fresh produce industry: state of the industry...

Fresh Produce Industry: State of the Industry ReportProduce Marketing Association Australia-New Zealand Ltd

Final report

20 June 2019

Copyright © 2019 Ernst & Young Australia. All Rights Reserved. Liability limited by a scheme approved under Professional Standards Legislation

NOTICE

Ernst & Young was engaged on the instructions of the Produce Marketing Association Australia-New Zealand Ltd (the “Client”) to develop this inaugural ‘Fresh Produce industry: State of the Industry Report’, in accordance with the order of services dated 27 February 2019.

The results of Ernst & Young’s work, including the assumptions and qualifications made in preparing the report, are set out in EY's report dated 20 June 2019f ("Report"). The Report should be read in its entirety including this public release notice, the applicable scope of the work and any limitations. A reference to the Report includes any part of the Report. No further work has been undertaken by Ernst & Young since the date of the Report to update it.

Ernst & Young has prepared the Report for the benefit of the Produce Marketing Association Australia-New Zealand Ltd and has considered only the interests of the Produce Marketing Association Australia-New Zealand Ltd. Ernst & Young has not been engaged to act, and has not acted, as advisor to any other party. Accordingly, Ernst & Young makes no representations as to the appropriateness, accuracy or completeness of the Report for any other party's purposes.

The Report has been constructed based on information current as of 20 June 2019 (being the date of completion of the data collection), and which has been provided by the Client and other industry stakeholders. Since this date, material events may have occurred since completion which are not reflected in the Report.

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Ernst & Young has prepared this analysis in conjunction with, and relying on information provided by the Client and other industry stakeholders. We do not imply, and it should not be construed, that we have performed audit or due diligence procedures on any of the information provided to us. We have not independently verified, or accept any responsibility or liability for independently verifying, any such information nor do we make any representation as to the accuracy or completeness of the information. We accept no liability for any loss or damage, which may result from your reliance on any research, analyses or information so supplied. It is important to note that the identification of economic impact and contribution is not a precise science.

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Glossary

Term Definition

ANZSICAustralia New Zealand Standard Industry Classification (ANZSIC) is a well recognised method of classifying industries. There are six levels of granularity beginning at 1 digit (least granular) and ending at 6 digit (most granular). Most ABS, NZ Stat, and IBIS world productions are at either the 1 or 4 digit level.

BusinessA division that is separately managed and keeps management accounts. Each business consists of one or more establishments that are under common ownership or control.

Consumer The person or individual who consumes the final product (the end of the supply chain).

Customer The purchaser of Fresh Produce and may sit anywhere within the supply chain such as a wholesaler.

EmploymentThe number of permanent, part-time, temporary and casual employees, working proprietors, partners, managers and executives within the industry.

Establishment The smallest type of accounting unit within a business, an establishment is a single physical location where business is conducted or where services or industrial operations are performed. Multiple establishments under common control make up a business.

Fresh Produce industryThe production, wholesaling, and retail components of the fresh fruit, fresh vegetables, and cut flowers supply chain in the Australian and New Zealand economies.

Gross Domestic Product The total value of goods produced and services provided in a country during one year.

Industry Value AddThe market value of goods and services produced by the industry minus the cost of goods and services used in production. Industry Value Add (IVA) is also described as the industry's contribution to Gross Domestic Product, or profit plus wages and depreciation.

International Trade The local currency value of importing and exporting activity occurring in an industry or sub-sector.

TurnoverThe total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other operating income from outside the business (such as commission income, repair and service income, and rent, leasing and hiring income); and capital work done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed tangible assets are excluded.

Wage Growth The gross total wages and salaries of all employees in the industry. Benefits and on-costs are included in this figure.

The following key terms have been used to measure the economic profile of the Fresh Produce industry.


Contents

Chapter 1 Executive summary 5

Chapter 2 Defining the Fresh Produce industry 10

Chapter 3 The economic profile of the Fresh Produce industry 15

Chapter 4 Consumer trends impacting the Fresh Produce industry 33

Appendix A Methodology 41

1. Executive summary


This report

The purpose of the report is to gain an understanding of the size and scale of the Fresh Produce industry and understand the consumer trends likely to impact the industry in the future. To do this, this report is divided into three sections which focus on:

1. Defining the Fresh Produce industry.2. Providing an economic profile of the Fresh Produce industry by outlining

the key economic indicators over the last five years: Turnover, Number of Firms, Industry Value Add, Employment, Wage growth, and Trade.

