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Food Sector in Australia Richard Harper

An Overview of Australia: Facts and Figures

• Australia's estimated resident population On 24 June 2014 is projected to be 23,508,937.

• The most populous states are New South Wales and Victoria, with their respective capitals, Sydney and Melbourne, the largest cities in Australia.

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Another view of Australia

Market Environment: Overview

• In Australia, food and non-alcoholic beverages account for over 17% of household expenditure.

• Food wholesaling represents about 16% of wholesale trade.

• The largest contributor to retail turnover (29%).

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Market LeadersWOOLWORTHS WESFARMERS METCASH

SUPERMARKETS

Woolworths, Safeway, Thomas Dux (and more in New Zealand)

Coles, BI-LO IGA, Supa IGA, Foodland, Franklins

LIQUOR STORE

Dan Murphy’s, BWS, Woolworths/Safeway Liquor,

plus 316 hotels with 13,480 poker machines

1st Choice, Liquorland, Vintage Cellars, plus 96 hotels with 3,000+ poker machines

Cellarbrations, Bottle-O IGA Plus Liquordistributes to 15,000+ liquor retailers, yet

owns none itself

FUEL & CONVENIENCE STORES

Caltex Woolworths/Safeway Coles Express (with Shell) IGA X-press, Lucky 7

DEPARTMENT STORES

Big W Target, Kmart

SUPERMARKET HOUSE BRANDS

Woolworths, Homebrand, Select, Fresh, Organic, Macro, Naytura, Freefrom

Coles, $mart Buy, Simply Basics, Derma, Purr and Banquet Pet Foods

Black&Gold, IGA, Signature, Way of Life, Purely Organic, Foodland

Woolworths and Coles• The two major supermarkets groups

together account for approaching 75% of super market sales

– Over 50% of alcohol retail

– 44% of petrol retail and 25% of all retail in Australia

very influential over suppliers

• However major changes have occurred

Market Share

ColesWoolworthALDIMetcashOther

33.5%9.5%

10.3%

39.0%

7.7%

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Market Environment: Food• One of the most concentrated grocery markets in the world

• Woolworths, Coles (Wesfarmers) and IGA (Metcash) together account for 82% of supermarket sales. Other players include ALDI which has now muscled IGA out of the third largest position with 10.3% share of market and plans to expand further.

• Woolworths and Coles account for 60% of alcohol retail, 50% of petrol retail and 40%.

• Woolworths is also the largest seller of tobacco and alcohol

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Woolworths and Coles: Changes• Moving towards reducing the range of all products they offer customers.

• Aim to free up supermarket shelf space, allowing for the introduction of private label range.

• As a result, consumer choice has been limited across all products sold.

• A product category will typically include their two top selling products plus a range of Coles or Woolworths branded products.

Metcash• Australia’s largest wholesaling and

distribution company.

• Part of South- African Metcash group. Supplies IGA supermarkets.

• Accounts for 16% of supermarket sales

• Servicing independent grocery retailers throughout Australia, including those under the IGA and Supa IGA banners. Eg. Foodland, Foodworks, 7-Eleven, Lucky 7, BP and several liquor retailers

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Food Sector in Australia.Continued consumer focus on health. • Consumers are looking for more

nutrition advice, health movement to salt and sugar reduction, which is being pushed health organisations.

• Consumers want products with recognisable origins.

• Chic packaging and premium products

• Growing consumer demand for organic goods

An influential factor in the product range on offer by supermarkets

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Assessment / Reappraisal

• SWOT analysis

• What were we selling (USPs)

• What was the realistic potential for the brand ?

• Could we export ‘relevant’ elements of the UK success?

• Revise

DON’T DO

Promise the earth

Over-estimate your sales

potential

Manipulate your distributor

Plan well in advance

Optimise your product benefits

Manage your marketing and

promotional budgets carefully

Find the right distributor - remember it’s horses for courses

And not all the sharks are in Sydney Harbour!

How can UKTI help?

OMIS service:

• Industry specific sector report.

• In-depth report with a bespoke section tailored to a specific sector with contacts in core areas.

• Product Launch.

• Commercial publicity.

Thank You

• Any questions?

