Food Magazine November 2014 by Prime Creative Media

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Foodmagazine INGREDIENTS | PROCESSING | SAFETY | PACKAGING | EXPORT

INFORMING FOOD AND BEVERAGE MANUFACTURERS

DEC 2014/JAN 2015

WWW.FOODMAG.COM.AU

Flavour trends

Print Post Approved 100007267

Which ingredients will influence your product development in 2015?

PLUS: 2015 Food Magazine Awards | Getting export ready | Tamper-evident packaging

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Tel: 03 9540 5100 Fax: 03 9551 5541 Email: enquiry@bestech.com.au Web: www.bestech.com.au Address: U14/44 Garden Bvd, Dingley, VIC 3172

TSE2032 Water Bath Integrity Tester

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TSE6086B Flexible Package Integrity Leak Tester TSE6084 Can Integrity Tester

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WELCOME

Bring on 2015 Welcome to the final issue of Food magazine for 2014. Where did the year go??

EDITOR: Danielle Bowling danielle.bowling@cirrusmedia.com.au

t’s been a big 12 months for the food and beverage manufacturing industry. SPC was brought back from the brink, thanks to a $100 million investment from Coca Cola Amatil and the Victorian government. Landmark free trade agreements were made with China, Korea and Japan, and the issue of truth in labelling was continuously floating around, not just in regards to country of origin, but also for various marketing claims. Free range claims in particular were closely scrutinised, with a number of manufacturers penalised for misleading consumers. Big retailers were also held to account by the ACCC, with Coles accused of taking advantage of its superior bargaining position by demanding money from suppliers that it was not lawfully entitled to. It’s also been issued with a three year ban from advertising that its bread is made or baked on the day it’s sold, after it was uncovered that the supermarket giant’s ‘Baked Today, Sold Today’ bread was partially baked and frozen off-site – sometimes in Ireland – then ‘finished’ in-store. The Health Star rating was launched, offering manufacturers the chance to use the health and nutritional value of their products as a unique selling point, communicated more clearly

to the end-user with a rating of up to five stars. While it’s been praised as an easier, more common sense communication tool than the Daily Intake Guide, the industry’s not convinced that the reforms will be worth the cost. There were plenty of other big headlines, of course, but I’ve got another important matter to address before signing off on 2014. This will be my last issue of Food magazine! Kevin Gomez is taking the reins, and will lead the magazine as it moves in a new, exciting direction. The change allows me to focus solely on the other Cirrus Media brand I oversee, Hospitality magazine, while allowing Food magazine to benefit from Kevin’s extensive experience and knowledge of the manufacturing sector. You may be familiar with Kevin; he’s also the editor of Manufacturers’ Monthly and PACE magazine, and while he’ll definitely have his hands full, I’m convinced Kevin will bring with him a fresh approach and an in-depth understanding of the intricacies of this dynamic industry. It’s been a pleasure putting this magazine together for you over the past two years. Thanks for your help along the way, and I wish you all a Merry Christmas and Happy New Year!

INSIDE 04 NEWS

12 FLAVOUR TRENDS

An examination of the AFGC’s State of the Industry report.

We get the inside word on which flavours will influence your product development in the new year.

18 EXPORTS

06 2015 FOOD MAG AWARDS Entries are officially open for the 2015 Food Magazine Awards.

ASSOCIATE PUBLISHER - Martin Sinclair P: 02 8484 0607 F: 02 8484 0915 E: martin.sinclair@cirrusmedia.com.au EDITOR - Danielle Bowling P: 02 8484 0667 F: 02 8484 0915 E: danielle.bowling@cirrusmedia.com.au JOURNALIST - Aoife Boothroyd P: 02 8484 0907 F: 02 8484 0915 E: aoife.boothroyd@cirrusmedia.com.au JOURNALIST - Jasmine O’Donoghue P: 02 8484 0854 F: 02 8484 0915 E: jasmine.o’donoghue@cirrusmedia.com.au GRAPHIC DESIGNER - Louis Santos P: 02 8484 0724 F: 02 8484 0915 E: louis.santos@cirrusmedia.com.au

16 FOREIGN INVESTMENT Grant Thornton Australia’s Tony Pititto sets the record straight on why we shouldn’t fear foreign investment.

Some top manufacturers share tips on how to get export-ready.

24 ON THE SHELF

22 PACKAGING

26 PRODUCTS

The AIP details the importance of tamper-evident packaging.

Would this equipment be a welcome addition to your facility?

NATIONAL SALES MANAGER - Sharon Amos P: 07 3261 8857 F: 07 3261 8347 M: 0417 072 625 E: sharon.amos@cirrusmedia.com.au PRODUCTION COORDINATOR - Tracy Engle P: 02 8484 0707 F: 02 8484 0915 E: tracy.engle@cirrusmedia.com.au SUBSCRIPTIONS 1 year subscription 2 year subscription

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NEWS

State of the industry: where do we stand? The Australian Food and Grocery Council has released its annual State of the Industry report, shedding light on key issues in the food and beverage manufacturing sector.

Turnover The Australian food and beverage, grocery manufacturing and fresh produce industry had a total turnover of $114 billion in the 2012-13 financial year. Food and beverage processing contributed $91.6 billion, grocery $16.2 billion and fresh produce $6.2 billion. Meat and meat product manufacturing continues to comprise the largest share of the total sector turnover, at 24.6 percent, despite contracting slightly (0.7 percent in 2012-13). Dairy product manufacturing was the second largest at 14.7 percent, increasing 9.1 percent. Seafood processing comprises the smallest share of the total sector turnover (1.2 percent), with a decline of 4.2 percent. The fresh produce sector recorded a turnover of approximately $6.2 billion in 2012-13, representing an increase of 12.3 percent on the previous year. The food and beverage, grocery manufacturing and fresh produce industry represents 28.9 percent of the total Australian manufacturing industry by turnover.

Employment Employment decreased slightly, down 2,571 or 0.9 percent from the previous financial year. In 2013-14, the industry employed approximately 299,731 people, down from 302,302 in 2012-13. In the 2013-14 financial year there was an estimated 27,469 businesses in the industry, 183 fewer than in 2012-13. The

vast majority of these businesses were in the fresh produce sector (18,609 businesses), while grocery manufacturing has 1,353 businesses, and food and beverage manufacturing has 7,507 businesses. “Turnover is up slightly but job numbers are down. This is a microcosm of the broader economy – growth is below trend and unemployment is creeping higher,” said Terry O’Brien, chairman of the AFGC. “In the food and grocery sector, the juxtaposition of growth and declining employment reflects the reality of companies automating to reduce labour costs and drive higher efficiency and productivity.”

