Wholesalers & Distributors of Processed Asian Foods in Australia
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
55
Major Importers and Distributors - Sydney
Supplier/distributor
Product
A Clovett Pty Ltd
Oyster sauce Instant noodles
Arnotts Biscuits Ltd Biscuits
BKK Aust Pty Ltd Canned fruit Longan Instant Noodles Cup Noodles Chilli sauce
Burlington Centre Supermarket Bean curd stick Beancurd/Tofu
Daily Fresh Services Pty Ltd Rice noodles fresh
DCB Trading Soya Sauce - Light
E S Imports Exports Rice cracker snacks
Ettason Pty Ltd Oyster sauce Bean curd sheet Bean curd stick Cup Noodles Instant Noodles Vermicilli Soups chicken
Fortune Food Rice noodles fresh Beancurd/Tofu
Fujian holding Vermicilli Jasmine tea
Fujian Aust Pty Ltd Jasmine tea
Gold Medal Snacks Pty Ltd Fried shrimp cracker snacks
Grand Coral P/L Instant noodles Cup Noodles
Grocery Wholesaler Pty Ltd Coconut extract /milk
Hakka Fish balls/sausages
Han Yang Import Export
Cup Noodles
Han Yang Import Export
Seaweed dried sheets
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
56
Supplier/distributor
Product
Instant noodles Happy Lamb Trading Pty Ltd
Fish balls/sausages
Hong Aust corp Pty Ltd
Beancurd/Tofu Bean curd sheet Oyster sauce Chilli sauce
Hung=s Trading Co. Ltd Vermicilli
Kikkoman Aust
Soy sauce light
Light Star Dist. Pty Ltd
Beancurd/Tofu
Lims Australia
Instant noodles
Meigor Pty Ltd
Cup Noodles
Mitsubishi Aust Ltd
Cup Noodles Instant noodles
New Eastland Pty Ltd
Seaweed Dried Sheets
Oceania Holding Pty Ltd
Rice noodles -dry
Ong Trading Company Bean curd sheet
Oriental Merchants
Soy sauce light Coconut extract /milk Oyster sauce Instant noodles Soy sauce dark
Rockman Australia Pty Ltd
Seaweed dried sheets Soy sauce light Rice noodles dry
Shin Mi Ltd Soups beef
Sin Ma Food Pty Ltd
Rice noodles -dry Rice noodles fresh
Tixana Manufacturing Pty Ltd
Beancurd/Tofu
TLY Pty Ltd
Beancurd/Tofu
Unigreen Food Pty Ltd Soya based drinks
Viet Huong Food Co. Fish sauce
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
57
Supplier/distributor
Product
Vina Tept Aloevera & Lime Wei Wah Pty Ltd
Rice noodles fresh Soy sauce light Soy sauce dark Vermicilli
Win Ho Trading Co. Bean curd stick Canned fruit longan Rice cracker snacks
Yakult Aust. Pty Ltd Yakult
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
58
Major Importers and Distributors - Melbourne
Supplier/distributor
Product
Chien Wah Trading Vermicelli
Chien Wah Trading Soya Sauce - light
Chung Hing Beancurd Manufacturer Beancurd
Conga International Foods Coconut extract/Milk
Ettason Pty ltd Rice Flour
Fu Sheng Foods Rice Noodles Fresh
Fujian Holding Champignons
Hakka Pty Ltd Fish Balls /sausages
Han Yang Imports Exports Pty ltd Seaweed Dried Sheets
Hoa Australia Soya Based drinks Straw mushrooms
Kien -Fat Trading Coconut Drink
Kung Shing Pty Ltd Rice Noodles Fresh
Lam Bros, Instant Noodles
Lay Bros Soya Based Drinks Fried shrimp cracker snacks Rice Flour
Lim Australia,
Instant Noodles Coconut extract/milk Coconut Drink
Mitsubishi Aust Ltd Instant Noodles
Nam Fong Trading
Beancurd Stick Shrimp stock Seasoning
Nan Fong Trading co Biscuits
Nan Fong Seaweed Dried Sheets
New Eastland Fried Onion Spice Canned fruit Lychees
Oriental Merchants
Rice Flour Oyster Sauce Coconut extract milk
Perfect Fine Foods Aust
Adzuki Beans Peanuts
Shuey Shing Pty Ltd
Coconut extract/milk
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
59
Supplier/distributor
Product
Smooth Food Processing Beancurd Wah Lien Trading
Canned fruit Lychees Fish Sauce Dried Chinese Mushrooms
Winho Trading Canned fruit Lychees
Yenson=s Fresh Beancurd Beancurd
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
60
APPENDIX C Major Manufacturers of Processed Asian Foods in Australia
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
61
Major Manufacturers of Asian Foods - Sydney/Melbourne
Manufacturer
Address
Telephone
Products
1,2,3 Food P/L
02 97551235 tel
Rice noodles
Ardmona Foods Ltd 818 Whitehorse Rd Box Hill VIC 3128
03 98965500 tel 03 98965555 fax
Canned fruits
Banh Pho Vien Dong Food processors
41 Whitaker Street Yennora NSW 2161
Rice noodles fresh
Chung Hing Beancurd Manufacturer
4/61 Osborne Ave Springvale VIC 3171
03 95481418 tel
Straw mushrooms
Continental
Mr Peter Boyden 20-22 Cambridge Street Epping NSW 2121
02 98696100 tel 02 98696221 fax
Instant Noodles
Edgells Birdseye
02 943 688668 tel 02 99013245 fax
Tinned Mushrooms
Fortune Food Manufacturer Pty Ltd
20 Meeks Road Marrickville NSW 2204
02 95574639 tel
Soy Drink, Rice noodles, Fresh noodles
Friend Trading N.S.W
95574840
Soya bean drink
Fu Sheng Foods 343 Little Collins Street Melbourne VIC 3000
03 96060006 tel
Straw mushrooms
Golden Circle Ltd
Earnshaw Road Northgate QLD 4013
07 2660000 tel 07 2605994 fax
Canned fruits
Goodman Fielder International
5/476 Gardners road Alexandria NSW 2015
02 93176300 tel 02 96995408 fax
Soup
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
62
Manufacturer
Address
Telephone
Products
Guzzi’s Pasta Manufacturing 14 Melissa Pl Kings Park NSW 2148
02 9831 6611 tel 02 9831 6833 fax
Packet Noodles
Hakka Pty Ltd
