Understanding Food Markets Outside Retail€¦ · Understanding food markets outside retail The composition of the market • The charts below provide some high-level analysis of

Understanding Food Markets Outside RetailPart 1: What is Foodservice?By Steve Spencer

Understanding Food Markets Outside Retail

Part 1: What is Foodservice?

by Steve Spencer

December 2016

RIRDC Publication No 16/040 RIRDC Project No PRJ-010142

© 2016 Rural Industries Research and Development Corporation. All rights reserved.

ISBN 978-1-74254-886-9

Understanding Food Markets Outside Retail. Part 1: What is Foodservice? Publication No. 16/040 Project No. PRJ-010142

The information contained in this publication is intended for general use to assist public knowledge and discussion and to help improve the development of sustainable regions. You must not rely on any information contained in this publication without taking specialist advice relevant to your particular circumstances.

While reasonable care has been taken in preparing this publication to ensure that information is true and correct, the Commonwealth of Australia gives no assurance as to the accuracy of any information in this publication.

The Commonwealth of Australia, the Rural Industries Research and Development Corporation (RIRDC), the authors or contributors expressly disclaim, to the maximum extent permitted by law, all responsibility and liability to any person, arising directly or indirectly from any act or omission, or for any consequences of any such act or omission, made in reliance on the contents of this publication, whether or not caused by any negligence on the part of the Commonwealth of Australia, RIRDC, the authors or contributors.

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This publication is copyright. Apart from any use as permitted under the Copyright Act 1968, all other rights are reserved. However, wide dissemination is encouraged. Requests and inquiries concerning reproduction and rights should be addressed to RIRDC Communications on phone 02 6923 6900.

Researcher Contact Details

Name: Steve Spencer Address: Unit 2.04 17-19 Yarra Street Abbotsford VIC 3067 Phone: 03 84140904 Mobile: 0417 969873 Email: [email protected]

In submitting this report, the researcher has agreed to RIRDC publishing this material in its edited form.

RIRDC Contact Details

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Electronically published by RIRDC in 2016 Print-on-demand by Union Offset Printing, Canberra at www.rirdc.gov.au or phone 1300 634 313

WHATISFOODSERVICE?Part1

UNDERSTANDINGFOODMARKETSOUTSIDERETAIL

Page2

The big picture

Understanding food markets outside retail

Distribution to consumers• The chart on the right shows the mix of

estimated total spending through the various channels to the consumer. This draws on the analysis conducted in the FOODmap study in 2012 updated to 2015.

• The numbers of outlets in the chart were assessed in June 2015. They have been established based on a variety of sources, including data from industry groups, databases of food establishments, and information from specific retail and foodservice chains.

• This shows the significant influence of the grocery channel on overall spending on food with a high percentage of sales through a relatively small number of outlets.

• While a large influencer of the value available at wholesale, grocery is a key determinant of value in the broader food market.

• There is some potential minor double-counting in this analysis, as some of the smaller independent retail and food service outlets buy food and other groceries through grocery chains and specialist food stores (such as bakeries and butcher shops).

grocery

convenience

specialised

Takeaway*

dining out*

event/leisure*

Full-service supermarketsIndependent grocersIndependent stores

Bakery, cake and pastryDelicatessen

Butcher, poultry, seafoodFruit & vegetables

Convenience stores

Quick-serve restaurants

Correctional

Sandwich barsIndependent takeaway

Restaurants & cafes

Event, leisure & travel

Pubs clubs functions

Accommodation

HospitalsAged care

Education Corporate (workplace)

Defence

retail

institutional

foodservice

Master channel Sub-channel

9,950

7,100

21,2505,300

2,9009,500

1,3603,480

8095

1,3509,400

Liquor merchants

Outlets

*referred to as “Commercial segments”

$77bn

$142bn Total

$11bn

$16bn

$3bn

$24bn

$8bn

$3bn

Estimated annual

FY2015 sales

Source: Freshagenda analysis drawing on ABS, IBIS

Figure 1.1 – Size of channels and distribution to consumers

Page3

The big picture


The composition of major segments• The chart on the right further illustrates the

diversity of outlets arranged by each of the “master channels”.

