IN-PROGRESS REVIEW DRAFT · 2019. 5. 24. · TARGET MARKET OPPORTUNITIES IN ASIA FOR ORANGES AND...

TARGET MARKET OPPORTUNITIES IN ASIA FOR ORANGES AND MANDARINS Part of Asia Market Success, April 2016

IN-PROGRESS REVIEW DRAFT Pre-release copy of significant commercial value to industry Document contains incomplete & in-progress research for comment For named reviewer/firm only; do not duplicate or distribute

RECIPIENT

FIRM

IINNHHEERREENNTT LLIIMMIITTAATTIIOONNSS This work was commissioned by the Department of Agriculture and Food Western Australia (DAFWA), with funding through the State Government’s Royalties for Regions program and prepared by Coriolis. This work is based on secondary market research, analysis of information available or provided to Coriolis by our client, and a range of interviews with industry participants and industry experts. Coriolis have not independently verified this information and make no representation or warranty, express or implied, that such information is accurate or complete. Projected market information, analyses and conclusions contained herein are based (unless sourced otherwise) on the information described above and on Coriolis’ judgement, and should not be construed as definitive forecasts or guarantees of future performance or results. Neither Coriolis nor its officers, directors, shareholders, employees or agents accept any responsibility or liability to readers or recipients of this report other than DAFWA or people other than DAFWA who rely upon it (described below as Recipients) with respect to this document. Coriolis wishes to draw Recipients’ attention to the following limitations of the Coriolis document “Target Market Opportunities in Asia for the Western Australian Premium Products” (the Coriolis Document) including any accompanying presentation, appendices and commentary (the Coriolis Commentary): a. Coriolis has not been asked to independently verify or audit the information or material provided to it by or on behalf of the Client or any of the parties involved in the project; b. the information contained in the Coriolis Document or any Coriolis Commentary has been compiled from information and material supplied by third party sources and publicly available information which may (in part) be inaccurate or incomplete; c. Coriolis makes no representation, warranty or guarantee to Recipients, whether express or implied, as to the quality, accuracy, reliability, currency or completeness of the information provided in the Coriolis Document and any Coriolis Commentary or that reasonable care has been taken in compiling or preparing them; d. the analysis contained in the Coriolis Document and any Coriolis Commentary are subject to the key assumptions, further

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2

FFIINNAALL vv110000;; AApprriill 22001166

SCREENING OVERVIEW In Phase One of the Target Market Opportunities in Asia for WA Premium Products Report (TMO Report), extensive import/export trade data was fed through a multi-stage screening process to “hone-in” on potential opportunities for Western Australia; stakeholder interviews also fed into this process

3

STRUCTURE OF MULTI-STAGE SCREENING PROCESS USED IN THIS PROJECT Model; 2016

INDIVIDUAL FIRM ROLE & RESPONSIBILITY STAGE I STAGE II STAGE III STAGE IV

PLATFORM PRODUCT POSITIONING TARGET MARKET

FIT WITH WA

WA INDUSTRY-GOOD RESEARCH

9 PLATFORMS

679 TRADE CODES

47 QUAL/QUANT

SCREENS

Project does not attempt to address firm-level operational or executional activities: -  R&D

-  Product development

-  Sourcing & supply chain

-  Production & operations

-  Marketing & branding

-  Sales & sales structure

-  Capital structure

-  Negotiation

-  Distributor appointment

20 OPPORTUNITIES

YOU ARE

HERE

4 This project is focused on “market demand” from the following twenty-four Asian/Middle Eastern markets

Note: Complete list for analysis purposes, some countries excluded from list if no/limited trade data available (e.g. Iran)

24 COUNTRIES DEFINED AS HIGH POTENTIAL TARGET MARKETS FOR WESTERN AUSTRALIA Target markets; 2015

MIDDLE EAST

Bahrain Egypt Israel

Jordan Kuwait

Lebanon Oman Qatar

Saudi Arabia UAE

24 defined target markets for this project

4

SOUTH ASIA

India Pakistan Sri Lanka

Western Australia

SE ASIA

China Hong Kong

Japan South Korea

Taiwan Indonesia Malaysia

Philippines Singapore Thailand Vietnam

PRODUCT PROFILE

HS Code 080510/080520

Product Oranges, mandarins, clementine & citrus hybrids, fresh or dried

Out-of-scope Lemons, limes, grapefruit; oranges and mandarins that are frozen, cooked, pureed, preserved; juices, peel, baby foods, supplements, etc. as all are covered under other screened trade codes

Origin Malay Archipelago, first cultivated in China around 2500 BC

Example ingredients

Oranges, mandarins

Forms/usage -  Healthy, convenient snack, especially for children -  Gift giving -  Ingredient in Middle Eastern Cuisines -  Juicing -  Flavouring in confectionary

Drivers of consumer/market success

-  Healthy (vitamin C)

-  Convenient self packaged snack

-  Traditional fruit of many of the markets

-  Gift giving culture

WHAT IS THE PRODUCT? Oranges & mandarins emerged in Phase I as one of twenty “high growth, high potential” opportunities for Western Australia; they are citrus fruit that are consumed fresh, juiced and used as an ingredient

5 Source: photo credit (Dollar Photo); Coriolis analysis

PRODUCT OVERVIEW Example; 2016

DOCUMENT STRUCTURE

What is the strategic situation in the market?