3. Identifying consumer trends likely to impact the Fresh Produce industry going forward.

This is the first time the industry has been defined as a specified industry and the first time the size and scale of the industry has been measured in this way. A key part of the report’s development has been understanding the parameters of the industry (i.e. drawing conclusions as to what products are part of or are excluded from it). PMA A-NZ represents the supply chain for fresh fruit and vegetables and cut flowers in Australia and New Zealand.

PMA A-NZ members are:

► involved in operations across the supply chain.

► located in both Australia and New Zealand.

The industry definition process therefore involved identifying which subsectors make up this supply chain and which products within each of the subsectors represent a part of PMA A-NZ’s membership base, given that this is not an industry that has been defined previously. The Australia New Zealand Standard Industry Classification (ANZSIC) was used to identify the subsectors covered by PMA A-NZ’s members.

For the purpose of this report the Fresh Produce industry is defined by the aggregation of identified subsectors. This is depicted at a high level in the diagram below. The details of the definition process can be found in Part 2, page 10 of this report. In the supply chain diagram below, the green boxes are included in the analysis while the grey box is excluded. The Food Services industry is not included as PMA A-NZ does not directly represent this industry, however it is noted that Fresh Produce is a key input into this sector.

Grocery Wholesale

Retail

Production & Packing

Exports Food Services


Summary of industry indicators – Australia

$4.9 bn

Wages Earned

18,442

Businesses

In 2017, the Fresh Produce industry is the 16th largestindustry in Australia

46.8% of the Fresh Produce industry turnover was in the Fresh Fruit and Vegetable Retail subsector

Australia has a ratio of $2.34 of exports to every $1.00 of imports in 2018

$542m

Imports All values are presented for the FY2018 unless otherwise stated

All monetary values are presented in Australian dollars

$45.9 bnIndustry turnover

Increase from the previous year

13.7%$8.1 bnIndustry value add


10.7%

130,614Employees


16.2%

$1.3 bnIndustry exports


9.6%

Turnover grew the most in the Fruit and Vegetable Retailing subsector between 2017 and 2018 (32.5%)

Turnover grew the most in the Table and Dried Grape Growing subsector between 2014 and 2018 (354.7%)

There has been modest but not significant growth in the Fresh Produce industry over the past five years

The majority of subsectors saw average wage growth between 2017 and 2018

Opportunities exist within the wellbeing trend to grow the performance of the Fresh Produce industry

Australia is a net exporter of Fresh Produce in 2018


Summary of industry indicators - New Zealand

$1.1 bn

Wages Earned

6,245

Businesses

36,013Employees

$14.9 bn

Industry turnover


2.3%

$2.3 bn

Industry value add


3.8%


1.8%

$3.2 bnIndustry exports


3.2%

In 2017, the Fresh Produce industry is the 11th largestindustry in New Zealand

57.7% of industry turnover was in the Fresh Fruit and Vegetable Wholesaling subsector in 2018

New Zealand is a net exporter of Fresh Produce in 2018

All values are presented for the FY2018 unless otherwise stated

All monetary values are presented in New Zealand dollars

Vegetable Growing has the fastest growing turnover of the subsectors between 2017 and 2018 (3.0%)

Kiwifruit and Berry Fruit Growing has the fastest growing turnover of the subsectors between 2014 and 2018 (64.5%)

$273 m

Industry Imports

New Zealand has a narrower export product range than Australia and is mainly focused on Kiwifruit and Berry Fruit

In 2018, New Zealand had a ratio of $11.86 of exports to every $1.00 of imports

New Zealand is a mature export market and is more trade focused than domestically focused

In 2018, for every $1.00 of Revenue earned there are $0.22 of exports


Consumer trends impacting the Fresh Produce industry

The majority of the industry trends identified have emerged over the last 10 years and remain present within A-NZ and the global market. During this period, there has been a dramatic change to all industries with the rise of social media, an increased focus on health and the environment and the advancement of technology. These changes have occurred quickly and are anticipated to grow exponentially over the next decade.