Trade In 2013-14, Australia’s total international trade (exports plus imports) increased by 7.3 percent to $55.9 billion. The real value of industry imports increased by 6.1 percent, while industry exports increased by 8.6 percent (from a smaller base). This resulted in a contraction of 20.9 percent in overall trade deficit to $1.8 billion in 2013-14, with total imports in 2013-14 valued at $28.8 billion, and exports valued at $27 billion. In 2012-13, food and beverage, grocery and fresh produce exports accounted for 21.3 percent of total industry turnover. During this period, 86.8 percent of all fresh produce grown in Australia went to the domestic market. The report quotes the weakening of the Australian dollar and growing global demand, particularly in processed meat,

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seafood, cheese and other dairy (exports grew by 24.5, 23.1 and 19 percent respectively), as the key drivers for strong export growth. Australia’s top 10 trading partners for the industry remained the same in 2013-14 as in the previous year, with the US our largest overall trading partner, surpassing Japan as Australia’s largest export market. Japan imported 21 percent of Australia’s meat products and dairy products in 2012-13. The US was the largest importer of wine and other alcoholic beverage products from Australia in the same year. The US and New Zealand were the top two supplier countries for imports into Australia. Imports of fresh produce from New Zealand grew by approximately 60 percent from 2012-13. The 2013-14 fresh produce figures indicate there has been a 23 percent increase in imports of fresh produce.

Capital expenditure and R&D According to the State of the Industry report, the food machinery manufacturing industry provides a proxy for the level of capital expenditure by the food and beverage industry. It is estimated that the food processing machinery manufacturing industry revenue grew from $965 million in 2007-08 to $1.09 billion in 2012-13, a compound annual growth rate of 2.4 percent. However, the industry has been subject to fluctuations over time. For example, growth of 6.4 percent in 2010-11 followed

revenue declines of 0.2 and 2.6 percent in 2007-08 and 2008-09 respectively when the global recession took its toll on demand for machinery and equipment. Revenue is expected to grow at a compound annual growth rate of 0.6 percent over the five years through 2017-18 to a total of $1.12 billion. The forecast growth rate is based on observed trends such as increasing technological advancement, higher automation, downstream price increases, economic recovery over the next five years, introduction of new products and consolidation required in the industry to make new technological investments economically viable. Capital investment in the food, beverage and tobacco product manufacturing industry flat-lined at $3.1 billion in 2012-13 increasing only by 0.3 percent from 2011-12. In 2011-12 the total amount spent in the food and beverage sector on research and experimental development was $541.8 million, an increase of 5.4 percent. The sub-sector with the largest expenditure on R&D was the dairy product manufacturing sector ($109.3 million), followed by meat and meat product manufacturing with $95.9 million. Significant growth was recorded in the sugar and confectionery manufacturing segment where estimated R&D expenditure rose by 56.1 percent from $26.7 million to $41.6 million, while most other segments recorded a decline over the same period.

gr Images: Photodisc (top) ; TimArbaev (bottom) - Thinkstock

his is the sixth edition of the State of the Industry report, which provides a comprehensive overview of the food and beverage manufacturing industry’s turnover, employment, international trade, capital expenditure and research and development. It uses data from the Australian Bureau of Statistics as its primary source, and where data from 2013-14 isn’t available, findings from 2012-13 are used.

re A

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Australia’s IN THE 2013-14 FINANCIAL YEAR THERE WAS AN ESTIMATED

FOOD & BEVERAGE GROCERY MANUFACTURING FRESH PRODUCE INDUSTRY had a total turnover of

$114 BILLION Total sector turnover

27,469 BUSINESSES in the Australian food industry FRESH PRODUCE

FOOD & BEVERAGE

GROCERY MANUFACTURING

18,606

7,505

1,353

TRADE 2013-14

Meat

Images: Photodisc (top) ; TimArbaev (bottom) - Thinkstock

24.6 %

Dairy

24.6 %

Australia’s top 10 trading partners for the industry in 2013-14 are:

Seafood

1.2 %

The food and beverage, grocery manufacturing and fresh produce industry represents 28.9% of the total Australian manufacturing industry by turnover.

1 2 3 4 5

USA CHINA NZ JAPAN SINGAPORE

6 7 8 9 10

UK REPUBLIC OF KOREA THAILAND GERMANY FRANCE

The weakening of the Australian dollar and growing global demand, particularly in processed meat, seafood, cheese and other dairy are key drivers for export growth. Source: The AFGC State of the Industry report www.foodmag.com.au | Dec 2014/Jan 2015 | Foodmagazine 5

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Celebrating success Following record entries in 2014, the 2015’s Food Magazine Awards are destined to be our biggest and best yet. Back for its 11th year, the 2015 Food Magazine Awards will go even further in acknowledging the industry’s success, thanks to the addition of three new categories, a new venue and of course some of the latest and greatest developments in food and beverage manufacturing. Celebrating the achievements of manufacturers both large and small, the annual Food Magazine Awards program has become the most highly anticipated event in the Australian food and beverage industry’s calendar. The night provides the perfect platform for businesses that have demonstrated innovation and thought-leadership to be rewarded and recognised by their industry peers at a fantastic gala dinner. In addition to popular product categories such as Health and Wellness, Ready Meals and Snack Foods, 2015 will see the addition of three exciting new categories: Label Design, Community Engagement and Employer of the Year. We decided

to add the Community Engagement and Employer of the Year categories not only in response to feedback from previous years’ entrants, but because it allows us to celebrate the admirable work that many Australian manufacturers undertake to improve communities, whether they be inside or outside the company. With 16 categories overall, there really

sponsors who have once again jumped on board to support the Food Magazine Awards program, and we’d of course like to welcome the fresh new faces that are pledging their support for the first time. Flavour Makers, our Platinum Sponsor for 2015, and a number of other brands have gotten in early to secure their spot in the program. You can read all about their great

the perfect opportunity for manufacturers to gain inspiration, insight and of course taste the fruit of their peers’ labour. The event serves as a fantastic opportunity for your business to join a prestigious group of leading manufacturers in gaining publicity in an increasingly competitive global market. Whether you are a small, medium or large manufac-

