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Asian markets: time for a treat

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IT is hard not to take notice of the way the Asian economy is shaping up.

Gearing towards substantial development and a sharp rise in incomes, the urban middle-class in Asia has money to spend.

The Australian food industry needs to bear in mind - with the growing standard of living, the next big thing to witness growth is the food appetite of the people.

Asia seems to fit the bill!

Big retailers are targeting the market, demand of private labels from distributors and retailers is on the rise, and there is more awareness about healthy eating, organic, GMO food and so on.

“Asia is Australia’s back door,” said Austrade ’s Singapore senior business development manager food and beverage, and agribusiness, Toh Guek Hong.

“Certainly, Asia looks to Australia for clean and safe food.

“Australia’s proximity and AQIS (Australian Quarantine and Inspection Service) certification of its food items provides a lot of confidence to the Asian consumers, especially in affluent countries like Singapore and Malaysia, whose basket of needs is different from other Asian countries.

“This is even more so, with the trends in Asia looking at organic well-being products in the likes of cereals down to organic honey, milk and so on.

Australia is well-positioned to cater to the demands of the Asian consumers.”

Export opportunities at a glance

When it comes to the retail scene, and the growing trends for organic wellbeing products in the processed F&B sector, Singapore is a forerunner.

Then comes Malaysia, Thailand, Indonesia, and the Philippines, in that order.

As far as the need for alterations and modifications in labelling and packaging from Australia is concerned, Toh pointed out, “If one looks at the continuum, Singapore is again at the top.

“Malaysia, Thailand and Indonesia have different labelling requirements in the form of local language, halal certification and even import regulations.”

Trade shows are an important barometer for exporters to gauge markets.

According to the Austrade calendar, ranking after Anuga in Germany, is this years Food & Hotel Asia held in Singapore.

It is the second biggest F&B industry trade show in the world.

Australia has the second largest pavilion after the American pavilion.

These trade shows are comprised of both established and new exporters from Australia like Jam Lady Jam and Real McCoy who get an opportunity to liaise with overseas buyers and secure bulk orders.

Australia has officially taken first place from France as the leading supplier of wines to Singapore, measured by volume.

More than one third of the 12 million litres of still wine Singapore imported last year came from Australia.

The Philippines is Australia’s second largest market for dairy after Japan.

In this westernised market, wine sales have been up by 10% per annum for the past fiveyears and the bakery sector is growing at 16%.

Australia is Malaysia’s second largest supplier of food, and nearly 70% of the raw materials used in Malaysian food manufacturing industry are imported.

The crisis of 1997, which saw a demand in cheap imported goods at lower costs in Asia, has given way to demand for quality premium imports.

Recent data from Austrade reveals South-east Asia, South Asia and the Pacific accounts for more than a third of all Australian exporters, while Asia Pacific makes up 14 out of 20 of Australia’s top exporters’ destinations.

Currently, India, Thailand, Malaysia, Singapore, Indonesia and the Philippines look to be the most promising food and beverage markets for exporters.

“In the light of rapid industrialization, increased urban values, and emerging middle class consumer groups, Asian countries witnessed major influx of imported processed food items,” said market research firm Research and Consultancy Outsourcing Services CEO Sushmul Maheshwari.

“Our study of the food processing industry in Asia-Pacific estimates China’s packaged food market to grow at a CAGR of 6.6% to reach $US64.5 billion by 2008, though the current market consumption in Japan is relatively higher amongst all countries listed under Asia-Pacific.”

Value and order

The Asian market is not just about demand for ethnic food anymore, but includes a broad spectrum of foods that are healthy, yet easily accessible and convenient for the time-pressed urbanites.

Topping the list in demand for imported processed food items in Asia are processed dairy, wine, seafood, confectionary and organic food.

Japan, Hong Kong, Taiwan, Singapore, Korea and Malaysia are poised to be the fastest growing confectionary markets in Asia.

Meanwhile, the concept of gourmet food is slowly catching up with Asian taste buds and steering demand for premium packed gourmet items.

“In the cheese category, the Asian market traditionally looked to France.

“However, Australia has been coming up not only with island cheese, but also cottage and gourmet cheeses like Jindi cheese, Parago and Barossa Valley have been making it to the gold medal awards.

“Even in retail markets the universal trend is to wellness and wellbeing products like low-sugar, low carbohydrate and lactose intolerance.

“These products are in the up and rising category in Asia,” said Toh.

Further, demand for healthier food products, bottled water, juice-based drinks, herbal tea, organic foods, low fat dairy products and fortified drinks is directing the flow of FDI in the Asia Pacific.

Sushmul Maheshwari pointed out that demand for food and drinks with added vitamins is growing in Asian markets.

Comparable, value-added products are now considered the most profitable food industry activity for both local and international markets, and as a result many agri-business manufacturers are now focusing on producing more value-added products.

In 2001-02, seven of the top 10 markets for Australian food and beverage exports were Japan, Indonesia, Korea, Malaysia, Taiwan, New Zealand and Hong Kong in Asia-Pacific, according to the Australian Bureau of Statistics.

The total Australian food export for 2004-05 was valued at $AU22.647 billion, out of which Asia accounted for $AU10.264 billion, according to the National Food Industry Strategy.

Slowly, but steadily, the traditional patterns of eating staple foods have given way to more industrial processed foods on the menu.

One of the factors influencing this is Female Labour Force Participation (FLFP) in the work force, which directly affects food consumption pattern.

The mega markets

Experts are bullish about both China and India in the long term.

Data from the Chinese Chain Store and Franchise Association shows Chinese supermarkets rose from just one outlet in 1990 to approximately 60,000 stores in 2003, with an estimated $71 billion in sales.

India's annual food and beverage sales are $US135 billion and growing at 5% per annum.

India is forecast to be the second highest growth market in Asia, after China, with a resounding middle class of 100-150 million, and it is witnessing the largest retailing revolution with plans for 200-300 malls within two years.

India is not a big importer of processed food and beverage products compared with its more developed Asian neighbours.

But, in the short to medium term, China and India will surpass most of the Asian countries for their need of wider range of premium quality food items and emerge as the ‘mega-markets’ for Australian exporters to target.

Market indent

The need to stretch out and streamline its biggest manufacturing sector, the food sector, seems to be of considerable focus for the Australian government.

The key is to concentrate on immediate neighbours to bring its export dough back home.

Although trade liberalization has always been an issue in Asia, attention to narrowing of trade barriers and implementing policies to create a conducive environment for ‘fast and easy’ trade is in constant progress.

Singapore and Thailand have already signed free trade agreements with Australia to further trade and investment links.

By 2010, 95% of all current trade between Australia and Thailand will be completely ‘free’.

Australian exporters can take advantage of this window of opportunity to exploit the privileged status that exists, for Australia and a few other nations.

The supply and demand game is always a tricky one.

In the context of poor infrastructure in countries like Indonesia and Vietnam end-to-end arrangement in logistics and cold chain facilities till the goods reach the assigned destinations needs to be handled with thorough precision.

Australian exporters have to keep this in mind while developing the ‘road to market’ strategies in Asia.

With improved market access and lowering of trade barriers, Asia’s reliance on Australia’s supply of quality processed F&B items is bound to increase in the coming years.

Asia provides the best ‘export-haven’ for Australian exporters who want to translate their product offerings into big bucks.

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