Source: Australian Food News

Story By: Matt Paish

A market report on Australia’s packaged food sector from market research consultancy Euromonitor predicts that ongoing economic uncertainty and weak consumer confidence could provide Australia’s packaged food retailers with enhanced opportunities to grow retail volume sales.

Euromonitor’s ‘Packaged Food in Australia’ market report, released yesterday, says the packaged food industry displayed resilience against lowered consumer confidence following the global financial crisis of 2008 and interest rate increases by the Reserve Bank of Australia in late 2010.

Retail value sales grow as consumers stay home

Euromonitor’s report said that in 2011 Australians were more cautious than previously about spending and, as a result, consumers opted to eat at home more frequently.

The report said Australian consumers were increasingly appreciative of convenience, while health or wellness was continuing to be a key consideration in the decision-making process. However, many shoppers rationalised cutting back on some products not only as economising, but also as a deliberate move towards better health.

Wesfarmers Managing Director identifies consumer saving trend

Independently, Richard Goyder, Managing Director of Wesfarmers Limited, which owns the Australian supermarket chain Coles, has confirmed that Australians are opting to save rather than spend at the moment.

Speaking at Wesfarmers’ AGM on 9 November 2011, Mr Goyder said that Mr Goyder said, “Ongoing investment in lower prices has been well received by customers. For example, Coles’ ‘Down, Down’ campaign, has reduced the price of over 6,000 items by more than 10 per cent. This has driven higher sales and increased customer transactions at the register.”

Euromonitor confirms substitution by supermarket private labels

Due to the prevalence of price rollbacks and bulk buy promotions for branded products, consumers have come to expect substantial discounts on multiple and larger format purchases. In the absence of such deals many consumers are content to substitute a branded product with a private label equivalent.

Private label strengthens its foothold in packaged food

The Euromonitor report claimed that supermarket-owned private label and artisanal brands lead to a “fragmented competitive landscape”, due largely to the diverse private label ranges offered by Coles and Woolworths and the penetration by their in-store supermarket bakeries and chained specialist bakeries in baked goods into markets previously dominated by external bakery companies and franchises.

According to Euromonitor’s research, National Foods Pty Ltd and Nestlé Australia Ltd are currently the two leading branded players in packaged food, with Kraft Foods Ltd (which also now owns the Cadbury’s brand) overtaking Fonterra Brands (Australia) Pty Ltd for third position. Kraft Food Inc made its global acquisition of Cadbury Plc in February 2010.

Supermarkets flourishing at expense of smaller grocers

The Euromonitor report points out that the trend towards deep discounting on staples products and bulk buy price promotions by Australia’s leading supermarkets is further evidenced by the network expansions of discounters Aldi and Costco in the review period. The Euromonitor report said the major Australian supermarkets/hypermarkets and discounters have gained retail value shares at the expense of forecourt retailers, convenience stores and independent small grocers.

To read the full story, follow this link: www.ausfoodnews.com.au/2011/11/10/euromonitor-sheds-light-on-australia%e2%80%99s-packaged-food-retailer-market-sector.html