Australia's Snack Industry at a Glance Paper Example

Introduction

Australia's snack industry is vibrant and has performed very well for the last five years. According to Mintel research, about 1 in 3 Australians consume a snack instead of having a regular meal. Marketing indicators point that the snack food production industry in the country is growing at an annual rate of 3.1% and is currently worth $2.6 billion (Marketline, 2018). The common foods manufactured by companies in the snack industries include potato chips, savoury snacks, corn chips, pretzels, and nuts among other healthy snacks including protein bars and muesli (Minotto, 2017). Raw material such as milled corn, potatoes, wheat, food extracts, preservatives, flavourings, and sugar are bought to be processed and manufactured. When finished, the products are package then sold in wholesale, retail and other market areas. Statistically, the industry makes a collective annual profit of $17.4 million and holds about 340 businesses. The players in the industry are always in competition with each other as customers have become more health conscious and are looking for healthy options despite the fact that casualness has altered the normal meal times directing most Australians to snacks. Other factors determining how the market runs include the disposable household income as well as the increased demands from grocery stores and supermarkets. In consideration also, is the domestic price of vegetables and wheat. Savoury snacks from Australia contribute about 2.9% in the overall amounts of snacks in the Asia-Pacific market (Vong, 2018).

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Market Analysis

The value of the savoury snack market is determined by the retail selling price (RSP) and is inclusive of all the applicable taxes. During the review period of 2013 to 2017, the Australian savoury industry for snacks experienced a weak growth, but it is expected to grow immensely over 2017 to 2022 forecast period (Vong, 2018).

There is an alarming rate in the occurrence of obesity in Australia, and this has created great concern for Australians to seek healthy snack choices. This concern has also been boosted by the initiatives put in place by the government to curb obesity and heart diseases. The involvement of the Australian government has boosted growth in value and volume as well in the Australian savoury market. Consequentially, organic foods and those with low fat and calories have found their ways into the markets as manufacturers try to respond to the needs stipulated by the government as well as becoming conscious of the health of the general population. New food labeling guidelines were introduced by the government in 2016 which were aimed at increasing consumer confidence especially in the packaged or processed goods (Vong, 2018).

In 2017, the revenue collected from the Australian snack industry was $944.2m which represented a compound annual growth rate of 1.5%, and that began from as early as 2013. When compared to other markets like the Chinese and the Japanese snack industries which grew in the rate of 3.5 and 8.3% during the same period and valued at $8524.3m and $11,040m respectively in 2017, it can be deduced that Australia has relatively attempted to make a mark (Vong, 2018).

Also in 2017, the market consumption value improved by the compound annual growth rate of 0.9% to total to 73.8 million kilograms accrued between 2013 and 2017. As the amount is expected to rise by 76.5 million kilograms by 2022, that means the compound annual growth rate will increase slightly to 0.7% come the end of 2022. From the available figures, it is clear that potato chips is the major snack in the Australian snack industry. The sales of potato chips contributed significantly to the annual sale bringing in the biggest value in 2017. In particular, the figure stood at $477.6m which is slightly more than half the value of the overall market. As compared to processed snacks, which was valued at $276.7m and represented only 29.3% of the industry's total market value, potato chips were the major contributor (Vong, 2018).

The Macro-environmental Analysis

Every industry has to be aware of the target group in terms of marketing. The players in the snack industry have to analyze both the seller and the buyers of a particular product or a set of products before they can plan, implement and control their marketing strategies. Marketing management is crucial as it determines designs and determines how companies achieve their marketing objectives (Samnani, 2014). The macro environment comprises of the GDP changes, employment, monetary policies, and fiscal policy, as well as spending and inflation rates. The macro-environmental factors that should be considered in Australia for any company or individual seeking to invest in the Australian snack food industry include the cultural forces, the demographic characteristics, the age structure of the country's population, the economic forces, natural, social, health, technological and the political forces. The most significant factors for consideration include the economic factors that come with massive purchasing power which Australia has as a country (Dixon, Scully & Parkinson, 2006). The natural forces such as the availability of raw materials, the cost of energy and increased population, are favorably and encourage investment. The political forces like those enforced by the government on healthy foods are crucial in ensuring that health standards are maintained in the kinds of snacks or foods produced.

The Market Segment

The market segmentation consists of various categories including potato chips, processed snacks, nuts and seed, popcorn, meat snacks, ethnic or traditional snacks, and other categories. The Australian savoury snacks industry is heavily dominated by potato chips, which as has been mentioned in the earlier segments, contributes up to 50.6% in revenue (Marketline, 2018). This is closely followed by processed snacks which contribute up to 29.3%, then nuts and seeds giving 9.8%, and then the rest of the percentage is shared in various capacities by the other products in the same segment (Vong, 2018).

Recommendation for Investment

Because potato chips are highly consumed as a snack by the majority of Australians, they represent the most appropriate choice for investment in this country. To make this more favorable, the raw materials are readily available and are at the right prices in the domestic markets making it a more feasible choice for investments (Marketline, 2018). This option is also boosted by the tendency that about 31% of Australians tend to go for potato chips as compared to other forms of snacks (Minotto, 2017). The market distribution patterns indicate that Supermarkets and the hypermarkets lead in demand for potato chips as the two contribute up to 54.1% of the overall demand for snacks in Australia. The convenience stores demand snacks at a rate of 32.7% followed by food and drinks specialists (Vong, 2018). It is, therefore, the best recommendation for any entity, individual or group seeking to try out an investment in Australian savoury snack industry.

Conclusion

In conclusion, the Australian savoury snack industry is so active and can predicatively improve in the near future as eating habits change due to many factors including changing lifestyles, increased household incomes, readily available snacks and much more. Above all, investing in potato chips can be the better option following the marketing analysis of the same in Australia.

References

Dixon, H., Scully, M., & Parkinson, K. (2006). Pester power: snackfoods displayed at supermarket checkouts in Melbourne, Australia. Health Promotion Journal of Australia, 17(2), 124-127.

Marketline. (2018). Savory Snacks in Australia (pp. 1-36). Marketline.com. Retrieved from https://store.marketline.com/report/ohme4264--savory-snacks-in-australia/

Minotto, J. (2017). Snack attack: Snacking in Australia goes to extremes. Retrieved from http://www.mintel.com/blog/food-market-news/snacking-in-australia-goes-to-extremes

Samnani, A. (2014). Macro-environmental factors effecting fast food industry. Food Science and Quality Management, 31, 37-40.

Vong, B. (2018). IBISWorld Industry Report C1191: Snack Food Manufacturing in Australia (pp. 1-30). IBISWorld.