• The classification of channels into large groups is based on their characteristics in terms of the nature of the outlets themselves and how meals are generally provided to patrons.

• There is some blurring between these sub-channels. Many of the meals provided by Quick Service Restaurant (QSR) chains – especially some of the recently-emerged cuisine-based groups –are eaten in-house at provided tables, yet essentially those operations are primarily geared to serve takeaway meals.

• There is often blurring between restaurants and cafes – cafe for this definition is a venue that is themed around the service of coffee and/or other hot drinks.

• Many accommodation hotels will feature restaurants that draw significant numbers of patrons not staying at the hotel, and hence which compete against other restaurants in the hotel’s proximity.

• Many large sporting venues feature QSR-style outlets as well as clubs and pubs. They are however typically managed as a single major facility.

• Institutional food channels are based on large commercial kitchens where meals are made, assembled, or reheated for large-scale provision to patients, inmates, employees or students. The meals and consumers may be radically different, but the systems and management of these facilities are similar.

takeaway

dining out

event/leisure

Quick-serve restaurants

Prison

Sandwich bars

Independent takeaway

Restaurants

Sporting venue

Pubs

Large hotels

Hospitals

Aged care

Education

Factory/office (canteen)

Defence institutional

Master channel Sub-channel

Source: Freshagenda analysis

Figure 1.2 – The composition of major market segments

Clubs

Function centres

Cafes - chains

Independent cafes

Day treatment clinic

Mining kitchen

Juice bars

Motels

Page4

The state of the market


The composition of the market• The charts below provide some high-level analysis of the composition of the overall market in terms of the share of

spending, frequency of visits, and the timing of eating out (time of week and time of day).

• This analysis shows the importance of the weekend peak in activity, as well as the importance of different occasions to certain large foodservice channels.

• It also shows the different spending patterns across the market.

Source: FSAA

Figure 1.3 – Preference in dining at certain outlet types (% of people dining at each outlet type – May 2015)

Figure 1.4 – Day of week eating out at different venues

Figure 1.5 – Time of day eating out at different venues

Source: FSAA

Source: FSAA

Figure 1.6 – Average spending per outlet type (May 2015)

Source: FSAA

Page5

What is different?


Features Grocery Foodservice Convenience & specialist

Product form Packaged finished goods An ingredient for a meal,generally supplied in bulk but increasingly in form to improve convenience

Packaged finished goodsProteins as large primals or portions

Buyer priorities ReliabilityCost

FunctionCost as a meal ingredientWaste

Outlet size/diversity

Limited number of grocery store models

Small, highly diverse range of outlets across different channels

Small, highly diverse requirement

Ability to plan demand

Readily based on established (historical) demand patterns that govern supply chain fulfilment requirements

Limited ability for many to predict walk-in trafficProne to shifts in patronage

Generally based on established (historical) demand patterns

Path to market Generally through a major Distribution Centre (DC)High proportion of fresh produce volumes move direct from producer to retailer but co-ordinated through a DC

Complex and diverse, depending on the nature of the product and the sales channels.Distributors – general and specialist – play a major role.Limited volumes move from producer to retailer

Similar to food service but generally through distributor networks

Supply chain costs Lowest, pressure to reduce further

High-cost, several points of handling and significant roles for intermediaries

Higher than retail due to outlet size/scale, simplifying supply chains with grocer involvement

Reward for convenience

Consumer prepared to pay, but want perceived value

Expected to be built into the service offering by many buyers

Consumers prepared to pay higher than retail

Information resources

Detailed sales data (at a cost) based on retail scanned sales

No aggregated supply or channel data, commercial providers supply survey-based insights

Convenience channel data from providers, some based on scanned sales for larger chains