In this environment, what is the opportunity for Western Australia?

Who are the potential in-market partners?

Who are the key firms in Western Australia capable of delivering?

6

Western Australia is well-positioned to expand orange & mandarin exports to Asia, though focus on key high value markets is required

7

-  Asian orange & mandarin imports are rising, with import value growth being driven by expanding tonnage and increasing average FOB (free-on-board) prices

-  Asian & Middle Eastern orange and mandarin imports come from five main suppliers – China, the USA, Egypt, South Africa and Australia

-  China, the USA and Egypt stand out for driving orange/mandarin import value growth in Asia & the Middle East

-  China leads in absolute volume growth while Spain stands out for rate of growth

-  Average FOB price to target Asian markets vary by supplier, with China leading at $1.33/kg; Australia sells at an average of -21% discount to China

-  Oranges & mandarins go to a wide number of the target markets, with no single country predominating; China is a relatively small importer

-  Growth in orange & mandarin imports is broad based and coming from multiple markets

-  However, some markets are growing faster than others, with Thailand, Hong Kong the UAE & India standing out for growth; there are strong signs of a move to quality (same/less quantity at a higher price)

-  Average orange/mandarin import prices vary by region, with East & South East Asia paying more than the Middle East; Thailand and South Korea stand out as large markets that pay well

-  Imported orange/mandarin consumption and aggregate imports appear partially driven by income per capita; a number of markets appear to have long-run penetration upside

-  Market share varies by country; Australia is stronger predominantly in East Asia; China really only achieving high penetration in poorer countries (e.g. Philippines, Thailand, Indonesia)

-  Western Australia has opportunities for orange & mandarin export growth across a range of Asian markets

-  Data supports new high value, premium orange & mandarin opportunities being initially launched in (1) Singapore, (2) Hong Kong and (3) Japan

-  As a “Straw Man” for discussion, we propose a export market roll-out plan

Asian orange & mandarin imports are rising, with import value growth being driven by expanding tonnage and increasing average FOB (free-on-board) prices

0

500

1000

1500

2000

2500

3000

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

8 * Compound Annual Growth Rate; Source: UN Comtrade database; Coriolis analysis and classifications

VOLUME T; 000; 2004-2014

$-

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

AVERAGE PRICE PER KILOGRAM US$; 2004-2014

$-

$500

$1,000

$1,500

$2,000

$2,500

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

VALUE US$m; 2004-2014

CAGR* 7%

CAGR 6%

CAGR 14%

TOTAL IMPORTS TO ASIA/MIDDLE EAST TARGET REGION (24 COUNTRIES)

Asian & Middle Eastern orange and mandarin imports come from five main suppliers – China, the USA, Egypt, South Africa and Australia

9 Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications

EXPORT VALUE BY SUPPLIER TO TARGET REGION US$m; FOB; 2014

Key ME/EU Australasia Key S.H.

Other

E/SE Asia USA

$150 $315 $282 $377 $32 $881

Pakistan $51

Egypt $209

Turkey $13

Other $32

Australia $147

New Zealand $3

South Africa $261

Spain $42

Thailand $7

Hong Kong SAR $65

China $789

Argentina $21

USA $377

Other E/SE Asia $7 Singapore

$12

TOTAL = US$2,038m

China, the USA and Egypt stand out for driving orange/mandarin import value growth in Asia & the Middle East


