THE AUSTRALIAN FOODSERVICE MARKET

©FOOD INDUSTRY FORESIGHT - COMMERCIAL IN CONFIDENCE

2019 ~ FEBRUARY 2020

THE NATURE OF THE AUSTRALIAN FOODSERVICE MARKET

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FOOD CONSUMER MARKETS

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A$115Billion + A$57

Billion

A$172 Billion

RETAIL FOODSERVICE

A$19.5Billion

WHOLESALE

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PROPENSITY TO EAT OUT

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In the la st two deca des Austra lia ns ha ve ma de

ea ting out a wa y of life. O ver three qua rters of the

popula tion a ged fourteen a nd a bove ea t out

a t lea st once a month.

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THE FOODSERVICE DOLLAR

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Australians’ propensity to eat out is among the highest in the world. Australian households spend on average 36.6% of their food & non-alcoholic beverage budget on eating out as opposed to eating at home.

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EATING OUT A WAY OF LIFE

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EATING OUT A WAY OF LIFE FOR AUSTRALIANS IN CITIESAND IN COUNTRY TOWNS

AUSTRALIANS EAT OUT FOR BREAKFAST, BRUNCH , LUNCH & DINNER

EVEN DURING UNCERTAIN ECONOMIC TIMES…AUSTRALIANS TRADE DOWN IN THEIR CHOICE OF OUTLET, BUT THEY DO NOT STOP EATING OUT

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AUSTRALIAN FOODSERVICE MARKET

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UNIQUE DYNAMIC VIBRANT DIVERSIFIED EVOLVING

PLETHORA OF CUISINES

FASTEST CHANGING

FOOD MARKET

A MARKET OF INDEPENDENT

OUTLETS

HUGE VARIETY OF

EATING OUT OPTIONS

CONTINUALLONG-TERM GROWTH

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CUISINE

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O UR NATIO NAL FO O D PALATE IS BOLD AND OPEN

NO REAL NATIONAL CUISINE

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SIX FOODSERVICE REGIONS

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2. VICTORIA • MELBOURNE still the COFFEE CAPITAL of Australia• Domestic & international FOOD TOURISM critical to REGIONAL

VICTORIA• More of a SOUTHERN EUROPEAN DINING SCENE in

Melbourne…the GREEKS & ITALIANS

1. NEW SOUTH WALES • SYDNEY CENTRIC…diverse & dynamic• Many other LARGE URBAN AREAS & CITIES - WINE DISTRICTS -

HOLIDAY DESTINATIONS

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SIX FOODSERVICE REGIONS

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3. QUEENSLAND • BRISBANE…A SOPHISTICATED DINING OUT MARKET

developed over the past two decades• Regional Queensland still a STEAK & SEAFOOD SOCIETY

4. WESTERN AUSTRALIA • PERTH…an ISOLATED ‘ISLAND’• Lingering SUPPLY PROBLEMS • A HUGE TOURIST REGION

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SIX FOODSERVICE REGIONS

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5. SOUTH AUSTRALIA • Significant SUPPLIER OF FRESH PRODUCE• Still largely reigned by ENGLISH & GERMAN FOOD TRADITIONS• ADELAIDE…not a strong tourist destination in itself

6. NORTHERN TERRITORY • NT CLOSER TO ASIA than the rest of Australia• DARWIN …A FAST-DEVELOPING FOOD SCENE• NT AVAILABILITY & CONTINUITY OF SUPPLY…still CHALLENGING

FOODSERVICE MARKET SIZE

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FOOD INDUSTRY

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TO TAL SUPPLY O F FO O D & NO N-ALCO HO LIC BEVERAGES

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FOODSERVICE MARKET

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FOODSERVICE MARKET SIZE

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FOODSERVICE MARKET SIZE

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COMMERCIAL VOLUME

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INSTITUTIONAL VOLUME

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HOW MANY FOODSERVICE OUTLETS ARE THERE?