FOODSERVICECHANNELS

Understanding food markets outside retailPage6

Type Nature of business Examples

Generaldistributors

• Large scale distribution networks• Dominating volumes of packaged products into most

channels and also into convenience retail• Wide category coverage, extending into fresh chilled

categories• Buying practices and category management similar to

grocery

BidvestPFDNAFDA

Drinks distributor

• Chilled milk and juice, and ambient drinks specialists• Servicing many independent foodservice outlets as well

as convenience retail and independent grocery outlets• Some are either tied to or integrated into the businesses

of specific drinks manufacturers & processors

AIDA groupThe Distributors

Specialist distributor

• Fresh category specific, generally with cold-chain capabilities

• Includes gourmet and “fine foods” specialists• Wide coverage of channels and outlets

Meat/seafoodspecialistsFresh dairyImported/ gourmet

Wholesaler • Distributors integrated into fresh produce and meat wholesalers

Fresh produce or protein wholesaler

Caterers (or Facility managers)

• Large scale contract supply and service co-ordination of facilities that include food and a wide range of other site services for event and institutional outlets

ISSSpotlessDelaware North

Cash & carry • Large retail chains specialising in bulk goods CostcoCampbells

Fresh cut processor

• Process and distribution of fresh produce and prepared meals

Chef’s PantrySnapfresh

Page7

Channels to consumers


This section

This document provides an overview of the structure of channels from producers and manufacturers through to consumers. This page summarises some of the key supply chain partners relevant to food and beverage suppliers that operate across foodservice. There are a large number of distributors that operate in the sector.

Page8

Approach for channel


Disadvantages

• Large groups provide limited visibility to suppliers of the end-user market segments, to understand trends and better assess needs

• This factor provides a barrier to supplier-led innovation that may lower cost or improve functionality and utility of the products supplied

• They prevent the building of closer relationships over time between food buyers and suppliers

• There is a potential layer of profit-margin that is being either met by the buyer or supplier. There are various views on the likely extent of any cost disadvantage as large distribution groups offer scale efficiencies

• Their use may limit the ability to offer provenance into customers that may value such a point of difference – why many go around these models

• Many regard larger operators as similar to grocery chains in the strictness of requirements.

Advantages

• Larger distributors assume the risks of market access – this includes reducing the search costs for an entrant attempting to identify and approach target customers in a preferred channel

• Their use may improve the spread of market channels reached, and reduce the dependence on a narrow number of outlets in a specific channel or region that might be exposed to changing market conditions

• They provide easier management of supply chain logistics providing cost efficiencies between supplier/producer and end-user

• They assume the working capital risk by purchasing and storing products in their supply chains for on-supply to customers

• These operations have strong compliance and supply chain management disciplines in place which are based on customer and consumer requirement

• The scope for use of supplier brands (including those in meat protein) is steadily increasing.

The pros and cons of distributors

Many suppliers of FMCG goods and fresh foods have mixed feelings about the role and impact that foodservice distributors – whether general or category specialists – have on their capabilities to optimise opportunities from foodservice channels. Our consultation provides a set of pros and cons that suppliers should consider when assessing path to market.

Page9

Dining out


Role Priorities Competitive advantage

General distributor

• Ensuring critical mass of coverage

• Range and geographical coverage

Drinks distributor

• Efficient logistics across all channel types

• Range• Strength of

distribution & logistics network

• “Fridge ownership” model to ensure loyalty

Specialist retailer

• Improving throughput and unit value to premium outlets

• Agility • Quality of

product/service

Cash & carry • Expansion of club-retailing model across small-scale outlets

• Cost-competitiveness • Range

Specialist wholesaler

• Viable throughput based on network of dependent outlets

• Specialist

The roles of key players

Food manufacturer

Restaurants & cafes

Specialist distributor Pubs, clubs and function centres

General distributor

Drinks distributor

Wholesaler

Cash and carry

Drinks manufacturer

Specialised retailers

Fresh food supplier

Grocery retailersThe dining out segment• The largest and most complex segment

of the market with significant diversity of cuisine-specialty, price-positioning, size and formality.

• Total outlet numbers are difficult to accurately estimate at any point in time but are estimated at 21-22,000. The diversity of cuisine varies by region, yet over time reflects trends in consumer preferences for variety in dining experiences.