"The night provides the perfect platform for businesses that have demonstrated innovation and thought-leadership to be rewarded" is something for every manufacturer, of any size. The application process is simple: a nomination kit can be downloaded from www.foodmag.com.au/awards2015 and once complete, must be sent to the Food mag team together with high resolution images. If you have any questions in relation to your nomination, the Food mag team is more than happy to help! We’d like to thank our very loyal

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work in the industry in the pages that follow. There are still a few categories available for sponsorship so do get in touch if your business is interested in getting involved. 2015 will see the return of the popular Product Showcase, where finalists have the opportunity to offer samples and spruik the unique selling points of their products before the awards presentation kicks off. The Product Showcase serves as

turer, we’d love to hear from you. Although nominations close in April 2015, we encourage you to start organising your submission as early as possible to avoid the infamous last-minute dash. As always, we look forward to reading about all of your latest product launches and best practice initiatives and we’re excited to celebrate your continuing success at the gala event next year.

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SPONSORS DTS FOOD LABORATORIES Health and Wellness

APPMA Packaging Design The APPMA represents Australia’s leading packaging and processing machinery and allied components companies. Established in 1983, the APPMA is Australia’s only national packaging and processing machinery association and the owners of AUSPACK – the largest packaging and processing machinery and

EARLEE PRODUCTS Sustainable Manufacturer Earlee leads the agrifood industry in the development and production of high quality, delicious food and beverage solutions. Family-owned and Brisbanebased, Earlee Products is a niche market manufacturer utilising a comprehensive new product development centre. Earlee has developed many industry leading poultry and meat innovations including natural brines, cures, marinades, glazes, seasonings and flavoured butters. Food safety is vital and Earlee has joined the fight, with groundbreaking natural antimicrobials fashioned to contain and destroy pathogenic and spoilage bacteria. Our latest warehouse and production facility expansion will enable the production of even

materials exhibition in Australia. The APPMA’s objective is to promote and foster development at all levels of the packaging and processing industry.

1300 787 122 www.appma.com.au

more new generation products. This facility will also allow Earlee to export its unique products to additional markets overseas. As research and development provides an integral platform for the advancement of Earlee’s fresh and innovative products, our forwardthinking team of food chemists, chefs and engineers undertake a range of projects to produce solutions for many major food brands. Through creativity and technical know-how, Earlee Products has developed a reputation as a leader in satisfying consumer demands and lifestyle trends.

At Earlee Products... We Make Good Food ... Great! www.earlee.com.au

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In 1954 Dairy Technical Services Limited was founded to provide microbiological and chemical test results for export products. This business has grown and prospered for 60 years, to become DTS Food Laboratories. From the first laboratory to its current extensive capabilities across multi-location facilities, DTS is proud to be part of the future of safe and healthy food supply. In 2014, DTS celebrated 60 years in business. A dedication to quality, service, performance and customer focus and is the driving force behind this successful Australian business – the only food testing laboratory in Australia owned by members of the food industry. NATA accredited since 1961, DTS is passionate about understanding

FLAVOUR MAKERS PLATINUM SPONSOR For over two decades, Flavour Makers have been inspiring palates around the nation to discover the true enjoyment of food that tastes amazing. The business was built on a love and passion for food – something that remains core to everything we do today. Every member of the Flavour Makers team is dedicated to creating amazing new food products for our customers, it’s a pre-requisite and a big one at that. Our team of chefs and culinary technologists continue to set and reset the bar in food development, discovering new methods, possibilities and game-changing opportunities for our customers – and it all begins with our “passion to plate” philosophy. Flavour Makers are the food architects – designing innovative food concepts for our customers, and turning them into reality.

the needs and requirements of our clients and their businesses. We do this by partnering with our clients and becoming an integral part of their business, through the provision of a comprehensive range of analytical and assurance services. As Australia’s largest independent food testing laboratory offering the most comprehensive range of analytical services, DTS Food Laboratories is expanding its analytical capabilities to address current and future industry needs which all contribute to the delivery of accurate and timely results – from raw materials to finished products. Why not make DTS your trusted partner in quality?

sales@dtsfoodlabs.com.au www.dtsfoodlabs.com.au

Our exceptional facilities are fully equipped to produce a comprehensive range of flavour and functional ingredient systems through to finished, packaged products for every sector of the food industry. We work in partnership with our customers, adding value to every stage of a project starting from insight discovery, strategy and ideation – right through to product development, manufacturing and fulfilment. Whether it’s creating breakthrough culinary concepts, developing the next exciting flavour trend or unlocking new possibilities for organic, allergen-free or cleanlabel healthy foods, Flavour Makers are consistently providing customers with a recipe for success.

enquiries@flavourmakers.com.au www.flavourmakers.com.au

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COMMERCIAL Brands you can trust COMMERCIAL Brands you can trust COMMERCIAL Brands you can trust

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SPONSORS HACCP AUSTRALIA Food Safety and Innovation in Non-Food HACCP Australia is a leading food science organisation specialising in the HACCP food safety methodology and its application within the food and related, non-food industries. Companies throughout Australia benefit from the organisation’s depth of expertise and its practical, systematic, common sense approach which is central to the success of the organisation. Through the development, implementation and ongoing operation of comprehensive HACCP based Food Safety Programs, we assist clients throughout the food industry to identify and manage food safety hazards. These programs are tailored to the particular needs of each individual and group enterprise. Suppliers to the food industry can have their products certified as food safe according to HACCP

NEWLY WEDS FOODS Meat and Smallgoods With over 30 years of experience in the Australian food industry, Newly Weds Foods (Australia) has a solid reputation built on innovation, quality and commitment to service excellence. As specialists in food coating systems, seasoning blends and functional premixes we offer a broad range of products from our state of the art manufacturing facilities located in Sydney, Perth and most recently Auckland, New Zealand. Our Technical and Culinary Centres can provide immediate response to customer inquiries for new product development and technical assistance. Supported by an enthusiastic and skilled team of sales professionals, food technologists, technical meat experts, chefs, regulatory and quality teams, we provide unsurpassed technical

Australia guidelines, providing a strong marketing platform to the food safety conscious sector of the industry. HACCP Australia’s Certificate of Conformance verifies a non-food product’s ability to support the integrity and safety of food as demanded by industry expectations. The HACCP Australia certification mark is a widely recognised symbol of excellence in applied food safety carried by leading food products and foodsafe equipment, materials and consumables that support the industry. HACCP Australia is headquartered in North Sydney but has operations and technical staff Australia wide as well as in key international markets in Asia, Europe and the USA.