EXPORT VALUE BY SUPPLIER TO TARGET REGION US$m; FOB; 2004-2014

2005

Pakistan

New Zealand

2004

Turkey

10y ABS

Argentina

Australia

Other

Hong Kong SAR

Other E/SE Asia

South Africa

Thailand

2011 2010 2009

Singapore

China

Spain

2014 2012 2013 2007

USA

2006 2008

Egypt

$50

$30

$83

$51

$74

$66

$89

$51

$117

$140

$39

$66

$150

$3

$2

$177

$3 $1

$1

$8 $6

$6

$16

$3

$142

$26 $23 $30

$12

$1

$1

$147

$191 $7 $65

+$5

+$132

+$7

+$39 +$6

+$40

-$6 +$16

+$27

+$5

+$209

+$717

$1,752

$1,471

$1,931

$2,038 $2,019

$1,253

$618 $573

$682

$1,103

$684

$157

$40

$73

$410 $304

$109 $72

$73 $25

$82

$100

$67

$789 $785

+$80

+$187

-$0

$24

$25

$419 $532

$691

$67

$193

$469

$359

$15

$478

$498

$261

$262

$51

$246

$17

$38

$289

$162

$3

$221

$3

$214

$3 $11 $23

$14

$377

$223

$2

$220

$2

$68

$13

$37

$4

$12

$5

$3 $2

$38

$13 $41

$3

$15

$32

$42

$70

$256

$52

$245

$24

$19

$8

$49

$20

$23

$65

$3

$3

$16 $8

$15

$187

$13

$4

$3

$12 $9

$8

$209

$5

$21

$1

$20

$3

$1

$1

$169

$13

$23

$1

$24

$1

$27

$114

$7

$13

$4

$11

$6

$6

$4

$143

$3

$130

$4

$11 $20 $6 $73

$3

$7

$6

$4

$5 $5

$114

$9 $5

$75

CAGR 14%

China leads in absolute volume growth while Spain stands out for rate of growth


FIVE YEAR EXPORT GROWTH MATRIX: CHANGE IN VALUE VS. RATE OF GROWTH VS. ABSOLUTE VALUE US$m; 2009 vs. 2014

$150 $200 $-50 $400 $350 $50 $250 $0 $100 $300

60%

10%

70%

20%

40%

30%

50%

-10%

0% $200m Egypt

Pakistan

Spain

Turkey

New Zealand

Australia

Other

South Africa

Thailand

Hong Kong SAR

China

Argentina USA

Other E/SE Asia Singapore

5y absolute change in value

5y CAGR

Bubble scale: US$m; 2014 A bubble this size=

Average FOB price to target Asian markets vary by supplier, with China leading at $1.33/kg; Australia sells at an average of -21% discount to China


AVERAGE EXPORT VALUE COST CURVE BY SUPPLIER US$/kg; t; FOB; 2014

Other E/SE A

sia

Hong K

ong SAR

Pakistan

China

New

Zealand

USA South Africa

Turkey

Singapore

Other

Thailand

Spain

Egypt

Argentina

Australia

$1.10

$0.37

$0.58

$1.11

$0.35 $0.37

$1.33

$1.14

$1.04

$1.26

$2.38

$0.86

$0.59

$1.07

$0.99

Volume imported by defined target market

Average FOB

value

-21%

This is driven predominantly by variety mix

Oranges & mandarins go to a wide number of the target markets, with no single country predominating; China is a relatively small importer


IMPORT VALUE BY MARKET BY REGION US$m; FOB; 2014

NA/ME/CA East Asia Indian Sub SE Asia

China $118

$37 $938 $620

Other $24

Other $10

$442

Israel $0

Egypt $0

Singapore $58

India $27

Saudi Arabia $185

Bahrain $9

United Arab Emirates $166

Kuwait $45

Qatar $13

South Korea $138

Japan $119

Hong Kong SAR $225

Taiwan $21

Vietnam $187

Thailand $186

Malaysia $248

Indonesia $160

Philippines $99

TOTAL = US$2,038m

Growth in orange & mandarin imports is broad based and coming from multiple markets


IMPORT VALUE BY MARKET BY REGION US$m; FOB; 2004-2014

2011 2012 2013 2014

Indonesia

Hong Kong SAR

Philippines

China

Japan

South Korea

Vietnam

Taiwan

Thailand

2008 2010 2009 2005 2004 2007 2006

Singapore

Israel Egypt

Bahrain

Other Ind. Sub

Qatar Kuwait

India Other ME

Malaysia

United Arab Emirates

Saudi Arabia

$10

$14

$38

$46

$10

$45

$11

$34

$7

$44

$6 $9

$21

$94 $115

$13

$89

$9

$11

$35

$15

$28

$20

$13

$18 $65

$185

$105

$180

$96

$186

$58 $94

$146 $0 $173 $0

$0 $0

$119 $57

$197

$53

$138

$14

$47 $52

$224

$207

$78

$219

$119

$162

$159

$185

$12

$682

$618

$3

$166

$1,103

$150

$684

$573 $5

$110

$8

$108

$5

$118

$5 $53

$2,019

$84

$2,038

$29 $29

$46

$1,931

$134

$1,253

$120

$1,471

$106

$1,752

$129

$117

$140

$9

$158

$5

$225

$2

$157

$7

$103

$10

$108

$10

$131

$8

$110

$9

$63

$10

$74

$9

$96

$8

$46 $39

$1 $3

$40

$9

$52

$9

$0

$3

$186

$3 $3

$22

$3

$17

$162

$7

$21

$10

$71

$4

$113

$5

$61

$9

$57

$7

$137

$4

$122

$18

$35

$27

$25

$19

$79

$22

$50

$5

$163

$51

$130

$42

$233

$36

$200

$48

$72 $61

$51

$58

$133

$53

$82

$10

$1 $1 $2

$11

$7

$11

$26 $29

$329

$37

$248

$1

$25 $27 $3

$1

$124

$1

$135

$0

$187

$1

$94

$0

$72

$0

$101

$1

$90

$0

$94

$0

$108

$0

$155

$0

$126

$0

$87 $79

$0

$0

$80

$0

$106 $19

$95

$28

$63

$24

$157

$26

$147

$24

$1 $2

$99

$39 $41 $34

$1

$22

$10 $16

$4

$0

$28 $30

$160 $35

$210

$40

$210

$19

$122 $31

CAGR 14%


However, some markets are growing faster than others, with Thailand, Hong Kong the UAE & India standing out for growth; there are strong signs of a move to quality (same/less quantity at a higher price)


FIVE YEAR IMPORT GROWTH MATRIX: CHANGE IN VOLUME VS. RATE OF GROWTH VS. ABSOLUTE VALUE US$m; t; 2009 vs. 2014

20%

-150,000

15%

-50,000 -100,000 150,000

0%

0

5%

10%

100,000 -5%

50,000

$200m

Egypt

UAE

Thailand

Vietnam

Jordan

Japan

South Korea

Lebanon

Kuwait

China

Sri Lanka

Bahrain

Israel

Indonesia

Hong Kong SAR

India

Philippines

Singapore

Saudi Arabia

Qatar

Taiwan

Malaysia

Pakistan

Oman

5y absolute change in volume

5y CAGR Shift to quality

Growing volume & value

Average orange/mandarin import prices vary by region, with East & South East Asia paying more than the Middle East; Thailand and South Korea stand out as large markets that pay well