• There has been increased blurring between cafes and restaurants, mostly defined by the extent of emphasis on coffee.

• There has also been considerable change in the repositioning of the “pub” as a gourmet food venue, blurring the distinction with restaurants.

Page10

Takeaway channel



General distributor • Ensuring critical mass of coverage • Range and geographical coverage

Drinks distributor • Efficient logistics across all channel types • Strength of distribution & logistics network

• “Fridge ownership” model toensure loyalty

Cash & carry • Expansion of club-retailing model across small-scale outlets

• Cost-competitiveness with other suppliers

• Range

Specialist wholesaler • Viable throughput based on network of dependent outlets

• Relationship focus• Cold-chain management• Just-in-time service • Fresh food focus


Food manufacturer

Sandwich bars & takeaway

Specialist distributorIndependent fast

food

General distributor

Drinks distributor

Wholesaler

Cash and carry

Drinks manufacturer

Fresh food supplier

Grocery retailers

The takeaway segment• This comprises a large number of small

independently-owned food outlets.

• This segment is very strongly dependent on traffic flows, with a strong focus on servicing workers and shoppers, mostly catering to breakfast, lunch and casual snacking occasions.

• Takeaway outlets in this segment are distinguished from the QSR segment (next page) in terms of operational scale and uniformity.

Page11

Quick Service Restaurant channel



General distributor • Maintaining business growth through expanding small chains

• Strength of distribution & logistics network

• Range

Fast-moving consumer goods

• Product solutions and functionality• Close relationships with major QSR chains

• Direct to store delivery


Specialist wholesaler or distributor

• Fresh product solutions to back of house operations

• Cold-chain management • Just-in-time service • Fresh food focus


Food manufacturer

QSR Chains

Fresh-cut processor

General distributor

Drinks distributor

Wholesaler

Drinks manufacturer

Fresh food supplier

The QSR or fast-food segment• QSR chains are defined by large chains

of branded casual dining outlets with uniform product offerings, sourcing, systems, and policies.

• Chains vary significantly in scale and cuisine focus, with increasing diversity in offerings in response to greater demand for variety and value.

• Due to the scale and systems in use, sourcing policies feature more directly-sourced and tailored solutions, and in general are far more sophisticated than the independent fast food segment.

Page12

Health and aged care channel



General distributor • Ensuring critical mass of coverage • Product range (one stop)• Strength of distribution &

logistics network


Caterers • Whole of facility service • Large-scale meal delivery capabilities

• Lower cost than in-house options• Cost-management disciplines

Specialist wholesaler • Fresh product solutions to kitchen operations • Cold-chain management • Just-in-time service • Fresh food focus


Food manufacturer

Hospitals


Aged care

General distributor

Drinks distributorDrinks manufacturer

Fresh food supplier

Own kitchensCaterers

Wholesaler

The institutional care segment• These segments refer to the provision of

meals in catered aged care and hospital facilities, most of which is funded through government programs.

• Various delivery models exist from fully external through to in-house facilities, but there has been a gradual shift towards out-sourced meal supply over food prepared and assembled in on-site kitchens, due to the focus on cost-saving in this sector.

• The size of the market is governed by the number of patients requiring extended care, and number of places provided in aged care facilities and funding available. A much larger number of meals are provided outside the aged care institutions in private retirement villages and delivered meals for at-home care.

Page13

Events and leisure channel



General distributor • What drives their model • Product range (one stop)• Strength of distribution &

logistics network

Drinks distributor • Brand presence at profile events • Brand sponsorship or access relationships


• Cost management disciplines

Specialist wholesaler • Fresh product solutions to kitchen operations • Cold-chain management • Just-in-time service • Fresh food focus


Food manufacturer

Sports


Travel

General distributor

Drinks distributor

Drinks manufacturer

Fresh food supplier

CaterersWholesaler

The events and leisure segment• This diverse segment covers a large

number of venues that stage or host major sporting, cultural or corporate events, including conferences and exhibitions.

• It also covers services to the travel market, either servicing aircraft or airport foodcourts and lounges.

