Australian produce first-class but supply-chain efficiencies lag US, UK: report

Posted by Daniel Palmer on 12th February 2009

The Australian food industry is some years behind its international counterparts in terms of its marketing and supply system sophistication, according to the findings of a report from Nuffield scholar and Queensland horticulturalist and exporter Camilla Philip*.

The report entitled ‘Supply chain efficiencies and the growth of category management in the horticultural industry‘, written as part of Ms Philip’s world travels as a Nuffield scholar, found that, while the quality of Australian horticultural produce was world class, marketing practices lagged behind many other countries. “Not everything that works overseas will work in Australia, but I think if producers can get closer to consumers, through better market and consumer research, they can develop products that will better meet consumer needs, and both will be winners,” Ms Philip explained.

Ms Philip’s Rabobank-sponsored scholarship took her to major fresh produce retailers and marketing companies across the United Kingdom, Canada and the United States. The aim of her tour was to study supply chain management, particularly the process of category management.

“In the United Kingdom, Europe and the USA you have several different mixes of how the retail chains handle buying and marketing of fresh produce within the produce category through their different supply base,” she reported. “For instance, I visited one company in northern England that deals with leafy green vegetable categories. They source from external suppliers and also grow their own produce, value-add through a range of packaging options and market five different types of leafy green vegetables for retailers.”

Ms Philips noted that this style of company, which integrates production, processing, supply and marketing, was a common model in the U.K. and the United States.

“Another company I visited was formed by five British tomato producers to provide them with a focused approach to marketing their product specifically to Sainsbury’s. Their innovative approach was to run the business as a cost centre but with a focus upon Sainsbury’s, managing the whole supply chain from contracting growers though to packaging, delivery in-store and marketing. This ensured the ‘cost’ would always be kept to an absolute minimum while the business had the maximum opportunity to achieve profitable sales growth for its growers,” she advised.

Marketing in Australia
Part of the research included speaking to Australian suppliers and retailers to identify where Australia fits into the international marketing mix.

“In Australia, suppliers provide fresh produce primarily for a domestic market but do not understand current drivers influencing why people buy, the different types of produce they buy, and at what price point they will stop buying,” Ms Philip added. “The Australian industry must follow the lead set down by Europe and the US, and conduct significantly more market and consumer research to facilitate greater awareness and informed decision making that will underpin a more responsive industry.”

“The future of horticulture in Australia rests with the consumer. Retailers and suppliers must rank consumers as their number one priority, acknowledge that consumers have a higher education status, and identify and respond to their demands and needs in relation to products and the purchasing environment,” Ms Philip concluded.