Catherine Sayer
We have all heard the term “the new normal”, but what does that actually mean for the food and beverage sector? Where are companies in terms of growth opportunity and diversification?
From Food South Australia CEO Catherine Sayer.
As the leading organization for the food and beverage industry in South Australia, Food South Australia has worked to provide updates and information to help individual companies put themselves in the best possible position for recovery. We recently partnered with our associate sponsor NAB Agribusiness to keep our industry up to date on global economic trends.
Phin Ziebell, NAB's regional and agribusiness economist, hosted the webinar and spoke about likely trends in domestic markets as the impact of Covid-19 continues to affect consumer spending, travel and business operations. Phin is responsible for analyzing and reporting trends and developments in the agribusiness, infrastructure and consumer spending for National Australia Bank and is also the Associate Director of NAB Group Economics.
As we know, the global economy has suffered its biggest decline since the Great Depression, and with the current pandemic remaining somewhat unchecked, the situation seems dire. That's the bad news. The good news is that signs of recovery are now showing as regions relax and reopen restrictions.
Phin told us that there are actually two “camps” in the world economy, characterized by countries at different stages of the pandemic.
China and all of Asiatic Asia put tight lockdown measures in place early on, and their economies are now picking up speed again. Demand for premium Australian food and beverage imports continues to be challenged, due to consumers remaining cautious about their in-store and restaurant spending on quality food and beverage. Going forward, the Southeast Asian countries are expected to emerge the strongest from the crisis, as they performed relatively well in the pandemic. These countries also have a growing middle class that is establishing this region as a key market for high quality Australian food and beverage products.
In the other “camp”, the global economy faces significant future and current challenges as the virus remains out of control in parts of the US and Europe.
On our home soil we have a diverse economic landscape in which only one state is strictly prohibited. The negative impact on Victoria State's gross profit is estimated to be at least 10-15%, which will have an impact nationwide.
With a challenging job market and a rising national unemployment rate, we now have a growing space of price sensitive consumers who will focus on availability and accessibility. This will lead to increased demand for processed imported foods such as canned and frozen foods. However, given this growing divergence in consumer spending, there are also shoppers who are not faced with the loss of jobs and who are consciously spending more on local products when they choose the choices made in South Australia. This trend was the driving force behind the recent launch of the SA Made and Owned program with Drakes Supermarkets.
Overall, there is less out-of-home and hospitality spending, and e-commerce sites have been booming, particularly in Victoria, due to the lockdown. This has challenged and disrupted the distribution chain.
There has been a decline in the hospitality industry that is gradually returning in some states. During that time, it has given a head start on food and beverage manufacturers who can make the transition from selling in the hospitality industry to selling directly to consumers. For businesses that can offer take-away or ready-made meals, or even ingredients, new opportunities remain to encourage consumers to cook more at home. The new trend of consumers buying direct from manufacturers – and often in bulk – also looks promising. It is expected to continue after the crisis and has been a good example for food and beverage companies of the need to diversify their markets in order to minimize risk.
If you'd like to listen to the replay of our economic update with NAB, please visit our Food South Australia website on our COVID-19 webinar series.
About Catherine Sayer
Catherine has headed Food South Australia since its inception in 2010 and is passionate about leading the development of the industry's governing body with a focus on industry growth and advocacy. She is also a member of several boards, some of which chair.
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About Essen South Australia
Food South Australia is the state's umbrella organization for the food and beverage industry committed to supporting and sustaining the industry in the state by helping businesses of all sizes develop their markets, capabilities and industry connections. Food South Australia is independent, industry driven and membership focused.
Foodsouthaustralia.com.au