• Corporate events can influence the demand for meals at function venues, hotels as well as private restaurants located adjacent to venues themselves and are hence difficult to measure as a separate segment of the market. Events

Page14

Institutional channel


Role Priorities Competitive positioning

General distributor • Ensuring critical mass of coverage • Range


• “Fridge ownership” model toensure loyalty


Specialist wholesaler • Addressing low-cost portion requirements to balance usage

• Cold-chain management • Just-in-time service • Fresh food focus


Food manufacturer

Corporate

Specialist distributor Corrections

General distributor

Drinks distributor

Drinks manufacturer

Fresh food supplier

CaterersWholesaler Defence

Own kitchens

Educational

The institutional segment• These markets are generally serviced by

larger contract caterers and distributors due to the size of the facilities, with fewer in-house meal facilities due to the efficiency of those providers.

• The approach to meal provision at schools varies markedly across states and between school systems.

CATEGORIESINFOODSERVICE

Understanding food markets outside retailPage15

Page16

Channel shares


Overall volume shares• The apparent share of sales into the overall foodservice market at a category level has been

reconciled. This has been developed based on firstly arriving at total food available to domestic markets which is the sum of:

• Total production (including yields in converting fresh product into processed lines)

• Less exports

• Add imports

• Less waste factors/estimates

• Volumes sold into foodservice are based on estimated retail shares using insights as to the total retail volumes (grocery and specialist stores) at a category level.

• Channel shares have been taken from a number of industry reference points and past studies.

• Poultry is higher than red meat due to the size of the QSR market for processed poultry portions.

• Seafood remains the highest protein sector in percentage terms given the importance of the fish and chips takeaway segment.

• Vegetable volumes exceed fruit with the importance of processed potatoes (a significant portion of which are imported) to the QSR segment.

• While pork and red meat channels arrive at similar outcomes, this is co-incidental due to the size of beef sold into QSR and restaurant channels, and the volumes of processed smallgoods (ham and bacon) sold into takeaway and café channels.

• The analysis shows the volumes sold into food service channels – which may be far more in some categories than those volumes that are actually eventually sold to end consumers. The potential for waste in product sourcing and meal preparation is much higher in food service channels than grocery.

Estimated share of food volumes (as a % of available to the domestic market) sold into foodservice channels (5 year average)

Page17

Category size: Milk


grocery

specialised

takeaway

dining out

event/leisure

Retail

institutional

Foodservice

Production

Export

Domestic supply

360 million litres

Key volume drivers • Growth in coffee consumption

Key value determinants • Retail private label white milk prices

Challenges faced • Balancing supply and offtake in small-scale integrated operations• Retail packages sold through much of food service (not always fit for

purpose)

Dominant players • Wholesale fresh dairy distributors

1.97 billion litres

24%

67%

33%

18%

50%

8%Import

0.5 million litres

106 million litres

2.42 billion litres*

Production

FSS retailer

Independent retailer

Specialty retailer

Takeaway

Dining out

Event/leisure

Institutional

Processing

Distribution

Foodservicedistribution

Caterers

Processing

* Waste/shrinkage is deducted to derive sales volumes in each channel

2.52 billion litres*

Page18

Category size: Cheese


grocery

specialised

takeaway

dining out

event/leisure

Retail

institutional

Foodservice

Production

Export

Domestic supply

73,500t

336,000t

173,300t

20%

75%

25%

40%

35%

5%Import

76,300t

162,000t

247,300t*

Processing

Production

FSS retailer


Specialty retailer

Takeaway

Dining out

Event/leisure

Institutional

Manufacturing

Distribution

Cash & carry

Specialist distribution

Caterers

Key volume drivers • Growth in pizza and burger consumption through QSR chains

Key value determinants • Wholesale prices for cheddar and mozzarella

Challenges faced • Volatile world prices for cheeses, sold into the large volume segments of the market which are price-sensitive

Dominant players • QSR chains• General distributors increasing cold-chain business