The rise of snacking vegetables, home delivery services, meal preparation kits and superfoods in the consumer market shows a growing desire for high quality fresh produce to be conveniently packaged for increasingly time poor consumers. Businesses have shown increased adoption of technology including robotics, blockchain, and software to create leaner supply chains, reduce costs and provide tailored products and experiences to consumers.

The use of Internet of Things and the increasing use of Artificial Intelligence technology will be integral to both the production and consumption of Fresh Produce products. As more consumption data becomes available, tailored products can be provided to consumers to meet the growing need for convenience of fresh produce. Additionally, the increased demand for data about the products being consumed will require producers to be efficient in their data collection and sharing.

Figure 1 depicts a snapshot of the future influences, ideas and thoughts that were discussed at the FutureConsumer.Now workshop held as part of this project to identify consumer trends impacting the Fresh Produce industry. It is noted that this illustration is not all encompassing and a number of consumer trends that have impacted the industry previously have now become assumed by consumers and are therefore expected, rather than been front of mind when asked about preferences and priorities. They were therefore not identified during the workshop but are still important. These include clean, green, and safe product characteristics. These trends are discussed further in section 4, page 33. Figure 1: FutureConsumer.Now output - See the Future: Set the context

2. Defining the Fresh Produce industry


Defining the industry

Production subsectors in Australia

Under Cover Vegetable Growing in Australia

Outdoor Vegetable Growing in Australia

Pome and Stone Fruit Growing in Australia

Citrus and Other Fruit Growing in Australia

Table and Dried Grape Growing in Australia

Floriculture Production in Australia

Grocery and Retail subsectors in Australia

Flower Retailing in Australia

Fruit and Vegetable Retailing in Australia

Wholesaling subsectors in Australia

Fruit and Vegetable Wholesaling in Australia

Production subsectors in New Zealand

Pome, Stone, Grape, Citrus and Other Fruit Growing in New Zealand

Kiwifruit and Berry Fruit Growing in New Zealand

Vegetable Growing in New Zealand

Wholesale subsectors in New Zealand

Fruit and Vegetable Wholesaling in New Zealand

Grocery and Retail subsectors in New Zealand

Fruit and Vegetable Retailing in New Zealand

For the purposes of this report, the aggregation of the subsectors detailed below will be referred to as the Fresh Produce industry and comprises of components of the production, wholesaling, and retail components of the supply chain in the Australian and New Zealand economies. This reflects the fact that PMA A-NZ members are involved in operations across the supply chain from production through to retail and are located in both Australia and New Zealand.

In the supply chain diagram below, the green boxes are included in the analysis while the grey box is excluded. The Food Services industry is not included as PMA A-NZ does not directly represent this industry.

Grocery Wholesale

Retail

Production & Packing

Exports Food Services


Data collection approach and limitations

The approach used for this report captures key economic indicators over the last five years: Turnover, Number of Firms, Industry Value Add, Employment, Wage growth, and Trade. Data has been collected from IBISWorld, from the Australian Bureau of Statistics (ABS), and from NZ Stats from 2013 to 2018. It is noted that IBISWorld undertook a large scale product reclassification in 2013. To provide the most complete historic data, the findings are therefore presented from 2014 to 2018.

The industry definition including product inclusion was undertaken by EY in consultation with PMA A-NZ. The industry definition is reflective of the data categories available which may not reflect standard product groupings used within the industry.

The following approach was undertaken for each of the subsector analyses:

• IBISWorld reports provided data by subsector over time.

• In some circumstances data is aggregated to include products not part of the Fresh Produce industry. Therefore, for each subsector, the proportion of the subsector not relevant to the Fresh Produce industry was excluded from the analysis (where required). These proportions are presented as the individual product’s proportion of total subsector revenue.

• These proportions are then used as a proxy to decompose all other economic indicators (IVA, employment, etc.).

The data was gathered and analysed as per the below approach.

1. Data was collected from IBISWorld at the 4 digit (most granular) industry level. IBISWorld collects data on the key economic indicators of interest providing the requisite granularity to identify the Fresh Produce industry’s economic performance.

2. IBISWorld also produces information on the products produced by each 4 digit ANZSIC industry. This is used to remove products not covered by the Fresh Produce industry. The data for each 4 digit industry is scaled by the proportion of relevant end product produced in that industry.