(02) 9956 6911 www.haccp.com.au info@haccp.com.au

support, customer service and most importantly, confidentiality in today’s competitive environment. With access to the global resources of Newly Weds Foods, we are also well placed to keep abreast of the latest food trends, regulatory issues and the ever-changing needs not only of our local customers, but also our customers supplying markets all around the world. Through our focus on technology and innovation we can assist you to develop and commercialise successful products, customised to meet your specific manufacturing and marketing requirements. Whether you’re developing products for retail, QSR or foodservice we can offer the solutions.

www.nwfap.com

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KERRY Ready Meals Kerry helps develop products that delight and nourish consumers across the globe. Building upon our strong food and beverage heritage, local insights, applications and culinary excellence and a solid foundation of science and technology, we help you deliver a variety of meal solutions to meet consumer demand for fresh, authentic flavours and natural ingredients. Whatever the product challenge, let our dedicated flavourists, food scientists, sales and purchasing experts in Kerry Australia and New Zealand provide ready meal solutions,

THE RIGHT FOOD GROUP Organics “We believe in innovation, wellness, flavour, ease of use and the need to satisfy consumer demand for clean, certified organic food.” Anni Brownjohn The Right Food Group is an Australian owned food manufacturer located in the stunning Tweed Valley. Since 1999, the company has been committed to delivering tasty, wholesome, low allergy, organic food solutions to kitchen tables around the world. The Right Food Group was born from the humble beginnings of a farmhouse, after founder Anni Brownjohn saw the opportunity to provide families, much like her own, with better meal solutions. Today, they are proud to remain one of the nation’s oldest and largest pioneers in the organic market, supplying their house

leveraging on our extensive portfolio of taste and nutrition systems. At Kerry we know that delivering great tasting food and beverages relies on understanding and working with both flavours and ingredients to achieve the right taste result. Whether you want your product to be crunchy, cheesy, smoky or spicy, Kerry can help you create a delicious market-leading dish for local or global consumers.

(02) 9741 4422 www.kerry.com

brands alongside private labels to both independent and large retailers nationally and abroad. Over the years, the group has been passionate advocates for organic education and generating awareness of the harmful chemicals and preservatives we consume every day. As a result of this commitment to providing better alternatives, their range of wellness foods has been recognised through numerous awards for innovation and quality. The Right Food Group range is gluten-free, dairy-free, low in salt, sugar-free and all produced in a nut-free facility: their priority is making high quality, healthy food accessible to all.

www.rightfood.com.au info@rightfood.com.au

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No one delivers

Taste & Nutrition like Kerry Todayâ&#x20AC;&#x2122;s food and beverage companies are challenged to deliver winning consumer products with a balance in taste, nutrition, texture, convenience and value. As the worldâ&#x20AC;&#x2122;s leading supplier of innovative taste and nutrition systems, Kerry is uniquely positioned to help food and beverage companies deliver that balance.

By partnering with Kerry, you will benefit from our wide portfolio of ingredients and flavours supported by our strong expertise in ready meal solutions.

Unique Connected Innovative

Kerry | Asia Pacific | www.kerry.com Email: sales.anz.@kerry.com Tel: 61 2 9741 4422

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FLAVOUR TRENDS

Which flavours will be favoured? 2014 seemed to be the year of the coconut. Whether it was coconut oil, coconut water or some sort of extract, it was one ingredient that demanded attention. But which ingredients and flavour trends will lead the way in 2015? Aoife Boothroyd reports.

ood magazine recently caught up with some of the industry’s top marketing research companies to look at which ingredient and flavour trends manufacturers will be at the mercy of in 2015. When it comes to identifying which flavours will dominate, the consensus pointed towards those conducive to the health and wellness movement. “Consumer concerns regarding health and an increasing demand for convenient foods that fit in with time-poor consumers are expected to drive product trends over the next five years,” says Caroline Finch, senior

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industry analyst at IBISWorld. “Producers are expected to increasingly integrate exotic flavours with premium and healthy ingredients, such as wholegrain, fibre, protein and vitamins promoted for specific health benefits.” Similar to what we saw in 2014, Finch says that the popularity of “superfoods” is expected to increase within the health and wellness category. “Superfoods that are forecast to continue to gain popularity in 2015 include maca powder, chia seeds, goji berries, acai, raw cacao, hemp seeds, coconut oil, bee pollen, and wakame

seaweed. Free-from products are also expected to be a growth area, as more and more consumers discover that they have intolerances, allergies or sensitivities to certain foods.”

Turning fads into sustainable trends Lead analyst at Canadean, Michael Hughes says that two of the current trends in the FMCG space will continue into 2015: hot and spicy ingredients from the Far East and South America, and the introduction of more ‘superfood’ ingredients such as beetroot juice. Specifically in relation to superfoods, Hughes says

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HIGH CAPACITY POULTRY CUTTING EQUIPMENT

that the popularity of FMCGs containing these ingredients will continue to increase. “This trend will continue to gain momentum in 2015, as consumers continue to seek out magic bullet solutions for their health needs - the key for manufacturers is ensuring such “fads” are turned into sustainable trends and that consumers understand they need to be consumed in accordance with a balanced diet,” he says. “Alternative protein will become a big trend - particularly in the dairy category. We also anticipate that vegetable nutrition will become a big trend with demand for beetroot juice expected to grow in particular.” Daniel Grimsey, senior research analyst at Euromonitor International believes that the superfood trend is likely to increase, but warns that not every consumer is on board. “I guess it depends on the social aspects. A lot of people are obviously into quinoa and gluten-free products, while other people hate that sort of thing,” he says. “I suspect that [super-

foods] will become more mainstream but it could go either way.”