AVERAGE IMPORT VALUE COST CURVE BY MARKET/REGION US$/kg; t; FOB; 2014

Saudi Arabia

Qatar

Vietnam

China

Bahrain

Malaysia

Singapore

Om

an

Indonesia

Jordan

Pakistan

Taiw

an

Lebanon

UAE

Sri Lanka India

Hong K

ong SAR

South Korea

Thailand

Japan

Egypt Israel

Philippines

Kuwait

$1.15

$0.58

$0.11

$1.13

$0.76

$0.39

$0.51 $0

.69 $0

.54

$1.16

$0.37

$0.4

5

$0.89

$0.85

$0.89

$0.38

$0.4

3

$1.41

$1.63

$1.02

$0.38

$1.21

$1.19

Volume imported

Average import

value

Imported orange/mandarin consumption and aggregate imports appear partially driven by income per capita; a number of markets appear to have long-run penetration upside

17 Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Wikipedia (GDP/capita); Coriolis analysis and classifications

MARKET SIZE DRIVERS: GDP PER CAPITA VS. IMPORTS PER CAPITA VS. MARKET SIZE Kg; US$; t; 2014

$50,000 0.0

$40,000 $30,000 $60,000

30.0

25.0

$0

40.0

35.0

$10,000 $20,000

5.0

10.0

20.0

15.0

Jordan South Korea

Malaysia

Taiwan

Kuwait

Lebanon China

Sri Lanka

100,000

Bahrain

Israel Japan

Hong Kong SAR

Indonesia Vietnam

Singapore

Thailand

Qatar

India

Saudi Arabia

Philippines

Pakistan Egypt

Oman

United Arab Emirates

GDP per capita

Imports per capita

Bubble scale: tonnes; 2014 A bubble this size=

Market share varies by country; Australia is stronger predominantly in East Asia; China really only achieving high penetration in poorer countries (e.g. Philippines, Thailand, Indonesia)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Israel

Jordan

Kuw

ait

Lebanon

Om

an

Pakistan

South Korea

Vietnam

Saudi Arabia

Qatar

Philippines

Thailand

UA

E

Malaysia

India

Sri Lanka

Bahrain

Indonesia

Hong K

ong SAR

Taiw

an

Singapore

China

Japan

China

Hong Kong SAR

Singapore

USA

Turkey

Spain

Pakistan

Egypt

Other

Argentina

South Africa

Australia


IMPORT VALUE MARKET SHARE BY MARKET BY KEY SUPPLIER % of value in US$m; FOB; 2014

Western Australia has opportunities for orange & mandarin export growth across a range of Asian markets


AUSTRALIAN IMPORT VALUE MARKET VS. MARKET VALUE US$m; FOB; 2014

Indonesia

Thailand

South Korea

Qatar

Singapore

Om

an

Malaysia

Saudi Arabia

Bahrain

Jordan Israel

Taiw

an

Pakistan

Lebanon

Philippines

Hong K

ong SAR

UA

E

China

India

Japan

Sri Lanka

Kuw

ait

Vietnam

0%

0%

0

%

14%

24%

6%

4%

3%

0%

19%

4%

1%

2% 1%

7%

0%

7%

12%

26%

8%

4%

0%

Total value of imports

Australian Market share

WA should be able to grow share in

Singapore to around 25%


Data supports new high value, premium orange & mandarin opportunities being initially launched in (1) Singapore, (2) Hong Kong and (3) Japan


WHERE TO FOCUS FOR NEW HIGH VALUE, PREMIUM PRODUCTS: AU SHARE VS. AVERAGE VALUE VS. MARKET SIZE % of value; US$; US$m; 2014

$0.00 15% 5% 10% 20% 30% 25% 0%

$0.20

$0.80

$1.40

$1.60

$0.60

$1.20

$1.00

$1.80

$0.40

India

$100

Sri Lanka

Singapore

UAE

Malaysia

Indonesia

Saudi Arabia

Vietnam China

Kuwait

Oman

Bahrain Qatar

Thailand

Taiwan

Israel

Pakistan

Lebanon

Jordan

Hong Kong SAR

South Korea

Japan

Philippines

AU share of total import value

VALUE Average

FOB $/kg 2014 1

3

2 4?

As a “Straw Man” for discussion, we identify a export market roll-out plan

21

PRELIMINARY “STRAW MAN” DEVELOPMENT & ROLLOUT PLAN FOR ORANGE & MANDARIN OPPORTUNITY Model; 2016

1 Export market launch in Singapore

2 Export market launch in Hong Kong

3 Export market launch in Japan

0 Product development and testing

Potential in-market partners identified later in this document

-  High income, sophisticated market and consumers

-  Manageable sized test bed -  WA/AU already has a strong

market position (19%)

DOCUMENT STRUCTURE





22

Western Australia can grow orange and mandarin exports to Asia, but focus and innovation are required

23

IS THE MARKET DEVELOPED & COMPETITIVE?