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Food and Drink Sector in Australia Richard Harper Senior Trade Development Manager UK Trade & Investment British Consulate-General Level 16, The Gateway,1, Macquarie Place Sydney NSW 2000 | Tel: +612 8247 2233 Mobile: 61 (0) 408 662 324 Email:richard.harper@fco.gov.uksydharpuk@hotmail.com URL www.ukti.gov.uk/greatbritain/au

Henning Harders (Australia) Pty LtdUK Trade & Investment

Webinar: 3 September 2014Subject: Exporting to Australia

Agenda

Introduction Company Overview Services Experience Facts & Figures

Accreditations/Memberships Challenges and Pitfalls of exporting to Australia Australian Customs and Border Protection Food Standards Australia New Zealand (FSANZ) Department of Agriculture; Quarantine and Imported Foods Program Import Documentation Meat and Meat Products Prohibited Goods Useful Links Contact Details Q & A

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Henning Harders (Australia) Pty Ltd Page 2

Company Overview

Australian, Family Owned, Founded 1987 Sydney

95 Employees, 6 Offices (Australia/New Zealand)Licensed Brokers – 8 in Australia, 4 in New Zealand

Turnover - AUD 84.74 Million | TEU 70,000 | Shipments 35,000

Strategic Partners – International/Domestic

Established

Professionals

Volume

Cooperation

Services

Sea Freight

Air Freight Customs

Clearance

Warehousing

Cargo Insurance

Domestic Transport & Distribution

Port/Terminal Transport

Cargo Tracking

Trade Advice

Vendor Manageme

nt

Project Manageme

nt

Value Added

Services

Approx Transit Times to Sydney

2-4

38-44

Approx

50

Air Sea Direct

SeaTranshipment

Transit Time (Days)

Facts & Figures

Fremantle

UK to Australia a $6 billion trade lane, serving 23.5 million people

Facts & Figures

Experience

Accreditations/Memberships

Food & Beverage Importers Association

Member of CBFCA (Custom Brokers Council of Australia)

Member of FBA (Family Business Australia)

Dangerous Goods by Air (accredited) and Sea Freight

Regulated Air Cargo Agent for Security

Member of German-Australian Chamber of Shipping Ltd

Member of AFIF (Australian Federation of International Forwarders)

Freight Agent & Memeber of IATA (International Air Transport Association)

Challenges and Pitfalls of exporting to Australia

Australia’s remoteness is the biggest challenge faced by exporters. Products with a short shelf-life need to be air freighted at

significant cost to the importer, which is ultimately passed on to the consumer.

Products with a longer shelf-life can be sent by sea, but it will still take a minimum of five weeks for the goods to arrive with the importer, longer if indirect shipping routes are used.

A pitfall to shipping to Australia, particularly with food and beverages, is a failure to research importation requirements.

Import permits issued by the Department of Agriculture can only be issued to an entity resident in Australia, causing issues when supplying goods on a DDP basis to customers.

Import permits should be in place prior to export to ensure that all permit conditions can complied with. Veterinary certificates for example cannot be issued once goods have left their country of origin.Henning Harders (Australia) Pty

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Challenges and Pitfalls of exporting to Australia

Failure to adhere to the import conditions as set out on the import permit or listed in the Import Conditions (ICON) database can delay or exclude goods from importation into Australia.

Incorrectly researching a product can also cause complications. ICON may not have conditions for a specific item, but this does not mean that the goods may be imported. It is then necessary to ensure each ingredient is not a quarantine risk.

There are different weight limits permitted for Australian roads in each state. A fully laden container may be permitted in the roads in Queensland, but the same container may be prohibited in New South Wales. Research is key.

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Australian Customs and Border Protection

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Like Customs Services worldwide, Australian Customs is tasked withcollecting government revenues (Duties and Taxes) and with preventingthe importation of prohibited and restricted imports at the border.

With regards to the importation of food and beverages, the onus for similarprevention falls upon the Department of Agriculture’s Quarantine department (except for foodstuffs that may be CITES listed species imported without the necessary permits).

Food Standards Australia New Zealand (FSANZ)

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Food Standards Australia New Zealand is a bi-national Government agency that administers the Food Standards Code.

The code dictates food requirements including permitted additives, food safety requirements, food labelling and genetically modified (GM) Foods.

Enforcement and interpretation of the code is handled by the food safety office within each state or territory.

Food Standards Australia New Zealand (FSANZ)

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All imported food must meet FSANZ labelling requirements. Full information on the code is available at the link provided at the end of the presentation, but an interactive example of a label is at the below link.

Please be mindful that information required on the label will vary depending on the goods so the example below may not apply to all foods.

http://www.foodstandards.gov.au/consumer/labelling/Pages/interactive-labelling-poster.aspx

Department of Agriculture – Quarantine/Biosecurity

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Australia’s Quarantine or Biosecurity program is an arm of the Department of Agriculture.

It’s role is to protect Australia’s unique environment by helping mitigate the risk of the introduction and spread of exotic pests and diseases, often introduced through shipping.

Prospective exporters or their Australian importer should first check for any importation requirements for their products with the Department of Agriculture’s Import Conditions Database (ICON).

Department of Agriculture – Imported Foods Program

The Imported Foods Program is administered by the Department of Agriculture. Imported Foods subjected to the measures are mainly classified between Chapters 1-22 of the Customs Tariff.

All imported foods must first satisfy quarantine requirements to be cleared at the border.

The Imported Foods Program’s focus is on food safety requirements as listed in the Imported Foods Control Act 1992.