Functional beverages on the rise Other areas to focus on include the gluten-free space which has gained immense popularity over the past five years, and is expected to continue to gain momentum. But an interesting category to watch is that of plant-based water and ‘superfruit’ enriched beverages. Grimsey expects that elderflower, chia and superfruits such as pomegranate will emerge in the beverages category, whereas Finch of IBISWorld believes that chlorophyll may be an ingredient to watch. “There is considerable innovation in the functional beverage category,” says Finch. “Consumers that purchase these products are typically well informed, and will select the type of plant-based water depending on the health benefits they provide. Chlorophyll water is a trend that may build.” Hughes from Canadean expects the popularity of plant-based waters such as coconut water to increase, however he

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Flavour trends

stresses that the market is still comparatively small compared to the soft drink market. “It will have to be remembered that these categories will remain a niche,” says Hughes. “The demand however will be driven by consumers looking to exit the carbonated soft drink market and instead seek out healthier alternative beverages. For those less driven by the desire for health, price can be a barrier for such products.”

leading the way in innovation In terms of product innovation and addressing any gaps in the market, the health and wellness category continues to be the one to watch. However Hughes warns that the positioning of particular products within the category needs attention to secure sustainable demand. “At the moment, I think more could be done to align certain ingredients with who should be their core audience in order to sustain fads into trends and by moving away from those consumers simply seeking a magic bullet health solution,” he says. “For example, coconut water manufacturers should do more to position products at athletes because of the potassium content, whilst alternative protein manufacturers are missing a trick not doing more to highlight the importance of protein and muscle retention to an ageing society.”

Still within the health and wellness category, Finch from IBISWorld believes that there is plenty of room to grow within the vegan, biodynamic and raw food categories in mainstream supermarkets, despite a surge in new product releases over the past few years. She also adds that products targeting specific food intolerances will continue to experience increased demand. “Products targeting fructose malabsorption also present an opportunity, as awareness builds with consumers. At the moment, there is not much depth in the range of products aimed at these consumers, presenting an opportunity in the market,” she says.

Categories to watch Finch also emphasises that manufacturers of health foods are in a stronger position for growth when compared to producers of traditional snack foods. According to IBISWorld data, health and snack food production has experienced a six percent annualised growth in the five years to 2014-15 ($601.9 million), with forecast growth at 4.7 percent annually for the five years to 2019-20 ($758.4 million). Whereas snack food production is sitting at 1.3 percent annualised growth in the five years through to 2014-15 ($2.4 billion), with forecast growth at 1.6 percent annualised in the five years to 2019-20 ($2.6 billion). “Some players have enjoyed immense

14 Foodmagazine | Dec 2014/Jan 2015 | www.foodmag.com.au

growth by tapping into niche markets brands like that which have enough shelf with unique ingredients, production space can have different variants such as methods and flavours,” says Finch. “For those. example the milk company. A2 enjoyed “Goodman Fielder is also introducrevenue growth of almost 16 percent in ing gluten-free bread to the mainstream 2013-14 with its milk audience, and Nudie products aimed at Foods is another brand consumers with dairywatch as they have "It depends on the tointroduced related digestive issues, a juice social aspects. A and Carman’s Fine containing chia now. lot of people are Foods revenue increased Within the iced tea at an annualised 24.6 space, the Stolen Recipe obviously into percent over the five is another innovaquinoa and gluten brand years up to 2013-14, due tive manufacturer.” free products while to the growing popularMichael Hughes ity of its health snack other people hate from Canadean says that foods.” that sort of thing" in his opinion, Nestle is To add to this, one brand that is ahead Euromonitor’s Daniel of the curve. Grimsey believes that private label “Nestle is investing a lot in health and brands within the health and wellness functionality, and I am really interested category are leading the way in terms of to see how it make strides in the market product innovation. over the next couple of years given their Grimsey says the that the Macro and R&D investment,” he says. gluten-free section in Woolworths has In terms of product and ingredibeen particularly well executed. ent innovation across the FMCG space “As far as health foods go, about half at large, Hughes says that a few key the market within Woolworths seems marketing elements will be a catalyst for to be private labels, not to mention the increased sales over the next 12 months. Coles Finest and Woolworths Gold at the “Personalisation and consumers wantpremium end of things which appear to be ing products for their specific needs and pushing more exotic ingredients,” he says. wants,” he says. “This is key, particu“Also Sanitarium Weetbix in the last larly as consumers are less willing to year or so has branched out in several compromise. An example of this could areas. They have a gluten-free version be specific health benefits, or [permitting and a protein enriched version, so major of] indulgence.”

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FOREIGN INVESTMENT

Why we shouldn't fear foreign investment

There are some common misconceptions when it comes to the effect of foreign investment on Australia’s food manufacturing industry. Grant Thornton Australia’s Tony Pititto sets the record straight.

s Australian food and beverage companies assume larger roles on the world stage, the focus on innovation of products, processes and customer service becomes increasingly important in order to remain competitive. As you well know, trends emerge quickly, requiring companies to rapidly develop new products or risk missing out on profiting from hot new markets. But innovation requires investment, and we’re seeing many Australian companies with limited access to capital feeling constrained in their ability to meet the needs of the changing market. Many Australian companies are unable to access appropriate capital domestically to fund their growth plans. The recent Hunger for Growth survey indicated that more than half (53 percent) of Australian food and beverage executives believed their organisations would need additional funding within 12

months, with 16 percent noting sourcing capital as a constraint on their ability to grow their business.

Demystifying a sense of lost identity - a sector starved of capital For some, mergers and acquisitions in the Australian food and beverage industry conjure up images of overseas buyers swallowing the heart and soul of iconic Australian food brands; when in fact, overseas buyers make up a very small portion of the deal activity across the entire sector. What’s more, these investors are looking to capitalise on iconic brands, in order to market quality products in new regions, as opposed to eradicating the brand’s identity. Whilst international interest is undoubtedly strong, the sector still sees most acquisitions made by local buyers. Grant Thornton’s Food & Beverage Deal

16 Foodmagazine | Dec 2014/Jan 2015 | www.foodmag.com.au

Tracker report highlights that 80 percent of Australian businesses sold during the period January 2011 to June 2014 were to domestic acquirers. Overseas buyers accounted for only 20 percent of total deals over the same period. In some cases, private equity firms and overseas buyers provided the best option for the required level of capital to grow a company through product innovation. This is because private equity firms and overseas buyers have greater access to debt funding and equity investment and are known to look for Australian food and beverage companies with growth potential. So is the perception fair that new owners destroy Australian brands? There’s little evidence to suggest Australian brands are eroded when they’re purchased by overseas buyers (think Vegemite, Fosters, Arnott’s Biscuits and Uncle Toby’s). In most instances, these brands are the primary reason for the

transaction, and there is little incentive for buyers to destroy them. In these examples, there has been little observable impact on the brand or product subsequent to the change in ownership. An analysis of the deals in the Deal Tracker report shows most transactions involving overseas acquirers were heavily motivated by the target’s strong brands and quality products. Subsequent analysis suggests these brands and products remain a key focus after acquisition.