3 Wood Street, Tempe NSW 2044
02 95588188 tel 02 95588155 fax
Fish Balls /sausages
Harry Hee Noodles Manufactures
489 King Georges Road Beverly Hills NSW 2209
02 95805662 tel
Rice noodles
Way Lup Food Manufacturing
397 Harris Street Ultimo NSW 2007
02 96608793 tel
Rice noodles fresh
Kraft Foodservice
Leitchville VIC 3567
03 96765555 tel 03 96765340 fax
Packet Noodles
Kung Shing Pty Ltd
Rice Noodles Fresh
Lan Chu Asian Food Pty Ltd 6/107 Tangerine Street Fairfield NSW 2165
02 97268086 tel
Fried pork
Lanes Biscuits Pty Ltd
Cnr Blair & Riggall Streets Broadmeadows Vic 3047
03 93010732 tel 03 93092110 fax
Biscuits
Light Star Dist. P/L
1/21 Childe Rd, Chipping Norton, N.S.W, 2170
97242446 Fax- 027257075
Beancurd fresh
Madura tea
Clothiers Creek Road Murwillumbah NSW 2484
066 777215 tel 066777451 fax
Tea
Makmur Enterprises Pty Ltd
20-126 Murphy Street Richmond Vic 3121
03 94295966 tel 03 94299862 fax
Frozen snacks
Massel Pty Ltd
1-17 Stanton Road Seven Hills NSW 2147
02 96747999 tel 02 97647900 fax
Dry soups and spices
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
63
Manufacturer
Address
Telephone
Products
Master Foods of Australia 4 Corella Close Berkleyvale NSW 2261
043 896700 tel 043 896799 fax
Various sauces including oriental sauces
Nestle Australia (Maggi Brand)
60 Bathurst Street Sydney NSW 2000
02 99312345 tel 02 99312610 fax
Instant Noodles Cup Noodles Vermicilli
Pecks (Aust) P/L 16 Kellogg Road Rooty Hills NSW 2166
1800677774 tel
Cup Noodles (Suimin Brand)
Perfect Fine Foods (Aust) Oty Ltd
2/Lot 6 Oliver Gr Keysborough Vic 3173
03 97987611 tel
Peanuts,Adzuki Beans
Pureharvest
15 Ardena Court East Bentleigh Vic 3165
03 95793422 tel 03 95793312 fax
Soya based Drinks
Rice Growers Cooperative Ltd
Bruce Coomber Yanco Road Leeton NSW 2075
069 530411 tel 069 534733 fax
Rice cracker snacks,Jasmine Long grain rice, Jasmine short grain rice,Rice noodles, Vermicilli
Rinoldi Hancock (Aust) P/L Rick Jordan 2 Elizabeth Street South Yarra Vic 3141
03 98278848 tel 03 98270619 Fax
Instant Noodles Vermicilli
San Remo Macaroni NSW pty Ltd
100 Derby St. Auburn NSW 2144
02 97480371 tel
Instant Noodles Vermicilli
Sanitarium Health Food Co
14 Hudson Avenue Castle Hill NSW 2154
02 98991499 tel 02 98991429 fax
Soya Based drinks
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
64
Manufacturer
Address
Telephone
Products
Simplot Australia Pty Ltd 41-125 Tennyson St Kensington Vic 3031
03 92799656 tel 03 92799701 fax
Canned Mushrooms
Smooth Food Processing
81 Murphy Street Richmond VIC 3121
03 94296430 tel
Beancurd
SPC Ltd
3-9 Wrecklyn Street North Melbourne VIC 3165
03 93213700 tel 0393213728 fax
Canned fruits
Tixana Pty Ltd
17 Elizabeth Street Campsie NSW 2194
02 97188255 tel 02 9718 8772 fax
Soya Based drinks,Beancurd fresh, Tofu
TLY Pty Ltd
20 Melbourne Street Riverstone NSW 2765
02 96275834 tel 02 96275863 fax
Tofu
Uncle Tobys
580 Church Street Richmond VIC 3121
03 92458666 tel 03 92458610 fax
Instant Noodles Vermicilli
Unibic
10 18 Norfolk Court North Coburg Vic 3058
03 93505111 tel 03 93545713 fax
Biscuits
Unifoods Pty Ltd
20-22 Cambridge Street Epping NSW 21121
0208696100 tel 0298696221 fax
Soup,Soup Noodles
Uni Green Food Pty Ltd
28/31 Wentworth street Greenacre NSW 2190
02 96427648 tel
Tofu Puff, Soya based drink
Food Processors Pty Ltd
6/92 Seville Street Fairfield NSW 2165
02 97256871 tel
Rice noodles fresh
Vina Tept Holdings
PO BOX 12240, Melbourne VIC 3000
03 3920555 tel
Aloevera +lime drink
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
65
Manufacturer
Address
Telephone
Products
Windsor Farm Food Group Pty Ltd 74 Mileham Street Windsor NSW 2756
045 774255 tel 045774814 fax
Canned Mushrooms
Yakult Australia
6 Boundary Road Northmead NSW 2152
02 98901900 tel
Yakult
Yenson’s Soya Bean product
68 Bird Street Springvale VIC 3171
03 95623702 tel
Beancurd
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
66
APPENDIX D Estimated Market Sizes of Processed Asian Foods in Australia
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
67
Estimated Australian Wholesale Market Size
Rank
Asian Food Product Estimated Australian Market Size (Wholesale $ mill)
1 Instant Noodles
75
2 Soya based drinks
62
3 Cup Noodles
18
4 Soy sauce
15
5 Champignon - canned
12
6 Biscuits
10
7 Oyster sauce
6
8 Seaweed sheets/products
6
9 Fish sauce
<5
10 Beancurd sheets and sticks
<5
11 Shrimp seasoning
<5
12 Rice Cracker snacks
<5
13 Fried shrimp crackers
<5
14 Peanuts
<5
15 Coconut extract/milk
<5
16 Longan fruit - canned
<5
17 Lychees fruit - canned
<5
18 Soup - Chicken/beef
<5
19 Straw mushrooms - canned
<5
20 Dried shiitake mushrooms
<5
21 Asian teas
<5
22 Fresh Rice Noodles
N/A
23 Fresh fish balls
N/A
24 Fresh/preserved sausages
N/A
25 Fresh Beancurd
N/A
Notes: I. Based upon data from AC Nielsen, Retail World Annual Survey and industry discussions. II. Data based upon Asian retail stores representing 11% of the retail outlets for Asian foods
* 5,600 Australian retail supermarkets and 136,000 retail food outlets (Australian Supermarket Institute) * Estimated 600 Australian Asian retail stores/outlets (Industry discussions)