Page19

Category size: Beef


grocery

specialised

takeaway

dining out

event/leisure

Retail

institutional

Foodservice

Production

Export

Domestic supplyProcessing

Fresh: 125,000t

Slaughter: 8.8m head # Prod’n: 2.32mill t

Fresh: 317,000t

24%

72%

28%

21%

47%

8%

Import

3,000t

# 1.09mill t

465,000t*

Key volume drivers • Growth of pizza and burger consumption through QSR chains• Demand for gourmet burgers through various segments of the dining

out market• Consumer health concerns regarding red meat

Key value determinants • Export returns for beef primals and portions

Challenges faced • Volatile world prices for beef, sold into the large volume segments of the market which are price-sensitive

Dominant players • QSR chains• Local butchers servicing larger portions of the dining out market

* Waste/shrinkage is deducted to derive sales volumes in each channel# Carcass weight equivalent

Production

FSS retailer


Takeaway

Dining out

Event/leisure

Institutional

Processing

Further processing

Meat wholesaler

Foodservice distribution

Caterers

Specialty retailer

Page20

Category size: Sheepmeat


grocery

specialised

takeaway

dining out

event/leisure

Retail

institutional

Foodservice

Production

Export


Lamb: 19,000t

Lamb: 20.5m headSheep: 7.6m head

Lamb: 106,000t

28%

72%

28%

4%

60%

8%

Import

# Lamb 213,080t# Sheepmeat 134,300

Lamb 125,000t

Production

FSS retailer


Specialty retailer

Takeaway

Dining out

Event/leisure

Institutional

ProcessingFurther

processing

Meat wholesaler


Caterers

Key volume drivers • Demand for premium cuts through various segments of the dining out market

• Consumer health concerns regarding red meat

Key value determinants • Export returns for lamb and mutton primals

Challenges faced • Volatile world prices for lamb and mutton, sold into the price-sensitive segments of the market

Dominant players • Specialist meat distributors• Local butchers servicing larger portions of the dining out market

#Lamb 450,000t#Sheepmeat 173,000t

* Waste/shrinkage is deducted to derive sales volumes in each channel# Carcass weight equivalent

Page21

Category size: Fresh pork


grocery

specialised

takeaway

dining out

event/leisure

Retail

institutional

Foodservice

Production

Export


Fresh: 10,400t

Slaughter: 4.76m head # Prod’n: 356,000t

Fresh: 56,900t

24%

85%

15%

18%

50%

8%

# 28,000t

71,000t

Production

FSS retailer

Independentretailer

Specialty retailer

Takeaway

Dining out

Event/leisure

Institutional

Processing

Meatwholesaler

Smallgoodsdistributor


Caterers

Import Smallgoodsmanufacturing

Cash & carry

Key volume drivers • Demand for premium cuts through various segments of the dining out market• Demand for pork cuts through ethnic segments• Consumer health concerns regarding red meat

Key value determinants • Overall carcass returns for pork (influenced by value of imported cooked meats)

Challenges faced • Competing prices for landed processed meats

Dominant players • Specialist meat and ethnic food distributors• Local butchers servicing larger portions of the dining out market

Smallgoods

# 140,300t

Page22

Category size: Smallgoods


grocery

specialised

takeaway

dining out

event/leisure

Retail

institutional

Foodservice

Pork Production Domestic supplyProcessing

105,600t

70,000t

248,400t

24%

62%

38%

18%

50%

8%Import

354,000t

284,200t

Production Processing

Import Smallgoods manufacturing

FSS retailer


Specialty retailer

Takeaway

Dining out

Event/leisure

Institutional

Meat wholesaler

Smallgoods distributor


Caterers

Cash & carry

Key volume drivers • Health of the breakfast occasion• Health of independent takeaway outlets• Consumer health concerns regarding cooked meats

Key value determinants • Landed prices of imported processed pork (ham, bacon, other cooked portions)

Challenges faced • Competing prices for landed processed meats

Dominant players • Specialist meat and ethnic food distributors• Local butchers servicing larger portions of the dining out market