Opportunities to service the refining palates of Asia Despite the perception of Australia “selling the food bowl”, foreign investment continues to play an important role in the food and beverage industry. It provides capital for growth and innovation, as well as access to expertise and the scale required to take advantage of the growing demand in Asia.

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foreign investment

International buyers have demonstrated their capacity to provide the appropriate expertise for Australian companies to expand into overseas markets. They achieve this through their size, their established distribution and marketing channels and the existing network of people on the ground throughout Asia. The capital employed by private equity firms and other investors (both domestic and foreign) stimulates innovation and efficiency. This creates a flowon of benefits for the sector, including employment and growth throughout the economy. Farmers, suppliers and other services all benefit from growth and increased demand for Australian food and beverage products.

What it all means for Australian food producers Many of the strategies that will help Australian food and beverage companies grow and succeed – from developing overseas distributions channels to expanding product portfolios – can be achieved through organic growth or through mergers and acquisitions. Particularly for mid-size and large companies, mergers and acquisitions offer opportunities that may not be available through domestic funding. Ownership succession is also a consideration for many privately owned food and beverage businesses who may be contemplating sale. Many successful Australian food and beverage businesses are family owned. For the family owned businesses, with founders reaching retirement age, or having grown their business to the limit of their capabilities or desired involvement, the sector is in a prime position to service Asia’s growing demand for high creates F quality D 1 0 1food 4 _products, 0 0 0 _which DUP 2 opportunities for such businesses to capitalise on when exiting their investment. The international interest in Austral-

ian companies continues to provide healthy competition in the sale process, allowing Australian owners to realise higher returns upon exit. Our research highlights that higher multiples are consistently achieved by those businesses with strong brands in premium segments. We’re seeing a trend that shows overseas buyers and private equity firms are willing to pay more for companies that are operating in the packaged food segment, and particularly those companies with strong brands, or those with innovative, organic and healthy products within their portfolio. Whilst the majority of merger and acquisition transactions continue to involve domestic buyers, the competitive tension introduced 1 2 0 1by4international - 0 9 - 1 suitors 5 T 1 has 1 :been 0 8 a benefit for many Australian owners. If Australian companies are to take advantage of the current market opportuni-

"The international interest in Australian companies continues to provide healthy competition in the sale process" ties, they must have a growth strategy that ensures their business is well positioned to capitalise (either through organic growth or mergers and acquisitions) on the increasing demand from Asia for high quality food products. This strategy should address the company’s ability to access capital, focus on strong brands, quality products within their portfolio, customer relationships and access to distribution and marketing channels throughout Asia. Many Australian companies will feel confident : 2 5 + 1 that 0 : they 0 0 have the expertise and means to grow organically. For others, external capital provides a viable and attractive option, either to grow their

business or as a lucrative exit strategy. Recent transactions including those of iconic Australian brands such as Inghams Enterprises and Peters Ice Cream, together with the interest in Australia’s biggest wine producer, Treasury Wine Estates, show that overseas private equity firms – in particular – continue to focus on growing Australia’s food and beverage sector. Their continued interest represents bright future prospects for the sector.

Tony Pititto is partner and national head of food and beverage at Grant Thornton Australia.

www.foodmag.com.au | Dec 2014/Jan 2015 | Foodmagazine 17

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EXPORTS

DEMYSTIFYING EXPORT If you’re considering growing your business internationally, there’s never a “safe bet” when it comes to timing, but ensuring you’ve ticked the right boxes definitely helps. Jasmine O’Donoghue reports.

Sean Garlick

18 Foodmagazine | Dec 2014/Jan 2015 | www.foodmag.com.au

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EXPORTs

hen getting ‘export-ready’, research is the first step and is also an ongoing process. It’s how you find out if the country you’d like to receive your goods will trade with you at all, and who you need to get approval from to get the ball rolling. It’s how you know what certifications you need to be successful in the receiving country; and it’s how you gauge the market interest or demand for your product. Research is also how you balance the risks and make sure that the investment you’ll make to see your product go international is worthwhile. “Do your research. There’s a wealth of information available online and once you contact the various industry bodies, there seems to be no end to the amount of resource material that’s available to you,” says Sean Garlick, managing director of Garlo’s Pies. “I remember printing out pages and pages of requirements and reading them and trying to ingest them all. It wasn’t until we engaged a consultant that it put it all in perspective and you sort of get an idea of what it’s going to cost as well.”

“Right at the start we acknowledged that there was a whole lot we didn’t know so we engaged a consultant … though it comes at a cost,” Garlick says. “You either learn it for yourself or you pay for someone to come in and teach you. It all depends on how much time you’ve got and how quickly you want to get it done. “It’s probably the first step [getting a consultant] because you need to get your premises right or you need to find out if you premises is ever going to be right and what the costs will be to get it right. Then you need to consider processes, whether you have the budget to be able to employ the people that you need in order to be on top of it every step of the way. “It’s not just to ensure that you do it right, but you’ve got to demonstrate that you’ve done it right, you’ve got to be able to show through your record that every single aspect of your production - your receival, production and dispatch - has all been at the right temperatures, according to the right plan that’s been written, and that it’s all auditable.”

Resources - have you got what it takes?

requirements of export and the requirements of the receiving country. “It came at a time where we were contemplating building new premises anyway; we were bursting at the seams at our old place and we figured the new place was going to be built from scratch so we might as well make it compliant with the regulations of having a meat export licence,” says Garlick. “There are some facilities that just don’t comply. For example, the whole drainage system of your premises has to be separated from your raw goods to your finished goods, so if you were to get a break out of listeria or something like that, it can’t be transmitted from raw ingredients to finished goods. It’s about the complete isolation of your staff from the various sections of your facility. It’s about constant monitoring and recording of all your temperatures and your cookchill processes. It’s basically drilling down every conceivable opportunity for contamination, which far exceeds HACCP.”