III. N/A Not appropriate as these are fresh foods which are not a major focus of the project.
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
68
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
69
APPENDIX E Competitiveness Analysis for the Australian Manufacture of Processed Asian Foods
Ranked Priority
Competitive Advantages Product Opportunities
Availability of Raw Materials
Labour
Manufacture
Freight/ Distribution
Packaging
Quality
Sales/Marketing
High
Instant noodles
High
Low
High
High
High
High
High
High Soya based drinks
High
Low
High
High
High
High
High
High Cup Noodles
High
Low
High
High
High
High
High
Low Soy sauce
Low
Low
Low
High
High
Low
Low
Low Champignon - canned
High
Low
Low
High
High
High
High
High Biscuits
High
Low
High
High
High
High
High
High Oyster sauce
High
Low
High
High
High
High
High
Mod Seaweed sheets/products
Low
Low
Low
High
Low
High
Low
High Fish sauce
High
Low
High
High
High
High
High
Low Beancurd sheets and sticks
High
Low
Low
High
High
Low
Low
Low Shrimp seasoning
High
Low
Low
High
High
High
Low
High Rice Cracker snacks
High
Low
High
High
High
High
High
High Fried shrimp crackers
High
Low
High
High
High
High
High
High Peanuts
High
Low
High
High
High
High
High
Low Coconut extract/milk
Low
Low
Low
High
High
High
High
Low Longan fruit - canned
Low
Low
High
High
High
High
High
Low Lychees fruit - canned
High
Low
Low
High
High
High
High
Mod Soup - Chicken/beef
High
Low
Low
High
High
High
High
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
70
Ranked Priority
Competitive Advantages Product Opportunities
Availability of Raw Materials
Labour
Manufacture
Freight/ Distribution
Packaging
Quality
Sales/Marketing
Low Straw mushrooms - canned High Low Low High High Low High Low
Dried shiitake mushrooms
Low
Low
Low
High
High
Low
High
Mod Asian teas
Low
Low
Low
High
High
Low
High
High Fresh Foods
High
High
High
(Small scale)
High
High
High
High
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
71
APPENDIX F PLANNING CHECKLIST The list below is intended as a prompt to key questions that should be answered by prospective manufacturers of processed Asian foods as part of the Concept Appraisal. This should be completed as “pre-requisite” guide prior to development of the Business Plan.
YES
NO
Have you identified the Asian food product?
Are you targeting an existing market with an existing product?
Are you targeting a new market with an existing product?
Are you targeting a new product in an existing market?
Are you targeting a new product in a new market?
Have you done a SWOT of your product?
Is there a market for the product?
Does the product meet Australian and /or international standards?
Has the total market been defined?
To what extent is the market segmented?
Is there a defined market segment you are targeting?
Is your product an “Asianised” western food?
Is your product a “Westernised” Asian food?
Is your product an authentic Asian food?
Is your product an authentic Australian food?
Is this segment growing?
Has there been an assessment of the competition?
Is brand loyalty an issue?
Do you have sustainable competitive advantage?
Do you have a marketing and promotional strategy?
Are you targeting export markets?
Potential Opportunities for Increased Production of Processed Asian Foods in Australia
72
YES
NO
Are customer needs and expectations well understood? Do you have the skill to make and sell the product?
Do you have the production facilities?
Do you require access to capital?
Do you have access to research and development facilities?
Do you have a distribution model?
Can you deliver the product to the market and at the right time?
Can the market share targeted be achieved?
Have you done revenue and cost forecasts?
Is the business strategy sound?
73
APPENDIX G SURVEY FORM PROCESSED ASIAN FOODS AUSTRALIAN MARKET SURVEY
PART 1 PLEASE TELL US ABOUT YOUR BUSINESS 1. What is your business and its postcode?
(Enter Postcode after box) Postcode
Retail Supermarket ........
Retail Asian groceries ........
Chinese ........
Japanese ........
Vietnamese ........
Korean ........
Other (Pls specify) ........
Wholesaler ........
Other (Please Specify) ........ 2. Business Name ................................................................... 3. Contact Person ...................................................................
/Position 4. Contact Number ................................................................... 5. What do you think of Australian made processed Asian foods? ............................................................................................
74
............................................................................................
............................................................................................ 6. What would encourage your CUSTOMERS to buy more Australian made
processed Asian foods?
Price Availability Customer Demand Product and packaging
Quality Industry Marketing Taste quality
Other (Specify)............................................................................. 7. What would encourage YOU to buy more Australian made processed Asian
foods?
Price Availability Customer Demand Product and packaging
Quality Industry Marketing Taste quality
Other (Specify)............................................................................. 8. Do you have any other comments on the processed Asian foods industry in
Australia? .........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
9. Would you like to make any other comments?
..........................................................................................................................................
..........................................................................................................................................
..........................................................................................................................................
........................................................................................... 10. Survey conducted by: ......................................................
75
Phone number: ............................
76
Product
Cat
Rank (top 15)
Australian
Imported bulk
Imported ready
Supplier
Manufacturer
Brand
Source
inc/dec
Source