All foods imported into Australia must meet with the guidelines in this act and be labelled in compliance with Australian requirements as set out by Food Standards Australia.

Risk foods are routinely analysed for the presence of harmful micro-organisms and bacteria that may cause serious illness after consumption. However a history of clean results will lower future instances of analysis.

Analysed foods that do not meet the guidelines issued by Food Standards will be issued with a failing food notice and must be destroyed or re-exported.Henning Harders (Australia) Pty

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Department of Agriculture – Imported Foods Program

Surveillance foods are subjected to less frequent testing as they are by nature less of a risk to the consumer.

All imported foods are randomly selected for inspection by Department of Agriculture officers at the importer’s premises to ensure labelling requirements are met.

If the labelling requirements are not met a failing food notice is issued and the importer has the opportunity to fix labelling faults before reinspection by Department of Agriculture officers.

Inspections and laboratory analysis are conducted at the expense of the importer.

Failing Food Notices are published on the Department of Agriculture’s website and list the importer’s name. This is available to the public and is clearly not a good advertisement for them or the supplier.

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Import Documentation

In addition to standard shipping documentation such as bills of lading, airwaybills, commercial invoices, packing lists and certificates of origin the following documentation may also be required:

Packing Declaration; Treatment Certificate (if ISPM15 treated packing material is not

used); Import Permit; Consignment Specific Manufacturer’s Declarations; Veterinary Certificate (for biologicals and foodstuffs containing

biological ingredients); Phytosanitary Certificate (for plant products); CITES Certificates (Convention for International Trade in

Endangered Species); Lot Code Lists (for all food imports).Henning Harders (Australia) Pty

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Import Documentation

Where an import permit is required, once issued the permit will list all conditions that must be met in order to import the product. This includes which of the above documents may be required, and what statements those documents are required to make. These conditions usually match those listed on the ICON database.

Some products may be exempt from permit requirements, yet still require additional documentation to allow for quarantine clearance. These conditions can be accessed online using the Department of Agriculture’s ICON database.

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Meat and Meat Products

Some meat and meat products are examples of goods for which the issue of import permits has been suspended. Uncanned red meat is an example (see below):

1. An import permit is required.2. The quarantine requirements for the importation of uncanned

meat and meat products from domestic stock (excluding porcine and avian) have been suspended pending a formal review.

3. Import permits will not be issued for products affected by this suspension until the review is finalised.

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Meat and Meat Products

Other meat products had an Import Risk Analysis conducted, but require development of country and commodity specific rules for import. These will only be developed upon negotiations between the exporting country and Australia and can takes months, even years to develop. Cooked uncanned chicken meat is an example (see below):

1. The 2008 chicken meat Import Risk Analysis (IRA) sets out the general requirements for imported non-retorted chicken meat and can be viewed at Department of Agriculture’s web site under Finalised Animal Import Risk Analysis documents. This IRA is not restricted to specific exporting countries. Please note that country and commodity specific import conditions must be developed before any chicken meat may be imported into Australia. All countries must meet the requirements outlined in the chicken meat IRA before specific import conditions can be developed. Currently New Zealand is the only country to have specific import conditions developed and an individual ICON case has been created which outlines their specific import requirements.Henning Harders (Australia) Pty

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Prohibited Goods

In the food and beverage sector, the term ‘prohibited goods’ is rarely used. However, the Import Conditions database will confirm any products for which the issue of permits has been suspended.

Similarly, goods imported into Australia without any necessary permits or other required documentation, will not be released from quarantine control and will need to be re-exported or destroyed at the importers expense.

Both of these scenarios would be similar to a prohibited goods situation.

One situation in which foodstuffs would be prohibited goods is if they are an endangered species and are imported without a CITES permit.

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Useful Links

http://www.daff.gov.au/biosecurity/importhttp://www.daff.gov.au/biosecurity/import/foodhttp://apps.daff.gov.au/icon32/asp/ex_querycontent.asphttp://www.foodstandards.gov.au/code/Pages/default.aspxhttp://customs.gov.au/

The above links contain a wealth of useful information regarding importing food and beverages into Australia. It can be quite overwhelming and ICON in particular can be difficult to navigate. Please contact Henning Harders for assistance or questions relating to the importation of your products into Australia.

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Contacts

Henning Harders (Australia) Pty Ltd Warrant Group Ltd

100 William StreetSydney NSW 2000

John NewlynBusiness Development Manager

Ph: 0410 495 800Fax: (02) 8302 0499

Email: jnewlyn@harders.com.au

Steven ButlerAssistant Customs Manager

Ph: (03) 9335 5644Fax: (03) 9335 5600

Email: sbutler@harders.com.au

Warrant House157 Regent RoadLiverpool L5 9TF

John BurnettBusiness Development Manager

Ph: +44 (0) 151 955 0600Email:

john.burnett@warrant-group.com