Get talking

Many manufacturers are prompted into export by inquiries, but ensuring inquiries DIY, or call in an expert? Before a business can even consider turn into business deals is all about getting Once you’ve done some research, the next export, they have to ensure they have the involved. You’ve got to get people talking step to getting export-ready is deciding resources to meet demand. Your facility and get talking to the right people. F D1 2 1 4 _ 0 0 0 _ SUM 1 2 0 1 4 - 1 1 - 1 3 T1 3 : 5 9 : 0 6 + 1 1 : 0 0 whether or not to bring on a consultant. needs to have the capacity, meet the Garlo’s Pies started the conversation

by attending an international trade show and giving out pies for five days straight. Chobani Australia managing director, Peter Meek, says the best advice for manufacturers looking to export is to “get started.” “You can over research it and worry about if you’ve got it right, but you’ve really got to get into the market and talk to the distributors and they’ll help you craft what you need to do to enter those markets.” Australian coconut yoghurt and ice cream manufacturer, CO YO, exports to New Zealand and recently won the Richard Joel Award for Emerging Exporter of the Year at the Premier of Queensland’s Export Awards.

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EXPORTs

CO YO co-founder and director, Henry Gosling, does a lot of the ground work himself. “You’re the one with the passion and you know how to sell it, you know how to promote it and you know how to talk to people about it,” Gosling says. “If you’re a small little business like ours, you need to get really personal, and the only way to do that is to go and do the work yourself.”

For Garlo’s Pies, it was knowing that it’s illegal to import poppy seeds into the UAE. “We used to decorate the top of our pies with poppy seeds for certain flavours. It’s about knowing those sort of individual country requirements that can be a deal breaker,” Garlick says. Chobani Australia recently entered into the Singaporean and Malaysian markets. Peter Meek says Chobani’s initial strategy in these new markets is to use Matching product to market existing flavours. So you’ve got your facility, and all the “It’s fascinating if you go into necessary paperwork – but is your product Malaysia and Singapore, the top flavour right for the market? in both of those markets Mitchell Taylor, is still Strawberry. So managing director of while the palettes are "You need to Taylor’s Wines says a very different within this have something manufacturer looking category, certainly a lot that is unique, to export has to make of the flavoured products sure they’ve “got a that we’ve already got and something high quality product are absolutely relevant to that reflects the that deserves to be them so we don’t want to regionality" exported.” introduce any complex“You don’t want ity in the first stages, but to be going over there in the longer term and with a product that doesn’t stand out, you as the markets reach a critical mass of need to have something that is unique, course, we will look to localise flavours and something that reflects the regionand bring local propositions to them.” ality and tells a good story…It’s not a Doing it differently quick sell. You don’t enter the market Going internationally does not always and walk away, you’ve got to invest a lot mean you have to export. of time in continually going back there CO YO sells the licence to manufacand revisiting the market and making turer to overseas interested parties and sure that you start to build some of those then helps them set up production units. relationships.” Gosling says CO YO has a simple Although there may be international formula after getting an international interest in your product, some small inquiry to distribute. tweaks may help its success, or perhaps After initial contact, Gosling passes may even be essential before exporting the inquiry onto a consultant, who can commence.

Mitchell Taylor (right) and his family 20 Foodmagazine | Dec 2014/Jan 2015 | www.foodmag.com.au

communicates with the interested party, answers any of their questions and sends them a contract. From there, the CO YO co-founders (Henry and Sandra Gosling), the consultant and the interested party will have a Skype session, after which, the Goslings may fly overseas and have a face-to-face meeting. If CO YO decides the interested party is suitable, they will charge them a licence. In the case

of the US, CO YO sent a duplicate of its Yandina manufacturing plant to the manufacturers in New Mexico. They also sent their yoghurt maker for the installation of the plant, and to give assistance and advice on how to set up and begin manufacturing. From then on, CO YO is in communication with the new manufacturers on a regular basis.

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EXPORTs

ARE yOu REAdy? • D oes your business have the production capacity and staff to supply export orders? • D o you have a clearly defined selling proposition and can state why overseas customers should buy from you compared with your competitors? • D o you have resources and funds available to make modifications to your product to suit overseas customers, cultures and local standards? • D o you have the financial resources to support ongoing marketing of your product overseas? • I s the management of your company committed to devote staff, time and resources to sustained export business? • H as the company undertaken initial research into overseas markets such as whether you require licenses, or what regulations or labelling requirements may be? • D o you have promotional materials suitable for overseas customers such as a website? • H ave you determined at what price you will sell your product? CO YO began exporting to New Zealand as a way to “test the waters”. “The New Zealand market was a toe in the water, that’s why we set up our own company and thought ‘well let’s give it a go and see whether there is a market for this product,’ because we want people [who buy a licence] to succeed, we weren’t too sure whether there was in fact a market for our product,” Gosling says. “At some stage, that operation in New F D1 2 1 4 _ 0 0 0 _ EXH

OWNED AND PRESENTED BY

ORGANISED BY

• D o you have an understanding of payment mechanisms for international transactions and managing foreign currency transactions?

Zealand will be sold off as a licence, but at the moment, it’s been going now for 12 months, we had a record shipment, just last week and it’s going extremely well.” Export consumes time, money and requires a strong managerial commitment, but if executed correctly, it can be a great opportunity to grow your business to new heights. So do the research, crunch the numbers and make the right decision for your business.

• I f you received an export order tomorrow, are you confident your company could process and deliver the order on time? *Based on Austrade’s International Readiness Indicator

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AUSPACK. The natural home for food processing and packaging machinery.

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packaging

Sealing in safety While it may represent an additional cost for manufacturers, ensuring your packaging has a tamper-evident design is a safe move. By Pierre Pienaar.

ackaging security is critical to food, for keeping it fresh as well as safe to eat. Packaging security can protect against everything from consumer tampering to bioterrorism to product counterfeiting.

Definition of tamper-evident packaging Tamper-evident packaging is packaging that has an indicator or barrier to entry which, if breached or missing, can reasonably be expected to provide visible or audible evidence to consumers that tampering has occurred.

avoiding tampering Tampering involves the intentional altering of information, a product, a package, or system. Solutions may involve all phases of product production, distribution, logistics, sale and use. No single solution can be considered as ‘tamper proof’. Many levels of security need to be considered to minimise the risk of tampering. Some considerations are: • Identify all feasible methods of unauthorised access into a product or package. In addition to the primary means of entry, also consider secondary or ‘back door’ methods. • Educate consumers to be aware of tampering. • Ensure that the time available for tampering is decreased.