3. Data collected from the ABS is available at the 1 or 2 digit (less granular) industry level. As the data is available only in aggregate, it is inappropriate to estimate the value of the Fresh Produce industry solely using ABS data. This data is appropriate for contextualising the Produce Industry Products in the broader economy (comparing to other ABS defined industries).

Each country’s results are presented in home currency current year values, i.e. Australian results are presented in AUD and New Zealand’s results in NZD. Results are reported by financial year.

Due to data limitations the findings presented in this report form a conservative estimate of the contributions to both economies. Data in relation to some products was not available. For example, there is no available information on the New Zealand floriculture industry in a comparative format to be able to include in this report.

Further, conservative assumptions have been applied in areas where it was difficult to isolate products. For example, in both economies, there is a lack of granular information at the product level on the “Other Product” category. This product category acts as a catch-all in many retail and wholesale subsectors. The proportion of this category capturing fresh fruit and vegetables or cut flowers is unknown. Given the large size of this catch-all category, it is left out of the analysis for the following subsectors:

• General Line Grocery Retailing in Australia;

• Livestock and Other Agricultural Supplies in Australia; and

• Supermarkets, Grocery Stores, and Convenience Stores in New Zealand.

However, this “Other Product” category is left in the Fresh Fruit and Vegetable production subsectors as it is a reasonable assumption that the other produce categories are either fresh fruit, fresh vegetables, or cut flowers.

The lists of product category inclusions by subsector and country are found on page 13 and 14.


Australian industry inclusions by product

PMA A-NZ sector name ANZSIC Industry Name Included Not included

Under Cover Vegetable Growing in Australia

A0122 Under Cover Vegetable Growing in Australia

Capsicums, Mushrooms, Other Produce, Tomatoes, Cucumbers

N/A

Outdoor Vegetable Growing in AustraliaA0123 Outdoor Vegetable Growing in Australia

Fruit Vegetables, Pulses, Leafy and Green Vegetables, Potatoes, Other Root Vegetable, Other Vegetables

N/A


A0130 Apple, Pear and Stone Fruit Growing in Australia

Apples, Cherries, Pear and Other Pome Fruit,Nectarines, Peaches, Other Stone Fruit

N/A


A0139 Citrus Fruit, Nut and Other Fruit Growing in Australia

Citrus, Bananas, Other fruits, Avocados, Strawberries

Almonds, Macadamias and Other Nuts, Olives


A0131 Grape Growing in Australia Table and Dried Grapes White Winemaking Grapes, Red Winemaking Grapes

Floriculture Production in AustraliaA0116 Floriculture Production in Australia

Wildflowers, Traditional Flowers N/A

Fruit and Vegetable Wholesaling in Australia

F3601 General Line Grocery Wholesaling in Australia

Fruit and Vegetables, Other ProductsMeat, Poultry, Fish and Smallgoods, Pre-packaged Foods, Liquor and Tobacco, Bread and Bakery Products, Beverages, Dairy Produce

F3605 Fruit and Vegetable Wholesaling in Australia

Citrus, Other Fruits and Nuts, Other Vegetables and Herbs, Grapes, Root Vegetables, Pome and Stone Fruit, Fruit Vegetables

N/A

Flower Retailing in Australia G4274 Flower Retailing in Australia Cut FlowersDelivery and On-site Installation, Floral Arrangements,Plants, Other Merchandise and Giftware


F4122 Fruit and Vegetable Retailing in Australia

Bananas, Other Fruit, Other Vegetables, Tomatoes, Apples and Pears, Potatoes and Root Vegetables

N/A

G4111 Supermarkets and Grocery Stores in Australia

Fresh Fruit and Vegetables

Tobacco Products, Beverages, Dry and Packaged Foods, Toiletries, Health Products, and General Merchandise, Meat Products, Bread and Bakery Products, Milk and Other Dairy Products


New Zealand industry inclusions by product

PMA A-NZ Industry Name ANZSIC Industry Name Included Not included

Pome, Stone, Grape, Citrus and Other Fruit Growing in New Zealand

A0139NZ Apple, Citrus and Other Fruit Growing in New Zealand

Apples and Pears, Other Fruits and Nuts, Stone Fruits, Citrus

Olives

A0131NZ Grape Growing in New Zealand Table and Dried Grapes White Wine Grapes, Red Wine Grapes

