Snack foods growth slows in Australia
Health trends, volatile input prices and strong competition have slowed growth in Australia’s snack food sector, according to market research organisation IBISWorld. However, the ‘healthy’ snack foods sector has benefitted from the same health consciousness in consumers, along with a rise in discretionary spending.
Health Snack Foods on the rise
IBISWorld said the Health Snack Food Production industry was performing strongly. Over the five years through 2010-15, industry revenue is forecast to grow at an annualised 6.6 per cent to reach $619.7 million. In 2014-15, industry revenue is forecast to increase by 4.7 per cent.
Despite constant product innovation, IBISWorld said it anticipated that industry growth would not be attributed to the introduction of revolutionary products, but rather an increased uptake of healthy diets among consumers. Growing participation in sport, concerns surrounding obesity levels in Australia and time-constrained lifestyles are the key driving forces behind healthy eating and uptake of industry products.
Consumer preferences changing
IBISWorld said the Health Snack Foods sector was in the growth stage of its life cycle. Industry value added (IVA), which measures the industry’s contribution to the economy, has been forecast to grow at an annualised 4.7 per cent over the 10 years through 2019-20, outperforming the overall economy. Real GDP has been forecast to grow at 2.7 per cent annualised over the same period.
The uptake of packaged healthy snacks, such as fruit varieties, dried fruit, nuts and muesli bars, has increased significantly over the past five years, according to IBISWorld. This has been driven by changing consumer preferences and behaviours. Innovation in product packaging has resulted in a growing number of new product variations appearing on supermarket shelves, which IBISWorld said had been one of the key factors driving the sector’s growth
General snack foods sector growth slowing
IBISWorld said revenue in the general snack foods sector in the five years through 2010-2015 was expected to increase by an annualised 1.3 per cent to total $2.4 billion. In 2014-15, revenue is expected to increase by 1.6 per cent. The Australian snack food industry employs 5,133 people and includes 133 businesses. Companies in the Australian snack food sector mainly manufacture snack food products such as potato chips, corn chips, savoury snacks, nuts, pretzels and other similar snacks.
Ongoing challenges for the broader snack foods sector
According to IBISWorld, the industry’s major players have endured falling profit margins, increased competition from private-label products and stagnating domestic demand, particularly in the salty snacks segment, which has historically been the most profitable.
Trend towards concentrated operations
IBISWorld said Australian snack food manufacturers often chose to establish themselves in densely populated metropolitan areas, in order to reduce the cost of transportation between storage and production facilities and downstream markets.
As a result, IBISWorld estimated that 75 per cent of industry establishments are located across the Eastern seaboard, with Queensland, Victoria and New South Wales home to the majority of snack-food manufacturers.
In recent years, IBISWorld said there had also been a trend towards concentrating operations within a small number of manufacturing sites, to minimise costs and optimise efficiencies through greater economies of scale.
Tassal will stop supplying Coles supermarkets with private label salmon as of 4 June 2016.
Australia’s supermarkets can thank My Kitchen Rules for boosting their bottom lines, with new resear...
Coles has hit a major milestone, opening its 800th Australian supermarket.
Retail Food Group (RFG) will be expanding further into the Middle East, just having entered into joi...
New research has suggested that fruit and vegetables are luxuries for young Aboriginal children in r...
Pet owners following the latest pet food trend of feeding animals raw meat only, instead of dry or c...
The New South Wales container deposit scheme has already seen the return of more than 50 million dri...
Another death has been linked to Australia’s recent rockmelon listeria outbreak, resulting in a tota...