Tamper-evidence in packaging Tamper-evident design is possibly most visible in product packaging and labelling, where it can be critical to know that the product has not been modified since leaving the manufacturer. Cans of baby food were among the first cases, where manufacturers were

extorted by persons claiming to have added various poisons to baby food and replaced them on supermarket shelves. The threat of public fear meant that tamper-evident design principles had the potential to promote food safety and save manufacturers a lot of money in the future. Jars of food items soon started appearing with a metal bubble-top lid, commonly known as a ‘safety button’, which popped out if the jar had been opened and stayed flat if the jar was not ever opened. Customers were advised not to buy a product with a popped lid. Newer jars of food tend to come with a plastic shrink-sleeve on the edge of the lid, which is removed when opening. The Johnson & Johnson Tylenol crisis of 1982 involved over-the-counter medications. Due to various regulations, many manufacturers of food (and medicine) now use induction sealing to assist in providing evidence of tampering. Packaging that tears open in a ragged manner or otherwise cannot be resealed is also used to help indicate tampering. In many cases, multiple layers or indicators are used, because no single layer or device is completely ‘tamper-proof’. Consideration should be given to unique indicators (which shoulf be changed regularly to avoid counterfeiting). End-users and consumers need to be educated to keep an eye open for signs of tampering, both at the primary and at secondary levels of packaging.

Track and trace Processors and their suppliers are developing a variety of packaging

technologies to keep food safe from such interference and to provide fast, thorough product tracking and tracing in the event of a recall. Covert and overt packaging techniques are developing more and more and becoming very sophisticated indeed. Covert techniques require a scanner or other device for detection. Marking packages with invisible, ultraviolet-luminescent ink is one example of covert security. Overt refers to something visible on the package, such as a batch code or tamper-evident bands.

RFiD tags as a form of tamper-evidence The radio frequency identification (RFID) tags consist of a tamper-evident technology to ensure that the RFID tag has not been interfered with after initial positioning on an article. These tags, if tampered with, become disabled, thereby preventing use of the tags on counterfeit or substitute products, and ensuring that detecting a working tag also means identifying the original product to which it is attached. As food and beverage companies increasingly experiment with RFID to satisfy retailer demands, they are enjoying the side benefit of greater control of cases and pallets moving through the supply chain. The heightened control increases the security of products during distribution. A fundamental reason to incorporate security features into packaging is to provide protection against vindictive tampering, or at least evidence of an attempt. Tamper-evident packages typically show visible signs of interfering, for example, a broken seal. The time has come for us to commence placing tamper-evidence onto any product that touches the body and/or is ingested, inhaled or absorbed into the blood stream. Pierre Pienaar is education director at the Australian Institute of Packaging (AIP).

22 Foodmagazine | Dec 2014/Jan 2015 | www.foodmag.com.au

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ON THE SHELF

1 - Buderim Ginger Beer

2 - John West Tuna Pasta Salad

This non-alcoholic Buderim Ginger Beer is made with fresh Australian ginger and no artificial colours or flavours. To date, Buderim Ginger has only made its beer available for distribution locally in Queensland, however, it will now be available nationally to distributors. Manufacturer: Buderim Ginger Shelf life: Two years Packaging: 250mL slimline can Website: www.buderimginger.com

The range is available in three new flavours including Mexican Salsa, Italian Style and Balsamic Dressing. The range delivers a blend of tuna and vegetables, combined with pasta served in ready to eat packs. The tub comes with a spork for convenience. Manufacturer: John West Shelf life: 18 months Packaging: 190g tubs Website: www.johnwest.com.au

4 - Vitasoy Coconut Milk

5 - Vodka O Pre Mixed Cocktails

Vitasoy Coconut Milk uses real coconut to make its coconut cream and is suitable for cereals, smoothies or as a dairy alternative in cooking savoury dishes and baking. Available in major supermarkets, the range comes in both Original and Unsweetened varieties. Manufacturer: Vitasoy Shelf life: Nine months Packaging: 1L carton Website: www.soy.com.au

Australian-owned ASM Liquor has released its own naturally crafted pre-mix cocktails inspired by global trends and consumer demand for more premium, crafted and healthier choices. Flavours include Apple, Ginger & Spice; Pineapple, Cucumber & Mint; and Pear with a hint of Vanilla. Manufacturer: ASM Liquor Shelf life: 12 months Packaging: 330mL bottles Website: www.asmliquor.com

24 Foodmagazine | Dec 2014/Jan 2015 | www.foodmag.com.au

3 - Goulburn Valley Fruit in Coconut Water Available in mango, peach, pear and two fruits, Goulburn Valley has released a new snack range which combines fruit with coconut water, and contains less than 100 calories per serve, with no artificial colours or flavours. Manufacturer: SPC Ardmona Shelf Life: Two years Packaging: 170g Tubs Website: www.spcardmona.com.au

6 - Better for U! Wild Berries & Yoghurt bars These bars contain the CSIRO developed, nonGM wholegrain, BARLEYmax which, can reduce the risk of diabetes, heart disease and bowel cancer. They have been granted 4.5 stars as part of the Department of Healthâ&#x20AC;&#x2122;s Heath Star rating. Manufacturer: Goodness Superfoods Shelf life: One year Packaging: 210g cardboard box Website: www.goodnesssuperfoods.com.au

FoodAwards2015_FP_R

2014-11-24T10:30:04+11:00

NOMINATIONS are now open for the 11th Annual Food Magazine Awards, to be held in 2015. A total of 16 awards will be up for grabs on the night, highlighting companyâ&#x20AC;&#x2122;s innovation and excellence in the industry. These prestigious awards recognise best practice and innovation in the Australian and New Zealand food and beverage manufacturing and packaging industries. Submit your entry and you can see your success and hard work rewarded at a glamorous gala event. All finalists will be profiled in Food Magazine and on the website. They will also be given two free tickets to the gala dinner where the winners will be announced.

For more information on the awards or to download the nomination kit please visit: www.foodmag.com.au/ awards

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