inc/dec
Source
inc/dec
Noodles & Rice
Chinese
Cup noodles
1c
Instant noodles
1c
Jasmine broken rice
1c
Jasmine glutinous rice
1c
Jasmine long grain rice
1c
Rice noodles - dried
1c
Japanese
77
Product
Cat
Rank (top 15)
Australian
Imported bulk
Imported ready
Supplier
Manufacturer
Brand
Source
inc/dec
Source
inc/dec
Source
inc/dec
Ramen noodles 1j Soba noodle
1j
S_men noodle
1j
Udon noodles
1j
Korean
Cup Style Ramen
1k
Ramen (Korean noodles)
1k
Processed Fresh Foods
Chinese
Beancurd fresh
2c
78
Product
Cat
Rank (top 15)
Australian
Imported bulk
Imported ready
Supplier
Manufacturer
Brand
Source
inc/dec
Source
inc/dec
Source
inc/dec
Black bean (processed) 2c Fish balls/sausages
2c
Rice noodles - fresh
2c
Japanese
Crab sticks
2j
Fish cake (Kamaboko)
2j
freezed prawn fry, freezed croguette
2j
Mori-Nu Tofu
2j
retort packed food (retoruto Kar_ etc)
2j
79
Product
Cat
Rank (top 15)
Australian
Imported bulk
Imported ready
Supplier
Manufacturer
Brand
Source
inc/dec
Source
inc/dec
Source
inc/dec
Sauces and Pastes
Chinese
BBQ sauce
3c
Bilis fish stock seasoning
3c
Chilli paste
3c
Chilli sauce
3c
Crab sauce
3c
Fish chilli paste
3c
Green curry paste
3c
Oyster sauce
3c
Red curry paste
3c
Satay powder seasoning
3c
Soya sauce Kikoman
3c
Soya sauce - light
3c
80
Product
Cat
Rank (top 15)
Australian
Imported bulk
Imported ready
Supplier
Manufacturer
Brand
Source
inc/dec
Source
inc/dec
Source
inc/dec
Soya sauce -dark
3c
Sweet plum sauce
3c
Yellow curry paste
3c
Japanese
Fish stock (dasi)
3j
Frozen crayfish paste
3j
Japanese curry paste
3j
Kikkoman milder soy sauce
3j
Memmi Sauce
3j
Miso paste
3j
3j
81
Product
Cat
Rank (top 15)
Australian
Imported bulk
Imported ready
Supplier
Manufacturer
Brand
Source
inc/dec
Source
inc/dec
Source
inc/dec
Products made with boiled fish paste (chikuwa, hampen etc)
Sauce for Tonkatsu
3j
Sauce for Soba noodle
3j
Sukiyaki sauce
3j
Tempura Sauce
3j
Teriyaki sauce
3j
Tontatsu sauce
3j
Yakiniku sauce
3j
Condiments /Spices/Dried goods
Chinese
Beancurd sheet
4c
Beancurd stick
4c
Coconut powder
4c
4c
82
Product
Cat
Rank (top 15)
Australian
Imported bulk
Imported ready
Supplier
Manufacturer
Brand
Source
inc/dec
Source
inc/dec
Source
inc/dec
Dried chilli spice Dried longan Pulp
4c
Dried fish products
4c
Fried onion spice
4c
Fried garlic spice
4c
Glutinous starch
4c
Rice flour
4c
Seaweed dried shredded flakes
4c
Seaweed dried sheets
4c
Seaweed powder
4c
Shrimp stock seasoning
4c
Soya Bean powder
4c
Tamarind spice
4c
83
Product
Cat
Rank (top 15)
Australian
Imported bulk
Imported ready
Supplier
Manufacturer
Brand
Source
inc/dec
Source
inc/dec
Source
inc/dec
Japanese
Aji-Mirin
4j
chilli powder (shichimi)
4j
chilli oil (R_yu)
4j
Curry sauce mix
4j
Curry powder
4j
Dried bonito flakes
4j
Dried fishes
4j
Dried Negi Shallots
4j
Fermented Soy beans(Nattou)
4j
Flour for Okonomiyaki
4j
Japanese mayonnaise
4j
Jelly pudding mix,
4j
84
Product
Cat
Rank (top 15)
Australian
Imported bulk
Imported ready
Supplier
Manufacturer
Brand
Source
inc/dec
Source
inc/dec
Source
inc/dec
dessert mix (Fruche etc) kanpy_
4j
Kombu seaweed
4j
Konnyaku (shirataki)
4j
Mirin
4j
Ochazuke mix
4j
Onigiri mix
4j
Panko (bread Crumbs)
4j
Pickled ginger (Beni- sh_ga)
4j
Pickled plum (Umeboshi)
4j
Pickles (Takuan, tsukemono)
4j
Powdered sushi mix (Sudinoko)
4j
Powdered rice vinegar
4j
Rice vinegar
4j
85
Product
Cat
Rank (top 15)
Australian
Imported bulk
Imported ready
Supplier
Manufacturer
Brand
Source
inc/dec
Source
inc/dec
Source
inc/dec
Seaweed nori sheets 4j Shichimi Togarashi (condiment like our pepper)
4j
Tastily seasoned dried food for sprinkling on rice (Furkake)
4j
Tempura powder seasoning
4j
Teryaki Nori
4j
Wakame seaweed
4j
Wasabi Karashi (Japanese mustard)
4j
Korean
Barley based products
4k
dried seaweed
4k
dried kelp
4k
86
Product
Cat
Rank (top 15)
Australian
Imported bulk
Imported ready
Supplier
Manufacturer
Brand
Source
inc/dec
Source
inc/dec
Source
inc/dec
dried fish
4k
gin Seng
4k
Ground Pine nuts
4k
red bean based products
4k
seasoned pollack entrails
4k
seasoned squid
4k
Sesame based products
4k
soy bean based products
4k
Snacks and Sweets
Chinese
Biscuits
5c
Confectionary
5c
87
Product
Cat
Rank (top 15)
Australian
Imported bulk
Imported ready
Supplier
Manufacturer
Brand
Source
inc/dec
Source
inc/dec
Source
inc/dec
Fried shrimp cracker snack
5c
Jelly dessert
5c
Rice cracker seaweed snack
5c
Rice cracker snack
5c
Soya based snack foods
5c
Japanese
Kakinotane (hot rice craker)
5j
Rice cake (mochi)
5j
Beverages/Drinks
Chinese
Asian beer and wines
6c
Coconut drink
6c
88
Product
Cat
Rank (top 15)
Australian
Imported bulk
Imported ready
Supplier
Manufacturer
Brand
Source
inc/dec
Source
inc/dec
Source
inc/dec
Coconut extract/milk
6c
Green tea
6c
Jasmine tea
6c
Lychees Drink
6c
Oolong tea
6c
Soya based drinks
6c
Japanese
Japanese tea ( Gemmai tea,h_ji tea)
6j
Yakult
6j
Canned Goods/Soups
89
Product
Cat
Rank (top 15)
Australian
Imported bulk
Imported ready
Supplier
Manufacturer
Brand
Source
inc/dec
Source
inc/dec
Source
inc/dec
Chinese Baby clam
7c
Canned fruit lychees
7c
Canned fruit longan
7c
Crab meat
7c
Soups - abalone
7c
Soups - chicken
7c
Japanese
Aka miso
7j
Dashi-no-moto (clear basic soup stock made of dried kelp and dried bonito)
7j
Miso soup
7j
Korean
beef soups
7k
Fish stews
7k
Kim Chi port stews
7k
90
Product
Cat
Rank (top 15)
Australian
Imported bulk
Imported ready
Supplier
Manufacturer
Brand
Source
inc/dec
Source
inc/dec
Source
inc/dec
Seaweed soup 7k spicy bean paste stews
7k
91
APPENDIX H
Rural Industry Research Development Corporation (RIRDC) Conference/Workshop 1 October 1997 Ethnic Affairs Commission 164 Liverpool Road Ashfield NSW
Potential for Increased Local Production of Processed Asian Foods AGENDA
Time Presenter
Topic
11:00 am - 11:10 am
Dr Jeff Davis - General Manager Research RIRDC
Welcome and Introduction
11:10 am - 11:30 am
Mr Stepan Kerkyasharian - Chairman NSW Ethnic Affairs Commission
Multicultural Marketing and Productive Diversity
11:30 am - 12:15 pm
Mr Barry Lee - Connectica International
Opportunities for Increased Local Production of Processed Asian Foods
12:15 pm - 12:25 pm
Break
12:25 pm - 12:40 pm
Mr Peter Webster - Industrial Supplies Office
Industry Alliances
12:40 pm - 1:00 pm
Mr Tony Spencer - Bamboo Pot
Industry Case Study
1:00 pm - 1:40 pm
Lunch