FOODSERVICE CHANNELS

FOODSERVICE OUTLETS

9%

1%

7%

20%

33%2%

26%

2%

62,937COMMERCIAL FOODSERVICE

OUTLETS

FOODSERVICE CHANNELS

FOODSERVICE CHANNELS

10%

1%

7%

19%

36%2%

23%

2%

22,676INSTITUTIONALFOODSERVICE

OUTLETS

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INDEPENDENTS VS CHAINS

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AUSTRALIA IS A FOODSERVICE MARKET DOMINATED BY INDEPENDENT OUTLETS

FOODSERVICE CHANNEL STRUCTURES

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FULL SERVICE RESTAURANTS

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FINE DINING ONLY 2-3% OF

AUSTRALIA’S TOTAL NUMBER OF

RESTAURANTS

ALL FOODSTUFFSMADE FROM SCRATCH

WORKING WITH SOPHISTICATED LATEST EQUIPMENT

PASSION FOR THE ULTIMATE FRESH PRODUCE

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FULL SERVICE RESTAURANTS

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UPPER/MIDDLEMARKET

PRESSURE TO DIFFERENTIATE THEMSELVES

INCLUDINGSIGNATURE FOOD DISHES

CREATING UNIQUE DINING OUT EXPERIENCE

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FULL SERVICE RESTAURANTS

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LOWER ENDSUBURBAN &

REGIONAL

IN THE MAIN SERVINGSTANDARD FARE

DEMANDING ON THE OPERATOR CHEF OFTEN THE OWNER

PLETHORA OF DIFFERENT CUISINES

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CAFÉS

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CAFÉSMANY MENU ITEMS

MADE IN ADVANCE

COFFEENO LONGER THE PRODUCT TO RELY ON

USUALLYNOT A TRAINED CHEF

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PUBS & TAVERNS

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PUBS & TAVERNS

DURING THESE YEARSGASTRO PUBS EMERGED

2017 GROWTH PLATAUED2018 AT A CROSSROADS

2014 – 2015 – 2016SAW STEADY GROWTH IN POPULARITY

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HOTELS

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HOTELSTHE HOTEL DINING ROOM - RESTAURANT

DECLINING IN IMPORTANCE

PRIVATE & BUSINESSFUNCTIONS GROWING

GREAT FOCUS ON THEBREAKFAST MEAL SEGMENT

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QSR CHAINS

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QSR CHAINSSINCE 2014

GROWTH PLATEAUED

AUSTRALIA IS NOT A CHAIN NATION

STRONG GROWTH DURING 2009 - 2013 DUE TO THE TRADE DOWN EFFECT AMONG

CONSUMERS

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QSR INDEPENDENTS

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QSR INDEPENDENTS

MOST IMPORTANT MEAL SEGMENTIS LUNCH

COFFEEAN ADDITIONAL REVENUE EARNER

QSR INDEPENDENTSUSUALLY RUN BY OWNER/OPERATORS

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INSTITUTIONAL KITCHENS

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INSTITUTIONALKITCHENS

MAJORITY OF BACK OF HOUSE STAFFCOOKS & KITCHEN HANDS

HOWEVER HUGE CHANGES ARE AFOOT

WORKING UNDERBUDGETARY CONSTRAINT

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FOODSERVICE MEAL NUMBERS

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A FOODSERVICE

OUTLET SERVES 300 MEALS PER

DAY ON AVERAGE

22 MILLION MEALS SERVED

EVERY DAYIN AUSTRALIA

ACROSS AUSTRALIA

MORE THAN 8 BILLION

MEALS SERVED ANNUALLY

FOODSERVICE DISTRIBUTION

TOTAL FOOD INDUSTRY DISTRIBUTION

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FOODSERVICE DISTRIBUTION

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The foodservice supply chain in Australia is complex.

The total supply chain is very much larger than in the retail market; operated by a greater number of players. Tyranny of distance also plays a part when food and beverage suppliers want to reach commercial and institutional foodservice operators in cities and regional areas with their produce and products across a continent.

In today’s market, there are six established distribution channels (as per next slide).

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FOODSERVICE DISTRIBUTION STRUCTURE

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DISTRIBUTION CHANNELS

1. General Distributors

2. Specialist Distributors/ Wholesalers

3. Cash & Carry 4. Supermarkets 5. Other Retailers

6. Direct from Manufacturer

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GENERAL DISTRIBUTORS

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• Total estimated turnover of the four General Distributors in the Australian foodservice market is $8 billion.

• In order to understand the group’s market share of total foodservicedistribution, deductions from turnover have to be made for food & beverage distribution pertaining to the convenience market as well as other services provided.

• It is therefore estimated that the four General Distributors collectively hold a 36% market share.

GENERAL DISTRIBUTORESTIMATED ANNUAL

TURNOVER

% OF TOTAL GENERAL

DISTRIBUTORS

COUNTRYWIDE $2.8 billion 35%

BIDFOOD $2 billion 25%

PFD $2 billion 25%

NAFDA $1.2 billion 15%

TOTAL $8 billion 100%

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TRENDS & DEVELOPMENTS IN FS DISTRIBUTION

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Over the past couple of decades, there have been no real changes to the total distribution structure and its key players.

There have also been no significant changes to the relative importance of each of the distribution channels.

Collective market share of the four General Distributors has remained the same at around 36% of total foodservice distribution over the past five years.

However, in the same time period, NAFDA has seen phenomenal growth – doubling its turnover to $1.2 billion in 2018. The group has therefore returned as a significant player in the market place.

New distribution channels are currently emerging in the foodservice sector with the establishment of Amazon Fresh as well as new procurement portals such as Ordermentum. We expect these new distribution channels to make significant impact and inroads into the market place in the next few years.

FOODSERVICE OPPORTUNITIES IN AUSTRALIA

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FOODSERVICE OPPORTUNITIES

HEALTHY EATING slowly on the rise

Strong growth in the meal segments, BREAKFAST & BRUNCH

Significant trend towards CASUAL DINING prevails, leading to growth in Café and Pub dining

Over the past three to four years the market has seen the RISE & RISE OF THE HAMBURGER which is still in vogue

Significant LONG-TERM OPPORTUNITIES WITHIN THE AGED CARE channel with changing menu offerings and increase in budgets

LONG DAYCARE CENTRES one of the largest institutional foodservice by channel by number of outlets and growing serving up to seven meals a day

SUPPLIER MARGINS WITHIN THE AUSTRALIAN FOODSERVICE MARKET ARE HIGHER than those achieved in the retail market (supermarkets)

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