-  The flow of oranges & mandarins from the farm through to the consumer is relatively straight forward and simple

-  Orange prices are competitive in Asia

-  Asian markets generally have a much less developed orange and mandarin range and offer than western countries

-  “Leading indicator” Western markets strongly suggest depth of range in Asian orange and mandarin markets will increase going forward

-  Retailers generally offer a few loose bulk SKU; beyond this range increases (and therefore sales increases) primarily come from increasing the number of prepack SKU

WHAT IS WA CAPABLE OF DELIVERING?

-  A wide range of premium, value-adding product attributes emerged from our cross-country retailer survey

-  Western Australian citrus producers need to continue to move forward and improve through new products

-  Multiple potential positions exist to develop a premium orange and mandarin offer for Asia

-  Products from other firms in other markets demonstrate what is possible in terms of developing a premium Western Australian orange and mandarin offer

-  There are a wide range of potential product positions or claims available for a premium carrot product from Western Australia targeting Asia

-  As a “Straw Man” for discussion, we identify an opportunity for a high value, premium orange or mandarin product with select characteristics for export market launch

HOW IS THE MARKET STRUCTURED? The flow of oranges & mandarins from the farm through to the consumer is relatively straight forward and simple

24 Source: Coriolis

SIMPLIFIED MODEL OF SUPPLY CHAIN: ORANGES & MANDARINS Model; 2016

Retailers

Foodservice & Institutional

Exports

Wholesalers

Distributor(s) (multi-layered in large markets)

Domestic Packer

Agent/Broker/ Distributor

Packer/Processor Sales/Marketing

In-Market Farmer

Logistics Providers

(Airfreight, Seafreight, Trucking)

WA Citrus Packer

Other Australian Packer

WA Farmer

South African Packer

Argentinian Packer

USA Packer

Chinese Packer

Other Packer

Other Asian/ME Packer

This stage branches and adds multiple layers in large markets

WHO IS THE COMPETITION? PRICING Orange prices are competitive in Asia

$0.16

$0.45 $0.45

$0.35

$0.83 $0.83 $0.87

$1.32 $1.35

$0.46 $0.40

$0.63

$0.24

$0.86

$0.69

$1.28

Tesco G

olden Orange

Bagged, Navel (A

U)

Bagged, Navel, Sunkist

Loose, Valencia (SA

)

Loose, Navel (SA

)

Loose, Navel (A

U)

Loose, Navel (A

U)

Loose, large, Late Navel

Loose, large, Navel (U

S)

Sunkist Valencia (A

U)

Bagged, 8 pack

Bagged, 5 pack

First Choice, 8 pack

First Choice, 5 pack

Loose, Navel, Large,

Imported

Loose, Navel

25 Source: Coriolis from store checks

SHELF PRICE PER ORANGE ACROSS SELECT SE ASIAN MARKETS AND AUSTRALIA: ORANGES US$/item; Jan 2016

SELECT SE ASIAN RETAILERS AUSTRALIA

AU AU AU AU

Malaysia Thailand Singapore Hong Kong

WHAT IS ON THE SHELF? RANGE IN MARKET Asian markets generally have a much less developed orange and mandarin range and offer than western countries

26 Source: Coriolis from store checks; photo credit (fair use/fair dealing; low resolution; complete product/brand for illustrative purposes); Coriolis analysis

EXAMPLE: ACTUAL PREPACK ORANGE AND MANDARIN RANGE ON SHELF Jan 2016

London: GDP/Capita US$75,200 Hong Kong: GDP/Capita US$40,169

IS THE MARKET DEVELOPED & COMPETITIVE? RANGE “Leading indicator” Western markets strongly suggest depth of range in Asian orange & mandarins markets will increase going forward

20

15

13

10

6 6 5

8 7 7

4 3

2

Waitrose (UK)

Tesco (UK)

Sainsbury (UK)

Wegmans (NY)

Safeway (CA)

Coles (AU)

Woolworths (AU)

Fairprice (Sing)

Cold Storage (Sing)

Tesco (TH)

Tesco (MY)

Park'N Shop (HK)

Wellcome (HK)


NUMBER OF LINES ON SHELF: SELECT RETAILERS FROM ACROSS MULTIPLE MARKETS SKU; actual; Jan 2016

SE Asia Anglo-American

Average 5.2 sku/store

Average 10.7 sku/store

2x

IS THE MARKET DEVELOPED & COMPETITIVE? SEGMENTATION Retailers generally offer a few loose bulk SKU; beyond this range increases (and therefore sales increases) primarily come from increasing the number of prepack SKU

4 2 2

4 4 2

3

6 5

1 1

16

13 11

6

2 4 2 8

1 2

3 2

2

Waitrose (UK)

Tesco (UK)

Sainsbury (UK)

Wegmans (NY)

Safeway (CA)

Coles (AU)

Woolworths (AU)

Fairprice (Sing)

Cold Storage (Sing)

Tesco (TH)

Tesco (MY)

Park'N Shop (HK)

Wellcome (HK)