1:40 pm - 2:00 pm
Mr Sam Yiu - Oriental Merchants
Industry Comment
2:00 pm - 2:45 pm
Open Forum
2:45 pm - 3:00 pm
Mr Barry Lee - Connectica International
Summary and Close
92
APPENDIX I Processes Asian Foods Workshop 1 October 1997 Attendees List
Company
Invited Attendee
Contact
Coles Myer Supermarket
Mr Rod Korff Toorak Road Tooronga VIC 3146
Ph: 03 98295766 fax: 0398296517
Coles Myer Supermarket
Mr Peter Cushman Toorak Road Tooronga VIC 3146
Ph: 03 98295766 fax: 0398296517
Coles Myer Supermarket
Mr Terry Long Toorak Road Tooronga VIC 3146
Ph: 03 98295765 fax: 0398296517
Cookieman Liverpool
Mr Shen William Kiosk 600 Westfield, Macquarie Liverpool NSW 2170
Ph: 96015372 fax: 98949638
Arnott’s Biscuits Limited
Mr Peter Geofrey George Street Homebush NSW 2140
Ph: 93943673
Austrade
Ms Rowena Gould GPO Box 5301 Sydney NSW 2001
Ph: 93902000
Austral China Liaison & Trade Pty Ltd
Mr Wai Yook Lee 35A-37 Hawthorne Pde Haberfield NSW 2045
Ph: 97160801
Australian Supermarkets Institute
Mr Ken Hendricks Level 1, 20 York Street Sydney NSW
Ph: 92996126
Australian Business Chamber
Ms Heidi Moran 140 Arthur Street North Sydney NSW 2060
Ph: 99277477
93
Company
Invited Attendee
Contact
Australian Business Chamber
Mr Graham Ferguson 140 Arthur Street North Sydney NSW 2060
Ph: 99277477
Banksia Food Products Pty Ltd
Mr Monty Williams 7 Helles Avenue Moorebank NSW 2170
fax: 98214168 Ph: 96006299
Coles Myer Supermarket
Mr Darrell Williams Toorak Road Tooronga VIC 3146
Ph: 0398295664
Connectica International
Mr Barry Lee Level 3, 2 Help Street Chatswood NSW 2067
Ph: 94154200
Connectica International
Mr Karnig Momdjian Level 3, 2 Help Street Chatswood NSW 2067
Ph: 94154200
Dept. of Primary Industries and Energy
Ms Deborah Gifford Rural Division GPO 858 Canberra ACT 2601
Ph: 062723787
Ernest Hall and Sons
Mr Tony Hall 141 McAvoy Street Alexandria NSW 2015
Ph: 96982854 Fax: 96982854
Freight on Board
Mr Kevin Sheppard 9th Floor, 100 Christie Street St Leonards NSW 2065
Ph: 94394199 Fax: 94376396
Global Trends
Ms Karen McLeod
Gourmet Asian Cuisine Ms Carol Selva Rajah 14 Duntroon Ave Wollstonecraft
Ph: 94374362
Grand Coral P/L
Mr Peter K C Tsung 37-41 Dunning Ave Alexandria NSW 2018
Ph.6631311
Henli Sales and Marketing
Mr Tony Spencer 68 Tennyson Road Mortlake NSW 2137
Ph: 97363222
Institute for Horticultural
Ms Mandy Chew Private Bag 15
Ph; 0392109302
94
Company
Invited Attendee
Contact
Development South Eastern Mail Centre Victoria 3176
Institute for Horticultural Development
Dr Wendy Morgan Private Bag 15 South Eastern Mail Centre Victoria 3176
Ph; 0392109302
Kerry Ingredients
Mr Bill Cameron 7 Powers Road Seven Hills NSW 2147
Ph: 98389811 fax: 98389810
Lillyvale Mushrooms Pty Ltd
Ms Helen Woodward 30 Bingara Crescent Baulkham Hills NSW 2153
fax: 98388870 Ph: 96246000
Lillyvale Mushrooms Pty Ltd
Mr Phillip Woodward 30 Bingara Crescent Baulkham Hills NSW 2153
fax: 98388870 Ph: 96246000
Massell Pty Ltd
Mr Christopher Vorbach 1-17 Stanton Road Seven Hills NSW 2147
Ph: 96747999
MasterFoods Of Australia
Mr Bruce Perkins 4 Corella Close Wyong NSW 2259
Ph. 04389600
Mauri Foods
Mr Barry Parker 15 Grand Avenue Camellia NSW 2142
Ph: 96844000
NSW Ethnic Affairs Commission
Mr Paula Masselos 164 Liverpool Road Ashfield
Ph: 97162282
NSW ISO Ltd
Mr Peter Webster Suite 313 Henly Lawson Business Centre Birkenhead Point Drummoyne NSW 2047
Ph: 98197200
NSW Ethnic Affairs Commission
Mr Stepan Kerkyasharian 164 Liverpool Road Ashfield
Ph.: 97162200
Oriental Merchants
Mr Sam Yiu Ph.: 03
95
Company
Invited Attendee
Contact
70/422 Somerville Rd, Footscray Vic, 3012
92508166
Oriental Merchants
Ms Hanna Yiu 70/422 Somerville Rd, Footscray Vic, 3012
Ph.: 03 98779812
Perfect Fine Foods Aust Pty Ltd
Mr Bill Yao Factory 2 Drive Grove Keysborough VIC 3173
Ph: 03 97987611
Primary Industry Bank of Australia
Mr Daniel Kwan 7th Floor 115 Pitt Street Sydney NSW 2000
Ph: 92315655
Riviana Foods Pty Ltd
Mr Steve Weston Private Bag 50 Knoxfield Vic 3180 Australia
Ph: 0397643622
Rockman Australia Pty Ltd
Mr Raymond Tsang 17 Enterprise Road Wetherill Park NSW 2164
Ph: 97251211
Rockman Australia Pty Ltd
Mr Dean Ng 17 Enterprise Road Wetherill Park NSW 2164
Ph: 97251211
Rockman Australia Pty Ltd
Mr Johnny Yip 17 Enterprise Road Wetherill Park NSW 2164
Ph: 97251211
Sam Remo
Mr Michael Cullinane 4 Boden Court Windsor Gardens NSW 5087
Ph: 0395436111
Simplot
Mr Andrew Logan Level 4 77 Parramatta Road Silverwater NSW 2128
Ph: 97357800
SPC Ltd
Ms Kathy Marmaras 3-9 Wrecklyn Street North Melbourne VIC 3165
Ph: 03 93213700 Fax: 0393213728
The Peninsular Group
Mr Cedric C K Wong Unit D9 11-15 Moxon Rd Punchbowl NSW 2196
Ph: 97963248
96
Company
Invited Attendee
Contact
The Peninsular Group
Mr Robert Black Unit D9 11-15 Moxon road PunchBowl NSW 2196
Ph: 97963248
Tixana Pty Ltd
Ms Carolyn Davies 17 Elizabeth Street Campsie NSW 2194
Ph: 02 97188255 fax: 02 9718 8772
Total Packaging Mr Michael Laurence 10 Sydenham Road Sydenham NSW 2100
Ph 99385166
University of Western Sydney
Mr M Khan Bourke Street Richmond NSW 2753
Ph: 045701359 fax: 45701383
Wheat Board
Ms Anna-Lisa Smith Sussex St Sydney NSW 2000
Ph: 0392092067
97
98
APPENDIX J BUSINESS PLAN FOR THE PRODUCTION OF INSTANT NOODLES BY
COMPANY Y
99
1. DESCRIPTION OF THE COMPANY AND ITS RATIONALE Company Y Enterprises Pty Ltd has three major shareholders: - One Enterprises Pty Ltd The architect of the concept name, responsible for sales, marketing and administration. - Two Kitchen Pty Ltd Manufacturers of frozen Italian foods for the catering industry. Providers of Company Y sauces. - Three Foods. Noodle manufacturers, Three Foods has the major interest (45%) with the others shares divided equally. Noodles are produced at a specialised noodle factory, 5000 sq ft, air conditioned and hygienically engineered to comply with stringent HACCP conditions. Sauces are prepared in Two’s factory which is set up to comply with standard HACCP. conditions. Both manufacturing units are working 8 hour shifts, 6 days a week. This is not always the case at Two’s where frozen needs are greatest during winter. Noodle production capacity is at 90% of 6 x 8 hr shifts at the factory and the Company’s immediate objectives have been achieved. This plan aims to develop a future strategic product development opportunities.