Kiwifruit and Berry Fruit Growing in New Zealand

A0132NZ Kiwifruit and Berry Growing in New Zealand

Berries and Kiwifruit N/A

Vegetable Growing in New ZealandA0120NZ Vegetable Growing in New Zealand

Onions, Tomatoes, Carrots, Parsnips and Turnips, Other Vegetables

N/A

Fruit and Vegetable Wholesaling in New Zealand

F3601NZ General Line Grocery Wholesaling in New Zealand

Other Grocery Products, Fruit and VegetablesDairy and Egg Products, Meat, Poultry and Fish, Alcohol and Tobacco, Bread and Cereal

F3605NZ Fruit and Vegetable Wholesaling in New Zealand

Root Vegetables, Fruit Vegetables, Other Fruits, Pome and Stone Fruits, Other Vegetables, Bananas, Leaf and Stem Vegetables, Citrus

N/A

Fruit and Vegetable Retailing in New Zealand

G4110NZ Supermarkets, Grocery Stores and Convenience Stores in New Zealand

Fresh Fruit and Vegetables, Other grocery Products

Toiletries and Health Products, Dry and Packaged Foods, Meat Products, Beverages, Cigarettes and General Merchandise

3. Detailed industry economic indicators3. The economic profile of the Fresh Produce industry


Turnover and businesses - Overview

• In 2018, total turnover was AUD $45.9bn in Australia and NZD $14.9bn in New Zealand.

• This represented an increase in turnover of 13.7% in Australia and 2.3% in New Zealand from 2017.

• Growth in New Zealand remained relatively stable over the past five years with an average 3.6% year on year growth rate. Australia saw contracting growth between 2014 and 2017. This returned to a positive growth rate in 2018.

• Between 2014 and 2018, despite the short term decrease in 2017, the Fresh Produce industry’s turnover has increased from AUD $38.8bn to AUD $45.9bn in Australia. Over the same time period, in New Zealand the industry has grown from NZD $12.3bn to NZD $14.9bn.

• Over this time there has been an increasing trend towards health and well being which is highlighted by a 15% increase in the revenue of Gym and Fitness Centres in Australia to over the past five years to $2.5 bn. This strong growth suggests there is an opportunity for the Fresh Produce industry to capitalise on this consumer trend.

There were a total of 24,686 businesses across Australia and New Zealand in 2018.

• 18,442 businesses in Australia, a increase of 1.4% from 2017.

• 6,245 businesses in New Zealand, a increase of 0.3% from 2017.

Number of businesses

-8%

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Australia (AUD) New Zealand (NZD) Australia - annual growth rate New Zealand - annual growth rate


Turnover and businesses - Australia

Overview

► $45.9bn turnover in 2018 an increase of 13.7% on 2017.

► The Fresh Produce industry's Australian turnover hasgrown over the past five years by 18.3%.

► Turnover increased in five of nine subsectors between 2017 and 2018.

► In 2018, there were 18,442 businesses with 130,614 employees. Changes of 1.4% and 16.2% respectively between 2017 and 2018.

► The Fresh Produce industry is highly sensitive to changes in the Fruit and Vegetable Retailing subsector given it is the largest subsector. It accounts for 46.8% of the total industry turnover.

Australia

► Growth has been driven by an increase in 2016 with a slight decline in 2017 before increasing again to 2018.

► Main subsectors in the Fresh Produce industry's purview are Fruit and Vegetable Retailing, Fruit and Vegetable Wholesaling, and Outdoor Vegetable Growing.

► These three subsectors account for AUD $40.8bn, representing 88.9% of the Fresh Produce industry turnover in 2018.

► The step changes in turnover levels are, in part driven by a product reclassification in several of the subsectors and cannot be entirely assigned to a fall in revenue levels themselves. This is particularly of note for Fruit and Vegetable Retailing between 2017 and 2018.

Comment

Industry turnover over the last 5 years has exhibited moderate growth in aggregate. However, across the defined subsectors there has been significant variability in growth rates.

Changes in the various subsectors comprising the industry are often offset by a significantly larger change in one subsector, resulting in only moderate changes to the overall industry’s turnover.