Prepack

Loose


NUMBER OF LINES ON SHELF BY PACK FORM: SELECT RETAILERS FROM ACROSS MULTIPLE MARKETS SKU; actual; Jan 2016

IS THE MARKET DEVELOPED & COMPETITIVE? PRODUCT ATTRIBUTES A wide range of premium, value-adding product attributes emerged from our cross-country retailer survey

49%

18%

14%

13%

8%

4%

4%

3%

2%

1%

1%

Named variety

Named origin

Easy peeling

Size

Organic

Sweet

Use

Seedless

Family pack

Sumer value

Kids pack


PERCENT OF OBSERVED PRODUCTS ON SHELF MAKING THE CLAIM ON PACK % of SKU; N=106; Jan 2016

-  This provide very clear instruction on what product attributes are succeeding the most across markets

-  Western Australian citrus producers looking to grow value and share should focus in these areas

-  Specifying variety and origin stand out, with approximately 1/2 observed product SKU noting the variety of orange or mandarin

-  Survey universe is all products in all listed retailers (across multiple countries)

TAKEAWAYS

WHAT IS WA CAPABLE OF DELIVERING? STRATEGIC DIRECTION Western Australian citrus producers need to continue to move forward and improve through new products

30

SUGGESTED STRATEGIC DIRECTION: WESTERN AUSTRALIAN ORANGES/MANDARINS Model; 2016

Loose, bulk oranges/

mandarins

Everyday prepack

oranges/mandarins

Organic Named gourmet varieties

Sized prepacked

Chinese suppliers are here

WA suppliers are here in Asia

High growth, high potential opportunities

are here

USA & UK suppliers are here

Loose, bulk, variety specified

Unique IP controlled

varieties

WHAT IS WA CAPABLE OF DELIVERING? CLAIMS Multiple potential positions exist to develop a premium orange and mandarin offer for Asia

31 Source: Coriolis; photo credit (Dollar Photo and Southern Forests Food Council Inc.)

IDENTIFIED POTENTIAL PREMIUM POSITIONS Model; 2016

Organic Family packs High in vitamin C

Identified source region Gourmet varieties Mini sized for kids Healing phytonutrients

Specialty variety Gift packed Seedless Immune support

Track & trace Kid friendly characters Antioxidant protection

CVD protection

Good source of fibre

High in carotenoids

Prevent kidney stones

Precut

Boosts heart health

HEALTH PROVENANCE INDULGENCE CONVENIENCE

Late season sweetness

Leaf and stem on Year round availability

Relatively long shelf life

WHAT IS WA CAPABLE OF DELIVERING? GLOBAL PEERS Products from other firms in other markets demonstrate what is possible in terms of developing a premium Western Australian orange and mandarin offer

32 Source: photo credit (fair use/fair dealing; low resolution; complete product/brand for illustrative purposes); Coriolis analysis

EXAMPLES OF PREMIUM PRODUCTS FROM OTHER MARKETS Select; 2016

Cooks’ Ingredients Sweet and juicy Sweet Mandarins

Marmalade oranges Easy to peel Premium local produce Year of the rabbit

Organic With leaf Direct from tree to trolley Gift packaging for Chinese NY

Vegetarian Vegetarian “Fresh, simple”

Traditional growing region Sustainably grown “Just they way you love it”

Packed on date

Appeal to cuteness

Basket opens into fruit bowl

Sustainable packaging

WHAT IS A POTENTIAL WA OFFER? There are a wide range of potential product positions or claims available for a premium orange or mandarin product from Western Australia targeting Asia

33 Source: Coriolis; photo credit (Dollar Photo and Southern Forests Food Council Inc.)

HYPOTHETICAL EXAMPLE OF POTENTIAL PREMIUM PRODUCT FROM WA Model; 2016

High in vitamin C High in fibre

From Western Australia

Organic Australian

Flag

Sweet varieties

Mini kid size fruit

Disease prevention

Gift packaging

HEALTH

PROVENANCE

INDULGENCE

CONVENIENCE

WHAT IS THE IDENTIFIED OPPORTUNITY? As a “Straw Man” for discussion, we identify an opportunity for a high value, premium orange or mandarin product with select characteristics for export market launch

34

PRELIMINARY “STRAW MAN” DEVELOPMENT & ROLLOUT PLAN FOR ORANGE & MANDARIN OPPORTUNITY Model; 2016

CURRENT WA POSITIONING IN ASIA

IDENTIFIED HIGH GROWTH, HIGH VALUE OPPORTUNITY FOR WA

High in vitamin C

From Western Australia Organic

Australian Flag On stem

Convenient packaging

Includes named variety From

Australia Prepack

POTENTIAL FUTURE PRODUCT LINE EXTENSION

Gift packaging

Sweet varieties

Use specific Mini kid sized fruit

Healthy snack

Easy peel

DOCUMENT STRUCTURE





35

FOCUS MARKET – 1 – SINGAPORE Singapore has a robust and well-developed food retailing and foodservice sector

$5.6

$3.9

$6.3

$1.9

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Turnover Purchases

36 Source: Coriolis from a wide range of sources

TURNOVER & PURCHASES US$b; 2014

ESTIMATED WHOLESALE FOOD & FMCG PURCHASES US$b; 2014

Foodservice Retail

$1.9 $3.9

Online $0.1

Traditional grocery $0.3

Supermarket $2.2

Convenience $0.4

Wet markets, etc. $0.7

Foodservice $1.9

Department stores $0.3

Petrol stations $0.1

Foodservice

Retail 6,500 restaurants,

hawker stalls, hotels, vending machines,

institutions (schools, hospitals, airline caterers,

prisons, etc.)

