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INDUSTRY INSIGHT WHERE TO FROM HERE FOR FOOD AND BEVERAGE SALES? We’ve all been hearing the term ‘new normal’, but what will this mean for the food and beverage sector and where does it leave businesses in terms of opportunities for growth and diversification? ABy Food South Australia CEO Catherine Sayer. s the peak body for the South Australian food and beverage industry, Food South Australia has been working to provide updates and information to help individual businesses put themselves in the best possible position for recovery. We recently partnered with our associate sponsor, NAB Agribusiness, to give our sector an update on global economic trends. NAB Agribusiness Economist Phin Ziebell led a webinar and spoke about likely trends in domestic markets as the impacts of Covid-19 continue to affect consumer spending, travel and business operations. Mr Ziebell is responsible for analysing and reporting on trends and development in the agribusiness industry, infrastructure and consumer spending for National Australia Bank, and is Associate Director, NAB Group Economics. The global economy has suffered its greatest contraction since the Great Depression and with the current pandemic remaining somewhat uncontained, the situation does seem bleak. That’s the bad news. The good news is that signs of recovery can now be seen as regions ease restrictions and reopen. Mr Ziebell told us that, effectively, there are two ‘camps’ in the global economy, characterised by countries at different stages of the pandemic. China and broader Asia implemented strict lockdown measures early, and their economies are now regaining traction, but demand for premium Australian food and beverage imports still remains challenged, driven by consumers remaining cautious with their spending on high-end food and beverage in-store as well as in restaurants. South-East Asian countries are forecast to emerge most strongly from the crisis as they have performed relatively well over the pandemic period. These countries also have a growing middle class, setting this region up as a key market for high-quality Australian food and beverage products. In the other ‘camp’, the global economy faces significant current and future challenges, with the Covid-19 virus remaining out of control within parts of the US and Europe. On our home soil, we have a diverse economic landscape, with only one state remaining in strict lockdown. The negative impact on Victoria’s gross state profit is estimated to be at least 10-15 per cent, which will have a ripple effect across the country. With a challenging labour market and our national unemployment rate increasing, we now have a growing space of price sensitive consumers who will be focused on availability and accessibility. This will mean increasing demand for processed, imported food such as tinned and frozen products. However, with this increasing divergence in consumer spending, there are also those shoppers who haven’t faced job losses and are consciously spending more on local products as they opt for those made in South Australia. This trend has been the driving force behind the recent rollout of the SA Made and Owned program with Drakes Supermarkets. Overall, there is less expenditure occurring outside of the home and in hospitality settings, while e-commerce sites have been booming, especially in Victoria due to the lockdown. This has challenged and disrupted the distribution chain. The hospitality sector has declined, but in some states is starting to recover. Over this pandemic time, it has given a leg-up to those food and beverage manufacturers able to make the transition from selling to the hospitality sector to selling directly to consumers. New opportunities remain for businesses that can offer take-away or ready-made meals, or even ingredients to encourage consumers to do more cooking at home. The new trend of consumers buying directly from the manufacturers, and often in bulk, is looking promising, too. This is expected to continue post-crisis and has been a great example to food and beverage businesses of the need to diversify their markets to mitigate risk. To listen to a recording of our economic update with NAB, visit our Food South Australia website’s COVID-19 webinar series page. About Catherine Sayer Catherine has led Food South Australia since it was established in 2010, passionately guiding the development of the industry’s peak body with a focus on industry growth and advocacy. She also is a member of several boards, some of which she chairs. catherine@foodsa.com.au About Food South Australia Food South Australia is the state’s peak body for the food and beverage industry, with a mission to support and sustain the industry in SA by helping businesses of all sizes to grow their markets, capability and industry connections. Food South Australia is independent, industry led and membership based. foodsouthaustralia.com.au 20 RETAIL WORLD SEP, 2020