Fruit & Vegetable – Current market settings & likely future impactsimpacts

I f d S itInfocado Summit Melbourne October 2010

Martin KneeboneDirector Freshlogic

Content

• The food market macro trends

• Fruit & vegetable market settings, drivers, shapers

• Next 10 years

Our capabilities

grocery

Survey to map shares and values• Net-based technology

• Incentives for collaborationC b t ith th l h i

FOODmap+ capability to validate wholesale values

foodservice

specialised• Corroborates with other supply chain inputs

export

Mealpulse™MarketingProcessing Farm Inputs

Imports  domestic specialised

convenience

groceryretail

p

Adwatchfoodservice

institutional

dining out

takeawayAnalysis:

• Value chain structures• Value & volume drivers

• Pressure points & implicationsevent/leisure

p p• Trends/directions/outlook• Key players & influencers

Macro food market trends

impactdrivers how they manifest

Macro trends…..are driving change and conditions …leading to:Macro trends…

•Changed demographics

•More complex wants &

conditions…•Increasing the demand for

convenience

g• Share of stomach back to

retail...after 5 yrs

desires

•Global economics

•Shopping frequency up

•Eating out of home

•Lower % of spend on food

• Trading down

• More product convenience

• Tech savvy media users•Advancing technologies

•Value sensitivity

•Lower % of spend on food

•Care for food integrity

•New media landscape

y

• Ethical foods awareness

Fruit & Vegetable market settings

190k

Processing

$11.5B 190k

tonnes

H h ld

RetailBroking &h l l

ProcessingImport

4 m

Household $28 week

F&V

Export

Foodservice

Production Wholesalingtonnes 6 shops per

4 weeks Export

610kttonnes

Fruit & Vegetable – drivers & shapers

Increasing •Supermarket influenceL l th

Part processing role has evolved

Processing

volumes •Low value growth•Strength of the specialist

RetailBroking &h l l

ProcessingImport

•Ethical food demand•Convenience demand

Export

Foodservice

Production Wholesaling •Value discerning•New media

Export•Diverse array of channelswith different buying criteria

Fragmentation cost is higher $AUD making criteriacost is higher g

it tough

Avocado market framework

10 000

Processing

$320m 10,000tonnes

RetailRipening &

ProcessingImport

48,000$1 70 $1 80

Export

Foodservice

Productionp g

Wholesaling,

tonnes $1.70 - $1.80

Export

4,000 ttonnes

Fruit consumption occasions

le cado

ana

y us pes

frui

t

go on rs appl

e

mer

frui

t

pica

l Fru

it

App

l

Avo

c

Ban

a

Ber

ry

Citr

u

Gra

p

Kiw

if

Man

g

Mel

o

Pear

Pine

Sum

Trop

BREAKFAST

LUNCHfile

LUNCHBOX

MOBILE SNACK

GRAZING & PLATTERSptio

n pr

of

SPREAD

SALAD

cons

ump

BEVERAGE

COOKED COMPONENT

AFTERAll

frui

t

DINNER -DESSERT

Supermarket sales growth

9%

10%Retailer "same store" sales v food inflation 

Woolworths Coles Food inflation

2.0

7%

8%

9% Woolworths Coles Food inflation6.2

5%

6%

7%

3%

4%

5%

1%

2%

3%

0%

Q10

8

Q20

8

Q30

8

Q40

8

Q10

9

Q20

9

Q30

9

Q40

9

Q11

0

Q21

0

Q31

0

Q41

0

Q11

1

Q Q Q Q Q Q Q Q Q Q Q Q Q

Food Market Channel Framework

O tl t Retail Fruit & Veg

groceryFull-service supermarkets

Independent supermarkets

Master channel Sub-channelOutlet numbers

6 143

Retail Fruit & Veg Market $ 11.5B

convenienceIndependent stores

Bakery

Delicatessen

Convenience storesretail

6,143

$84.0B15,647

Markets

Delicatessen

Butcher, Poultry, Seafood

Greengrocer9,504specialised

takeaway

dining out

Quick-serve Restnts (QSR)

Sandwich bars

Independent takeaway

Restaurants & cafes

16,193

25,979$dining out

event/leisureEvent and travel catering

Pubs, Clubs & function centres

Hotels and motelsfoodservice

25,979

14,796$42.0B69,936

Correctional

Hospitals

Aged care

Defence institutional12,971

Education

Corporate (workplace)