3.0%

5.0%

Retail

Foodservice

TURNOVER GROWTH RATE % Y-O-Y; S$; 2013v2014

FOCUS MARKET – 1 – SINGAPORE Four potential in-market partners are identified for Western Australian firms in Singapore

Firm NTUC Fairprice Cold Storage Sheng Siong Prime Supermarkets

Ownership National Trade Union Council (Singapore)

Dairy Farm International (Hong Kong)

Listed; Singapore Private; Singapore

Website www.fairprice.com.sg www.ntuc.org.sg

www.coldstorage.com.sg www.dairyfarmgroup.com

www.shengsiong.com.sg www.allforyou.sg

www.primesupermarket.com

Annual sales US$1.83b US$1.55b US$0.55b US$0.2b

Store formats Supermarket Hypermarket Convenience (Cheers; 139) Online

Supermarket (Cold Storage, Marketplace) Hypermarket Convenience (7-Eleven; 502) Online

Supermarkets Online

Supermarkets

# of stores 285 848 38 19

Store fascia


POTENTIAL IN-MARKET PARTNERS – SINGAPORE 2015 or as available

FOCUS MARKET – 2 – HONG KONG Hong Kong has a robust and well-developed food retailing and foodservice sector

$11.5

$8.0

$12.8

$3.9

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Turnover Purchases




Retail Foodservice

$3.9 $8.0

Foodservice $3.9

CRA $0.3 CRE

$0.2

Wellcome $1.2

AEON $0.6

Drug stores $0.6

Wet markets, etc. $3.0

ParknShop $1.5

Other retail $0.6

Foodservice

Retail 14,000+ restaurants 1,000+ bars & clubs

1,050+ hotels Vending machines

Institutions (1,088 schools, 42 hospitals, 3 main airline

caterers, prisons, etc.)

6.7%

3.5%

Retail

Foodservice

TURNOVER GROWTH RATE % Y-O-Y; HK$; 2013v2014

FOCUS MARKET – 2 – HONG KONG Seven potential in-market partners are identified for Western Australian firms in Hong Kong

Firm Wellcome Park’N Shop CR Vanguard Dah Chong Hong 759 Stores AEON Stores Convenience Retail Asia

Ownership Dairy Farm International/Jardine Matheson

A.S. Watson/ Hutchison Whampoa

CRE/China Resources (SOE; China)

Dah Chong Hong/ CITIC Pacific/CITIC (SOE; China)

Private; Hong Kong (Lam Wai Chun)

AEON (Japan) Fung Group

Website www.wellcome.com.hk www.parknshop.com www.crvanguard.com.hk www.crc.com.cn

www.dch.com.hk

www.759store.com www.aeonstores.com.hk www.aeon.info

www.circlek.hk/en www.cr-asia.com

Annual sales (in HK)

$2.2b+ $2.8b ~$0.8b (food/FMCG) N/A N/A $0.8b $0.4b

Food store formats

Supermarkets 318 Convenience 921 Health & Beauty 369 Restaurants 676

Supermarkets 260+ Convenience

Supermarkets Convenience

Supermarkets Grocery 247+ Dept. stores (w/food) 8 Supermarkets 5

Convenience 600+ Bakery

# of stores Wellcome 280+ Marketplace 31 7-Eleven 900+ Olivers the Delicatessen ThreeSixty

ParknShop 175 PnS Superstore 50+ PnS Taste 10 PnS Fusion 14

CR Vanguard 100+ VanGo 79

DCH Food Mart 80+ DCH Food Mart Deluxe

759 Stores 247+ AEON 13 Circle K Saint Honore Cake

Store fascia


POTENTIAL IN-MARKET PARTNERS – HONG KONG 2015 or as available

FOCUS MARKET – 3 – JAPAN Japan has a robust and well-developed food retailing and foodservice sector

$331

$232

$310

$93

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Turnover Purchases




Foodservice Retail

Convenience $112.9

$93.0

Small grocers $27.5

Specialists $22.5

Foodservice $93.0

Other grocery $16.6

$287.1

Supermarkets $102.3

Online $5.3

Foodservice

Retail 711,000 restaurants, bars & clubs, 87,927 hotels/motels/etc., vending machines,

institutions (schools, hospitals, airline

caterers, prisons, etc.)