Other meats

140,300t

Page23

Category size: Poultry


grocery

specialised

takeaway

dining out

event/leisure

Retail

institutional

Foodservice

Production

Export


Fresh: 192,000tProcessed: 138,000t

Slaughter: 572m birdsProduction: 1.06mill*

Fresh 573,000tProcessed 173,000t

Fresh: 381,000tProcessed: 35,000t

33,000t

13%

88%

12%

24%

46%

16%

Production

FSS retailer


Specialty retailer

Takeaway

Dining out

Event/leisure

Institutional

Processing

Poultry meat wholesaler

Smallgoods distributor


Caterers

Key volume drivers • Growth in chicken product consumption through large and gourmet QSR chains• Demand for poultry cuts through ethnic dining out segments• Consumer health concerns regarding red meat has boosted consumption over

time• Ease of application across meal types

Key value determinants • Overall bird returns for poultry across retail and foodservice uses

Challenges faced • Ensuring suitable mix of business for product recoveries• Passing on rises in input costs to low-value segments of the market

Dominant players • QSR chains• General distributors increasing share of processed products


Page24

Category size: Eggs


grocery

specialised

takeaway

dining out

event/leisure

Retail

institutional

Foodservice

Production

Export

Import

Domestic supplyPackaging

Fresh: 52m dozenProcessed: 20,300tProcessed eggs: 980t

399 million dozen 363m dozen

Fresh: 260m dozenProcessed: 3,000t

Processed egg: 220t Fresh Processed

68% 72%

32% 28%

55% 55%

32% 20%

3% 10%

10% 15%

Production

FSS retailer


Specialty retailer

Takeaway

Dining out

Event/leisure

Institutional

Grading and packing

Wholesale egg distribution

Fresh produce distributor


Caterers

Key volume drivers • Growth in demand through QSR chains• Health of the breakfast occasion• Consumer health concerns regarding red meat

Key value determinants • Wholesale prices influenced by market balance

Challenges faced • Balancing supply and demand across channels with some volatility in egg production

• Improving the integrity of free-range product

Dominant players • Major integrated egg marketers

Processing

Page25

Category size: Grains & flour


grocery

specialised

takeaway

dining out

event/leisure

Retail

institutional

Foodservice

Production

Export

Domestic supply

Wheat: 19.0mt Flour: 50,000t

Flour: 2.3mt

Milling

Production

FSS retailer


Specialty retailer

Takeaway

Dining out

Event/leisure

Institutional

Miller

Flour products distributors


Caterers

Key volume drivers • Healthy eating trends improving demand for high fibre products

Key value determinants • Higher demand for artisanal products in bread and bakery markets • Differentiation in bread styles

Challenges faced • Private label price pressure on retail flour and bread markets

Dominant players • Major millers as processors and distributors• Major bread manufacturers• Large bakery chains servicing home use

Wheat: 25mt

Industrial

Handling

Total flour sold into the food industry for various uses including breadmakingand a range of bakery products is estimated at about 1.8mt per annum (excluding industrial uses of flour), however shares between channels are not measured.

Large-scale breadmaking is estimated to consume about 40-45% of total flour supply, but this does not count consumption in small bakeries. It is estimated that major grocery chains hold about 60% of the retail bread market, while specialist bakeries hold 30%.

Breadmaker

Feed use

Wheat: 2.6mt

Flour: 0.5mt

Page26

Category size: Fresh Seafood


grocery

specialised

takeaway

dining out

event/leisure

Retail

institutional

Foodservice

Fresh catch

Export

Import

Domestic supply

146,000t

113,000t17%

206,000t

74,000t

233,000t*

81,000t40,000t49%

51%

34%

30%

19%

Production

FSS retailer


Specialty retailer

Takeaway

Dining out

Event/leisure

Institutional

First stage processing Fresh chill

processing

Seafood wholesaler


Caterers

Imports

Key volume drivers • Growth in demand through takeaway segment• Overall demand across the dining out market• Consumer health concerns regarding red meat

Key value determinants • Wholesale prices for different qualities of white fish and salmonids influenced byoverall supply