1 b

Food dollar spend by household – market growth impact

BreakfastSpecialist

Food Spend per Week ‐ Average in Q2 ‐10 1 b

Eat out & Take home 2nd Qtr 2010

Breakfast 1.9% Lunch, 8.7%

Specialist Food Stores, 

12.0%Dinner, 12.6%

Snacks, 4.6%

Supermarkets62.2% Mealpulse™

•Eat out was 29.5% in Dec 08 now to 27.8% in Jun 10 

Fresh food share – The specialist retailer

Supermarket Shoppers using Specialists YTD Q425

30%

35%

40%

pers

Supermarket Shoppers using Specialists - YTD Q4 2009 average

WW YTD Q4 09

Coles YTD Q4 09

IGA YTD Q4 09

•Advantages are robustWoolworths

Coles

10%

15%

20%

25%

ropo

rtio

n of

Sho

p Q

•Ability to train and retain skilled staff 

•Highly credible with consumers

IGA

Reasons for Shopping at SpecialistsB-13.AMealpulse™

0%

5%

Bakery Fruit shop Fish shop Butcher shop Delicatessen Convenience store

Pr

Fresh Food Specialist Mealpulse™

g y

80%

90%

100%

ents

Reasons for Shopping at Specialists

BAKERY GREENGROCER FISH SHOP BUTCHER DELICATESSEN CONVENIENCE STORE

Strong

es ood Spec a st

40%

50%

60%

70%

ion

of R

espo

nde

advantages

0%

10%

20%

30%

dy

on r - ng

wer

la

r es al

s ge ter

lity aff

t ent

Pro

port

Han

dlo

cati

Qui

cke r

serv

ice

less

wai

ti

Low

regu

pric

e

Spe

cia

Bet

ter

ran

Bet

tqu

al

Bet

ter

serv

ice,

st

Sup

port

inde

pend

est

ores

Mealpulse™

Brands & programs

Ethical food – awareness & demand

Egg product price premiums113%

100%120% Vegetarian

10%18%28%

51%

0%20%40%60%80% Grain Fed

Barn Laid

Free Range

Premium over caged Organic

20%

•Many messages & claims

•Consolidation & clearer messages likely

M hi i•Message ownership an issue

Convenience demand & value capture - vegetables

Average price for

Basis  for extra value

cts

ion

Average price for vegetables  $3.50 per kg

No. of p

rodu

c

Portion size

Varie

ties

Pre‐prep

arati

Selling price per kg

11 * *7 * *16 * * *16 * * *12 * *

*1 *1

1

1

Communicating – value messages

Communications - Masterchef - what is going on

At 3.9M viewers the June 25th final was the most‐watched non‐sporting 

t i A t li TVevent since Australian TV ratings began. 

The MasterChef style of TV show has changed attitudes towards home‐meal preparation among all age groups. It has resulted in positive attitudes towards scratch cooking at home by increasing its entertainment value and has enhanced meal quality.

Is impacting the value of some food

Communications - New media

•The Internet is now the 3rd media channel

•Levelling the playing field ideal for SME’s

•New levels of consumer activism

•If absent you are positioned by default

Kraft Foods Big Fork Small Fork, which

•Majors players are coming back

g ,uses the larger iPad touch screen

RecipespFood Games

How to VideosTips & Articles$1.99 Tips & Articles

Dinnertime

See www.bigforksmallfork.com

What could the next 10 years bring

• Population increases driving growth

Gl b l f d it ill b iti i ld f– Global food security will be more sensitive...yield focus

• More processed foods

– Led by technology & innovation will take share off fresh

M i t f hi h lit i t A t• More imports of higher quality into Aust

– Global market...local scale will be impacted

• Control of producer inputs

GM o ners ill arri e & e tend into cons mer marketing– GM owners will arrive & extend into consumer marketing

What could the next 10 years bring

• Ethical considerations are here

B h i & ibilit ill tt & d i t– Behaviour & responsibility will matter & drive patronage

• Varying levels of value captured

– Convenience remains a major driver

N f l i l di• New powerful social media

– New reach at new speed and tipping points

• More channels will impact existing players

New distribution channels – most technology enabled

More questions than answers?

For more detail

C t tContact Martin KneeboneFreshlogic Pty LtdFreshlogic Pty Ltd

PH 03 9818 1588PH 03 9818 1588or E-mail martin@freshlogic.com.au