For example, in 2016 Outdoor Vegetable Growing increased significantly, offset by reductions in Citrus and Other Fruit Growing and Floriculture Production.

Note: due to reclassification of product level data for the Grape Growing subsector, this subsector is not included for 2014-15

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2014 2015 2016 2017 2018

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Fruit and Vegetable Wholesaling inAustralia

Fruit and Vegetable Retailing inAustralia

Citrus and Other Fruit Growing inAustralia

Table and Dried Grape Growing inAustralia

Pome and Stone Fruit Growing inAustralia

Outdoor Vegetable Growing inAustralia

Under Cover Vegetable Growing inAustralia

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2014 2015 2016 2017 2018

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Turnover and businesses – New Zealand

Overview

► The Fresh Produce industry turnover in New Zealandhas increased from $12.3bn to $14.9bn between 2014 and 2018.

► This represents a 21.7% increase over this period.

► At the subsector level, growth rates were relatively volatile between 2014 and 2018.

► Kiwifruits and Berry Growing is the most volatile subsector. It had a growth rate of -18.1% in 2014. This increased to 19.3% in 2016 before falling to 2.1% in 2018.

New Zealand

► $14.9bn turnover in 2018 an increase of 2.3% on 2017.

► Main subsectors in the Fresh Produce industry's purview are Fruit and Vegetable Wholesaling, Fruit and Vegetable Retailing, and Kiwifruit and Berry Fruit Growing.

► These subsectors represent 87.2% of the Fresh Produce industry's total industry New Zealand revenue in 2018.

► Turnover has increased in all subsectors.

► There are 6,245 businesses with 36,013 employees. Between 2017 and 2018, the number of businesses increased by 0.3% and employment increase by 1.8%.

Comment

The New Zealand Fresh Produce industry is highly sensitive to changes in the Fruit and Vegetable Wholesaling subsector as it represents approximately 58% of the Fresh Produce industry (in 2018). In comparison to Australia, the Fruit and Vegetable Wholesaling subsector makes up a larger proportion of the industry compared to retailing.

Contracting growth in the Fruit and Vegetable Wholesaling was offset by strong growth in the Kiwifruit and Berry Fruit Growing subsector between 2016 and 2017. This offset, in concert with smaller increases in the other subsectors, limited the change in the Fresh Produce industry over this period.

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Fruit and Vegetable Wholesaling inNew Zealand

Fruit and Vegetable Retailing in NewZealand


Kiwifruit and Berry Fruit Growing inNew Zealand

Pome, Stone, Grape, Citrus andOther Fruit Growing in New Zealand

-20%

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2014 2015 2016 2017 2018

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Comparing turnover to other industries

While the Fresh Produce industry is not defined in its own right (its sub-sectors are categorised by the ABS as falling within the production, wholesaling, and retailing industries), its turnover is comparable to other industries within Australia and New Zealand, indicating its importance to both economies. It is noted that 2017 data is the most up to date industry size data for both Australia and New Zealand and so has been used for this analysis. The Fresh Produce industry value is reported as its absolute value, as such the values in the charts below cannot be added together to find the total value of the Australian and New Zealand economies as this would double count the Fresh Produce contribution to production, wholesale, and retail. Key findings are:

• In Australia, the Fresh Produce industry was the 16th largest industry in 2017.

• The Fresh Produce industry was larger than the Arts and Recreational Services and the Public Administration and Safety industries.

• The Fresh Produce industry was of comparable size to the Education and Training industry.

• In New Zealand, the Fresh Produce industry is the 11th largest industry behind such industries as Manufacturing, Construction, and broader Retail.

• The Fresh Produce industry was larger than the Education and Training , Accommodation and Food Services, and Mining industries amongst others.

• The Fresh Produce industry was of comparable size to the Health Care and Social Assistance industry in 2017.

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Industry Value Add - Overview

IVA is the measure of the contribution of businesses within each sector to overall gross domestic product (GDP). The IVA for an industry is measured by looking at the total value of goods and services produced and then deducting the costs of goods and services used in production. This variable is meant to capture the value added by each industry to the overall GDP figure for a country.

• IVA has increased in both Australia and New Zealand over the past five years in the Fresh Produce industry.