0.0%

2.4%

Retail

Foodservice

TURNOVER GROWTH RATE % Y-O-Y; JPY; 2013v2014

FOCUS MARKET – 3 – JAPAN Eight potential in-market partners are identified for Western Australian firms in Japan


POTENTIAL IN-MARKET PARTNERS – JAPAN 2015 or as available

Firm AEON Retail Seven & I Holdings Uny Group Holdings Izumi Co. Ltd. Life Arcs Lawson Family Mart

Ownership Japan; listed Japan; listed Japan; listed Japan; listed Japan; listed Japan Japan; listed Japan; listed

Website www.aeon.info www.maxvalu.co.jp www.daiei.co.jp www.ministop.co.jp

www.7andi.com www.sej.co.jp www.itoyokado.co.jp

www.unygroup-hds.com www.uny.co.jp www.circleksunkus.jp

www.izumi.co.jp

www.lifecorp.jp www.arcs-g.co.jp www.lawson.jp

www.family.co.jp

Annual sales Total/Food

US$61.2b US$16.8b

US$49.1b US$17.5b

US$9.0b US$6.7b

US$4.7b US$2.1b

US$4.7b US$3.8b

US$4b US$4b

US$17.4b US$14b

Food store formats

Hypermarket Supermarket Department stores Convenience (3.4% share) Pharmacy/HBC

Convenience 17,900 (41% share) Supermarkets 185 Department stores

Supermarket Convenience (9.6% share) HBC Foodservice

Supermarkets Hypermarkets Malls

Supermarket Convenience 12,254 (20.5% share)

Convenience 9,975 (19% share)

# of stores 1,882 18,262 226 102 239 290 12,254 9,975 (JP) 16,970 (Global)

Store fascia

DOCUMENT STRUCTURE





42

IDENTIFIED WA COMPANIES

43

AGRIFRESH

COSTA GROUP

GINGIN CITRUS

ADDRESS: 12/41 Catalano Ct, Canning Vale, WA 6155 ADDRESS: 45 Orton Rd, Casuarina, WA 6167 ADDRESS: Dooling Road, Neergabby, WA 6503

PHONE: 08 9455 4538 PHONE: 08 9419 5850 PHONE: 0418 944 151

WEBSITE: www.agrifresh.com.au WEBSITE: www.costagroup.com.au WEBSITE: N/A

Sources: Coriolis from a wide range of sources

GOLDEN GROVE ORCHARD

HARVEY CITRUS

MOORA CITRUS

ADDRESS: 1378 Chittering Rd, Lower Chittering, WA 6084

ADDRESS: 7 Fifth Street, Harvey, WA 6220 ADDRESS: 1429 Prices Rd, Moora, WA 6510

PHONE: 08 9571 8074 PHONE: 08 9729 3861 PHONE: 08 9653 1318

WEBSITE: www.goldengroveorchard.com.au WEBSITE: N/A WEBSITE: www.mooracitrus.com

ODEUM FARMS

YAMBELLUP ESTATE

ADDRESS: 34 Catalano Road, Canning Vale, WA 6155 ADDRESS: 399 River Rd, Harvey, WA 6220

PHONE: 08 9256 8100 PHONE: 0417 911 534

WEBSITE: www.odeum.com.au WEBSITE: www.yambellup.com.au

AUSTRALIA Coriolis Australia Pty Ltd

PO Box 5831 St Georges Terrace

Perth, WA 6831 Australia

+61 8 9468 4691

NEW ZEALAND Coriolis (New Zealand) Limited

PO Box 90-509 Victoria Street West

Auckland, 1142 New Zealand

+64 9 623 1848

www.coriolisresearch.com

Coriolis is the leading Australasian management consulting firm specialising in the wider food value chain. We work on projects in agriculture, food and beverages, consumer packaged goods, retailing & foodservice. In other words, things you put in your mouth and places that sell them. WHERE WE WORK We focus on the Asia Pacific region, but look at problems with a global point-of-view. We have strong understanding of, and experience in, markets and systems in Australia, China, Japan, Malaysia, New Zealand, Singapore, South Korea, Thailand, the United Kingdom and the U.S. We regularly conduct international market evaluations and benchmarking. WHAT WE DO We help our clients assemble the facts needed to guide their big decisions. We develop practical, fact-based insights grounded in the real world that guide our clients decisions and actions. We make practical recommendations. We work with clients to make change happen. We assume leadership positions to implement change as necessary. HOW WE DO IT All of our team have worked across one-or-more parts of the wider food value chain, from farm-to-plate. As a result, our recommendations are grounded in the real world. Our style is practical and down-to-earth. We try to put ourselves in our clients’ shoes and focus on actions. We listen hard, but we are suspicious of the consensus. We provide an external, objective perspective. We are happy to link our fees to results. WHO WE WORK WITH We only work with a select group of clients we trust. We build long term relationships with our clients and more than 80% of our work comes from existing clients. Our clients trust our experience, advice and integrity.

Coriolis advises clients on growth strategy, mergers and acquisitions, operational improvement and organisational change. Typical assignments for clients include… FIRM STRATEGY & OPERATIONS We help clients develop their own strategy for growing sales and profits. We have a strong bias towards growth driven by new products, new channels and new markets. MARKET ENTRY We help clients identify which countries are the most attractive – from a consumer, a competition and a channel point-of-view. Following this we assist in developing a plan for market entry and growth. VALUE CREATION We help clients create value through revenue growth and cost reduction. TARGET IDENTIFICATION We help clients identify high potential acquisition targets by profiling industries, screening companies and devising a plan to approach targets. DUE DILIGENCE We help organisations make better decisions by performing consumer and market-focused due diligence and assessing performance improvement opportunities. EXPERT WITNESS We provide expert witness support to clients in legal cases and insurance claims. We assist with applications under competition/fair trade laws and regulations.

IN-PROGRESS REVIEW DRAFT · 2019. 5. 24. · TARGET MARKET OPPORTUNITIES IN ASIA FOR ORANGES AND...

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