100
2 THE PRODUCT OR SERVICES OFFERED BY THE COMPANY Company Y as a brand was conceived August 1995 as the prospective means by which fresh fully cooked noodles could be marketed. Distribution of six varieties of fully cooked ready to eat noodles are now distributed through the Eastern Australian States and South Australia. The product range includes:
Hokkien Rice Ramen-Japanese Chow Mein Thin egg Laksa
The noodles sells from refrigerated cabinets of supermarkets. The success of Company Y has spawned wider ambitions, however the primary objective has been to establish the brand as the first, most reliable, premium quality, fully cooked, ‘Ready To Eat’ noodle available in Australia. Priority has been afforded to unique production methods and capacity of manufacture. Accordingly, a completely new food category has been developing around this Company Y’s brand of product. A range of complementary sauces sold fresh, are also marketed by Company Y. With rising consumer awareness and popularity for this convenience food, Company Y’s aspirations have broadened to encompass dry, long life noodles. Company Y 2 Minute Noodle Most 2 minutes Noodles are consumed as snacks. Research shows that noodles in the cup drive the eating regime since instant noodles were introduced into the market. Nestle acknowledges this in their advertising but are seeking to widen consumption habits by appealing to the family. Herein lies the opportunity to market well packaged premium quality noodles as a family food staple. The product It is planned to market 3 x 85g slabs including 3 dried vegetable sachets and 3 pouches of wet sauce. These units are to be contained in a plastic tray hermetically sealed and over -wrapped in foil with a graphics label. Retail product noodle weight is to be 255 gms and full unit pack weight including sauce and vegetables shall be 300gms. Position
101
The product will be sold as Company Y brand: Family pack or 2 single serves with fresh sauces and vegetables. Costing/Pricing ($)
Cost of manufacture 0.833
Overheads/Indirect costs .367
Ex Factory Price 1.20
Distribution cost 0.3
Wholesale price into store 1.50
Recommended Retail Price
$1.99
Potential Gross Margin
$0.49
102
3. MARKET SITUATION AND ANALYSIS There are many types of noodle products made from both wheat flour and rice flour. Wheat flour based noodles include Chinese noodles, wet and dry noodles, wet or boiled (Hokkien Style) noodles, steamed and dried noodles, Japanese or white noodles, and modern instant noodles. The instant noodle has become very popular in Australia, and continues to increase in popularity. The noodles are produced by kneading wheat flour, additives, salt and water together, and the resultant dough is passed through pairs of rollers of progressively finer clearance, after which the thin dough sheets are cut, steamed or fried and dried for packaging with a sachet of flavouring. Deep fried noodles can be made from a flour of lower protein content than raw noodles. Australia has a natural advantage for the availability and quality of existing exports of noodle wheats which are grown in Western Australia, Victoria and southern NSW. Major noodle wheat varieties include Cadoux, Eradu, Gamenya and Rosella. While multi-national groups such as Nestle with their Maggi brand have already demonstrated the commercial viability of the Australian manufacturing of noodles, this plan demonstrates the further opportunity for other groups to further develop the instant noodle market in Australia. The dry and fresh noodle market is estimated to have a market size of almost $100 million, and that this market has the potential to increase due to the growth in the Asian foods category in supermarkets. It is anticipated that a significant amount of this growth shall occur from the growth of the HMR market and the introduction of ‘instant noodle’ meals. It is difficult to forecast how far or how fast this noodle consumption will go. There is no doubt it is beginning to erode the established fresh pasta market which currently exceeds $100 million per annum, but dry noodles are having little or no impact on the dry pasta market. A key issue shall be the development of ‘instant noodle’ meals with accompanying products (eg, sauces and vegetables) which have a long shelf-life of up to 5 weeks.
103
Current Product Range- Noodle Only Wet Noodle Refrigerated Market size $4million Market Share Brand
Market Share %
Market Size $
Company Y
65
2,600,00 Noble house
7.5
300,000
Wok Stock
10
400,000 Other*
17.5
706,201
100
4,006,201 * No frills, South & West Australia and Tasmania In Company Y’s current circumstances fresh noodles can reach $5 millions turnover. Urgent forward planning is required as it is now believed $5 millions turnover will be reached by December 1998. Company Y 2 minute Noodle The dry, lightly fried , 2 minute noodle market is growing at over 12% per annum Current estimates (Source A.C. Nielsen) have the market size at $69,000,000 nationally with the market shares are as follows
%Retail
$M
Maggi (Nestle)
62.3
43.0 Other & House brands
12.4
8.6
Trident
11.8
8.1 Changs
6.8
4.7
Fantastic (San Remo)
6.7
4.6
100
$69.0
Company Y seeks to achieve a $6.9 million turnover in 2 years and $10 millions in 3 years. Company Y is reasonably well placed financially to grow to the next level however it is Company Y’s very strong view that it will need specific brand advertising in 1998 to establish Company Y’s premier position within the market. There are many “local”/”boutique” noodle makers in major capital cities evidenced by the preponderance of noodle bars popping up in major capital cities. They are all potential marketers, however Company Y has developed a competitive advantage with a product shelf-life of some 5 weeks.
104
4. THE FINANCIAL PLAN Company Y 2 Minute Noodle Financial projection for 2 years from commencement:
Year 1
Year 2
Revenue
6,900,000
10,000,000 Cost of goods
3,831,300
5,553,333
Trade
1,380,000
2,000,000 Overheads
1,304,100
1,890,000
Advertising
100,000
200,000 Net Profit
284,600
356,667
Overheads are calculated as follows: Item
% Costs
Sales Marketing Commission Marketing Costs Administration Merchandising Freight
5 2
2.6 3.8 1.5 4
Total
18.9
Projected Wet and Dry Noodle Revenue for Company Y
Year 1
Year 2
Revenue
10,103,438
15,000,000 Cost of goods
5,665,506
8,418,333
Trade
2,007,874
2,980,000 Overheads
1,816,192
2,690,000
Advertising
100,000
200,000 Net Profit
513,866
711,667
105
APPENDIX K
BUSINESS PLAN
OR THE PRODUCTION OF
OYSTER SAUCE
BY
COMPANY X
106
1. EXECUTIVE SUMMARY Company X is a major manufacturer of sauce products for main meal foods. It has some 6% market share in the oriental sauces retail sector (Retail World, 1996). Its products include products X X stir fry sauces, XY sauces and other products such as herbs and spices, mustards and canned beans under the X brand. Company X’s brand recognition and its manufacturing marketing resources provides Company X with a competitive advantage for the development of other sauces which shall extend their current range of oriental sauces. Greater potential business benefits may accrue if these new products can provide a basis for strategic export development into Asia. Sauces for Asian main meals is an existing product range for Company X and the opportunity to extend this range to include ‘Oyster Sauce’ for main meals and/or cooking is the subject of this business plan. The unique feature of the X Oyster sauce product shall be its development and positioning as a main meal sauce rather than as a condiment sauce only. All other oyster sauces are imported and are used essentially as condiments rather than as sauces for main meals. Sauces for main meals which target today’s busy lifestyle provides speed and convenience in the preparation of foods and is a demonstrably successful product strategy for Company X. 2 DESCRIPTION OF THE COMPANY AND ITS RATIONALE X is a world leader in each of its main business’s:
Branded snack foods Petcare Products. Main meal foods Electronic payment systems and Drink vending.