Challenges faced • Balancing supply and demand across channels with some volatility in supply • Length of the supply chain affecting product freshness in discerning market

segments

Dominant players • Specialist seafood distributors• Specialist seafood retailers (with wholesale activities)

Processing


Page27

Category size: Processed Seafood


grocery

specialised

takeaway

dining out

event/leisure

Retail

institutional

Foodservice

From fresh catch

Export

Import


58,000t

111,000t17%

74,000t 59,000t 170,000t

111,000t82%

18%

50%

25%

8%

Production

FSS retailer


Specialty retailer

Takeaway

Dining out

Event/leisure

Institutional

First stage processing

Seafood wholesaler


Caterers

ImportsFMCG

processing

Seafood distributor

Key volume drivers • Growth in demand through takeaway segment• Overall demand across the low-value of the dining out market• Budgetary scope within institutional channels• Consumer health concerns regarding red meat

Key value determinants • Benchmark value of imported lines

Challenges faced • Remaining price competitive with imported products

Dominant players • Major Fast-Moving Consumer Goods (FMCG) processors• General distributors• Specialist seafood distributors

Page28

Category size: Fresh Horticulture


grocery

specialised

takeaway

dining out

event/leisure

Retail

institutional

Foodservice

Production

Export

Import

Domestic supply

25%

Fruit: 1.69million tVeg: 3.31million t

Fruit: 254,000tVeg: 1,098,000t

71%

29%

15%

50%

10%

Fruit: 344,000tVeg: 177,000t

Fruit: 1.25million t*Veg: 2.06million t*

Fruit: 175,000tVeg: 31,000t

Fruit: 323,000tVeg: 532,000t

Fruit: 827,000tVeg: 1,364,000

Production

FSS retailer


Specialty retailer

Takeaway

Dining out

Event/leisure

Institutional

Broker

Wholesaler

Distribution

Caterers

ImportsFresh cut processor

Key volume drivers • Overall demand across the dining out market• Consumer health priorities regarding fresh foods

Key value determinants • Wholesale prices driven by fluctuations in supply

Challenges faced • Balancing supply and demand across channels with some volatility in supply• Minimising waste• Improving meal portion convenience/freshness

Dominant players • Fresh cut processor servicing large takeaway• Specialist fresh produce distributors• Specialist green grocers (with wholesale activities)

Processing


Page29

Category size: Processed Horticulture


grocery

specialised

takeaway

dining out

event/leisure

Retail

institutional

Foodservice

From production

Export

Import

Domestic supply

15%

90%

10%

50%

27%

8%

Fruit: 1,700t Veg: 3,000t

Fruit: 169,000tVeg: 660,000t

Fruit: 46,500tVeg: 125,000t

Fruit: 123,000tVeg: 482,000t

Fruit: 46,000tVeg: 178,000t

Processing

Production

FSS retailer


Specialty retailer

Takeaway

Dining out

Event/leisure

Institutional

Processor

Frozen food distributor


Caterers

Imports

Cash & carry

Key volume drivers • Growth in demand through QSR chains• Overall demand across the low-value of the dining out market• Budgetary scope within institutional channels• Consumer health concerns regarding fast food lines

Key value determinants • Benchmark value of imported lines

Challenges faced • Remaining price competitive with imported products• Improving ready-meal assembly to lower cost

Dominant players • Major FMCG processors• General distributors• Ready-meal producers

Fruit: 254,000tVeg: 1,098,000t


N ATIONAL RURAL ISSUESUnderstanding Food Markets Outside RetailPart 1: What is Foodservice?

by Steve Spencer

RIRDC Publication No 16/040

RIRDC Project No PRJ-010142

Bookshop: 1300 634 313

Email: [email protected]

Postal Address: Locked Bag 588 Wagga Wagga NSW 2678

Street Address: Building 007 Charles Sturt University Booroma Street Wagga Wagga NSW 2650

www.rirdc.gov.au

Documents

Understanding Food Markets Outside Retail€¦ · Understanding food markets outside retail The composition of the market • The charts below provide some high-level analysis of