MX’s parent has annual sales in excess of US$13 billion with markets in over 100 countries and manufacturing facilities in more than 60 countries. The Australian operations of Company X includes a state-of-the-art manufacturing plant in Sydney. The plant has significant manufacturing capacity and currently manufactures for not only the Australian market, but also the export markets of Asia and South America. A key objective of Company X Australia is to focus on the strategic development of products for the Asian markets. The management structure of Company X reflects this objective. For example, it is noted that the Research and Development Manager has the joint responsibilities of product development and export development for Asia.
107
3 THE PRODUCT OR SERVICES OFFERED BY THE COMPANY Company X is a major manufacturer of sauce products for main meal foods. It has some 6% market share in the oriental sauces retail sector (Retail World, 1996). Its products include XX stir fry sauces, XY pasta sauces and other products such as herbs and spices, mustards and canned beans under the X brand. This manufacturing experience, and its existing distribution and marketing infrastructure for such sauce products provides Company X with a competitive advantage for the development of other sauces which shall extend the product range of their sauces. Greater potential business benefits may accrue if these new products can provide a basis for strategic export development into Asia. Sauces for Asian main meals is an existing product range for Company X and the opportunity to extend this range to ‘Oyster Sauce’ for main meals and/or cooking is the subject of this business plan. The oyster sauce product requires further developmental work in terms of: Formulation - Development of the product based upon liquification or rehydration of
‘oyster powder’ food ingredients. Taste Profile - Flavour, consistency, and other sensometric issues. Branding - X have major brand recognition and brand development strategies with X X
and other related products. The unique feature of the X Oyster sauce product shall be its taste, branding, retail market position and its potential to be recognised and utilised by both Asian and Australian consumers of Asian style foods. All other oyster sauces are imported and are used essentially as condiments rather than as sauces for main meals. Sauces for main meals which target today’s busy lifestyle provides speed and convenience in the preparation of foods and this is a demonstrably successful product strategy for Company X.
108
4. MARKET SITUATION AND ANALYSIS Situation Analysis ABS statistics (1996) show that imported sauces as a category (excluding soy and tomato sauces) are valued at $50.4 million and have been growing at an annual rate of 15.7% since 1994. Similarly in Retail World’s 1996 annual survey, it was estimated that the oriental sauces market in retail outlets was valued at $25.2 million pa, and was growing at an annual rate of 16%. Industry comments confirm that this rate is similar for oyster sauce specifically, and this is supported by the growing consumer market of non-Asian consumers who are developing the taste for Asian flavours and cuisine. The Oyster sauce market is currently dominated by four leading brands as shown by Table 1 below: Table 1 Leading Brands of Oyster Sauce in Australia Brand
Source
Target Market
Target Use
Lee Kum Kee Singapore/Malaysia
Asian Grocery Stores
Condiment
Maggi Malaysia
Supermarkets
Condiment
Ayam Malaysia Asian Grocery stores and supermarkets
Condiment
Kikkoman
Japan
Asian Grocery stores and supermarkets
Condiment
As Table 1 shows Lee Kum Kee is mainly distributed in Asian grocery/supermarket stores, Maggi is predominantly in the mainstream supermarkets whilst Ayam and Kikkoman are marketed in both. In all cases, the oyster sauce is marketed as a condiment rather than as a sauce for main meals.
109
Market Size The total retail market size including Asian grocery stores for oyster sauce in Australia is estimated to be $5.5 million pa. The approximate market shares by brand are shown in Table 2 below: Table 2 Approximate Market Share for Oyster Sauce in Australia
Brand Estimated Market Size ($ Million)
Lee Kum Kee
3.0 Maggi
1.5
Ayam
0.5 Kikkoman
0.5
Total
5.5 Strategies and Competitive Advantages It is estimated that Company X has some 5.7% of the oriental sauces market in the retail (excluding Asian grocery stores) sector. Company X shall focus on complementing its existing range of oriental or Asian sauces for main meals with an ‘Oyster sauce for main meals’ targeted at both the main supermarkets and Asian grocery stores. Oyster sauce as a condiment can also form part of the product range. Company X has a well established distribution channel and a product range into the mainstream supermarkets and would focus its initial target on the mainstream supermarkets using an “Asian” look product. Based on Company X projections and market research of prices in the Asian stores, the product should be able to compete on price , subject to consumer acceptance of taste and the packaging is appealing to Asian and non-Asian consumers.
110
Manufacturing The Company X plant has available capacity for the manufacture of food products of very high quality and standard. Flexible manufacturing scheduling allows the company to adopt a just-in-time or make-to-order approach that can assist with its existing marketing strategies for supermarkets and Asian food exports. While the company’s primary target is South East Asia, the Australian market and the Asian grocery stores provides the opportunity of a good testing ground especially for the Asian market. This focus can be based upon both the Asian food shelves in the mainstream supermarkets and the Asian grocery stores. The company has in the past attempted ‘scallop sauce’ for the Asian market which was not successful. However this experience shall be used in the development of a packaging and distribution model for the oyster sauce.
111
5. THE FINANCIAL PLAN Plan for Oyster Sauce (Unit: 350 ml bottle) Projected Sales:
$900,000
Cost of manufacture $1.66
Overheads/Indirect costs/margins 0.67
Ex Factory Price 2.33
Distribution cost 0.17
Wholesale price into store $2.50 per unit
Recommended Retail Price
$3.33
Potential Gross Margin
0.83
Given the current philosophy of the company, the availability of raw material, capacity and technical expertise, the company no longer bases its production decisions on long term financial projections. Each transaction is evaluated on its merits and its returns. For examples based on direct comparisons in this case, Company X believes that they can produce a 350 ml bottle of oyster sauce at a direct into store cost (DIS) at $2.50 per bottle. Market survey results have indicated that on average the leading opposition products are priced at $3.00 DIS. Summary Financial Plans
Year 1
Year 2
Revenue
$900,000
$990,000 Cost of Manufacture
448,648
493,513
Overhead /indirect costs
181,080
199,189 Distribution Costs
45,956
50,540
Gross Profit
224,316
246,758
112
6 PROMOTIONAL SUPPORT Company X currently has 30 full time field based sales associates, and over 400 part time merchandisers, who visit most supermarkets in Australia on a weekly basis. It is planned that this resource be utilised to help drive distribution and in store presence of the product. Like other Company X products, the Oyster Sauce can be demonstrated in store using the fully trained demonstration team which is used by Company X on weekly basis. Allowance has been built into the cost to allow in store promotional activity at a level similar to other Company X products such as price off deals, off location displays, shelf talkers, recipe cards and neck tags. Company X uses a 1800 toll free consumer telephone line on all it’s products to facilitate consumer feedback and service, and each product is supported by a full on label “Guarantee of Satisfaction”. It is planned that the Oyster Sauce will also carry this guarantee and toll free number. Based on forecast sales for the product of $900,000 annually, it is envisaged that the launch of this product be supported with a small scale media campaign probably using magazines.
113
APPENDIX L BUSINESS PLAN FOR THE PRODUCTION OF CHAMPIGNONS BY COMPANY Z
114
1 DESCRIPTION OF THE COMPANY AND ITS RATIONALE Company Z is an Australian-owned unlisted public company, established originally as the ZZ Coop in 1975. Since that time, the operation has undergone significant changes and today dominates the domestic market for Australian processed mushrooms. The Company Z division has also built significant business in the manufacture of salad dressings under private labels. The Jam division produces a range of products which includes jams, baker’s fillings, and honey. The Foods division manufactures and blends an extensive range of dry food products including soups, sauces, seasonings, boosters and herbs & spices. Each division in the Group produces for the industrial food market, food service market and retail market. Company Z operates from three sites; each site has achieved accreditation to the international quality standard ISO 9002, demonstrating the commitment of Company Z to quality and continuous improvement. A flexible approach to development, production and packaging ensures that Company Z is able to cater to the changing needs of its customers and the market in general. Ongoing commitment to quality, innovation and product diversification are the basis of Company Z’s continued growth in prominence in the food industry in Australia and beyond. Financial Summary The company turnover is $16 M p.a., and retail sales account for $6.2M (39%) of total sales. Canned mushrooms under both the Company Z and private/generic brands contribute 60% of the company’s retail sales. Company Z dominate the mushroom processing industry in Australia and process around 70% of all canned retail mushrooms.
115
2 THE PRODUCT OR SERVICES OFFERED BY THE COMPANY Company Z Foods currently process and sell mushrooms in a variety of forms to the food service and retail markets in Australia and New Zealand, under the Company Z brand as well as under private label and generic brands. The company is focussed on a program of new product development over the next five years, with the primary focus being on new retail mushroom products. One of the products Company Z contract manufactures is Australian canned champignon, for distribution under a major Australian brand, in mainstream Australian supermarkets. There is an opportunity to re-package the product for the Asian supermarkets in Australia. In addition, the Foods division has expertise in sauce development, and has taken the opportunity to capitalise on the growing Asian food trend, by working closely with a local Asian company to develop and produce a range of six authentic Asian sauces and seasonings to be sold in retail markets overseas and in the Australian market. The sauces were developed over a period of two years, and considerable effort went into carefully re-creating authentic Asian flavours, using specially imported ingredients. Samples have been produced for presentation to potential customers in countries including China, Hong Kong, Canada, USA, and Chile. The next step is to determine the opportunities for the product range in the Australian retail market. Objective The objective is to pack champignons under the Company Z brand, in 425g and 220g cans, and target the product for distribution into Asian supermarkets in Australia. Product description A-grade button mushroom, processed in brine. The point of difference over imported champignons is greatly superior flavour. The flavour of the mushroom is evident, as opposed to champignons which provide the texture and colour of mushrooms, but with only a salty flavour. The product will be priced at a premium compared to imported products. The product is Australian, and Company Z is ISO accredited, so there is a greater assurance of quality, compared to imported products. The benefit to Asian distributors in Australia is that they can deal more easily with a local supplier.
116
Pricing Product
220g x 12 ctn
220g x 24/ctn
425g x 12 ctn
Cost of manufacture 15.58
30.11
27.95
Overheads/indirect cost included
included
included
Distribution cost 5%
5%
5%
Wholesale price into store 20.75
40.15
37.25
Rec. Retail Price $27.67 / ctn (12 x $2.30)
$53.53 (24 x $2.23)
$49.67 (12 x $4.13)
Potential Gross Margin 25%
25%
25%
3. MARKET SITUATION AND ANALYSIS According to Retail World 1996 report on supermarkets lists the canned champignon market size at $10.3 million. It is estimated the Asian grocery stores represent another $ 5 - 8 million Strategy In view of the fact that Company Z is already packaging for a major Australian brand for the mainstream supermarket, an opportunity exists for Company Z to develop packaging appropriate to the Asian supermarkets, and to present the product to Asian distributors, along with a range of Asian sauces and seasonings. A program of promotion and product sampling will be conducted in-store to demonstrate the superior flavour of the product to consumers. This market segment can be used as a test bed for the Asian market leading to export opportunities into Asia. Competitive Scenario Imported champignons available on the retail market are sourced from India, China and Indonesia. They are available in a range of sizes, including 425g and 220g cans. Competitor Brands (in Asian supermarkets) The market is saturated with a wide variety of imported mushrooms which sell primarily on price (in non-Asian supermarkets). It is considered that the product quality is inferior, in terms of flavour, to the proposed Company Z champignons. Currently there are no Australian produced champignons available through Asian supermarkets. The competitor brands and source are as follows:
117
IV. Narcissus - China V. Weitram - Taiwan VI. Valcom - Thailand 4. THE FINANCIAL PLAN Based on the market size and the feedback from Asian distributors it is estimated that Company Z should be able to capture about 5-8 % share of the Asian grocery store market during the first year of launch.
Year 1
Year 2
Revenue
250,000
400,000 Cost of Goods
139,750
223,600
Distribution
125,000
200,000 Trade costs/advertising
35,250
56,400
Gross Profit
62,500
100,000 5. THE IMPLEMENTATION PLAN Given the existing production capacity of Company Z and the availability of supplies, Company Z’s is in a position to produce commercial samples within a week of expressions of interest, subject to artwork which may take 4-8 weeks. For normal production we should allow 1-2 weeks for incubation of the canned product for quality assurance. Taste samples, without labelling, can be delivered within days from an order.
118
REFERENCES REFERENCES REFERENCES BIS Shrapnel (1997) - The Australian Food Service Market Department of Primary Industries - Innovate Australia and Energy (1994) Outcomes of the National Consultation Program
Report for Senator the Hon. Peter Cook Minister for Industry, Science and Technology
Instate Pty Ltd (1995) - Corporate Strategies and Structures Penetrating Asian Markets - A Strategic
Perspective Rural Industries Research and Development
Corporation Research Paper No.95/7 Retail World (1996) - Annual Report, December 1996 Retail World (1997) - Various issues, March - October, 1997 Ripe, C (1993) - Goodbye Culinary Cringe, Allen and Unwin 1993 RIRDC (1996) - Australian Asian Vegetables - An Assessment of
Market Demand in Australia Rural Industries Research and Development
Corporation Research Paper No. 96/7 RIRDC (1994) - Asian Food in Australia - Getting a Bigger Bite
Rural Industries Research and Development Corporation Research Paper No. 94/5
Rolls E, (1992) - Sojourners
Flowers and the Wide Sea Macmillin Press
Vinning G, (1993) - Asian Food - Market Trends and Prospects
Report for Rural Industries Research & Development Corporation. Research Paper 93/3
Vinning G, (1995) - Compendium of Asian Vegetables
Report for Rural Industries Research & Development Corporation, Research Paper 95/12
Wells I, (1993) - Soy Sauce Product Development Study
Qld Dept of Primary Industries 1993