• $8.1bn in Australia in 2018 representing an increase of 10.7% on 2017.

• $2.3bn in New Zealand in 2018 representing an increase of 3.8% on 2017.

• The moderate growth in the Australian and New Zealand Fresh Produce industries suggests a maturity of the industry in both economies.

• Increased consumer focus on Health and Wellbeing over the past five years has led to strong growth in the IVA of the Gym and Fitness Centre industry. Given the strong growth in other industries in the health and wellbeing space, this indicates opportunities for the Fresh Produce industry to capitalise on this trend.

• In Australia, an increase in the value add of the Outdoor Vegetable Growing subsector drove the increase in the Fresh Produce industry’s IVA between 2015 and 2016. The subsector’s value add grew 38.4% between these years.

• New Zealand’s IVA growth rate dropped to -0.7% between 2015 and 2016 before increasing at an average of 3.3% per annum to 2018.

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Industry Value Add - Australia

Overview

► Total Australian IVA was $8.1bn in 2018.

► This was an increase of 10.7% or $777.9m on 2017.

► There was growth in five of the nine sub-sectors being Under Cover Vegetable Growing, Table and Dried Grape Growing, Citrus and Other Fruit Growing, Fruit and Vegetable Retailing, and Fruit and Vegetable Wholesaling.

Australia

► The main subsectors contributing to the Fresh Produce industry's IVA in Australia are:

► Fruit and Vegetable Retailing, Fruit and Vegetable Wholesaling, and Outdoor Vegetable Growing.

► These subsectors represent 82.4% of the Fresh Produce industry's total IVA in 2018.

► When measuring turnover against IVA, for every $5.70 of industry turnover there was $1.00 added to the overall GDP of the economy by the Fresh Produce industry in 2018 .

Comment

The moderate growth in the Fresh Produce industry’s IVA is in line with Australian GDP growth over the same time period. Given IVA effectively represents the industry contribution to GDP, this suggests that the Fresh Produce industry is maintaining its contribution to the overall size of the Australian economy.

Capitalisation on consumer trends, such as wellbeing and increasingly ethically focused consumers, provides an opportunity to increase the Fresh Produce industry’s economic share.


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Industry Value Add – New Zealand

Overview

► In 2018, IVA was $2.3bn.

► This is an increase of 3.8% or $84.7m on 2017.

► There were decreases in the IVA of two sub-sectors.

► Kiwifruit and Berry Fruit Growing decreased by 2.3% and Pome, Stone, Grape, Citrus and Other Fruit Growing decreased by 1.1%.

► There were fluctuations in the annual growth rates caused by changes in the sub-sector IVA levels between 2014 and 2018.

Comment

The New Zealand Fresh Produce industry has grown slower than GDP over the time period assessed. Given IVA effectively represents the industry contribution to GDP, this suggests the industry’s share of the economy is decreasing relative to other industries.

As the Fresh Produce industry in New Zealand is trade focused, the growth in the industry is significantly tied to international consumer trends. Therefore in order to maintain its relative importance in the economy, there is an opportunity for the Fresh Produce industry to grow by focusing on changing trends and international consumer demands.

New Zealand

► Main subsectors driving the Fresh Produce industry's IVA are:

► Fruit and Vegetable Wholesaling, Kiwifruit and Berry Fruit Growing, and Fruit and Vegetable Retailing.

► These represent 67.5% of the Fresh Produce industry's total New Zealand IVA.

► When measuring turnover against IVA, for every $6.46 of industry turnover there was $1.00 added to the overall GDP of the economy by the Fresh Produce industry in 2018 .

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Fruit and VegetableWholesaling in New Zealand

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Vegetable Growing in NewZealand

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Employment - Overview

Employment is calculated on a headcount basis. This means that the total employment number captures all persons employed in the industry irrespective of their contract type. Permanent, part-time, temporary and casual employees, working proprietors, partners, managers and executives within the industry are included in the total employment figure.

• In 2018 total employment was:

• 130,614 in Australia, a increase of 16.2% or 18,241 employees on 2017.

• 36,013 in New Zealand, a increase of 1.8% or 637 employees on 2017.

• Employment has risen 16.5% on the 2014 level in Australia and 8.6% on the 2014 level in New Zealand.

• This is an increase of 18,473 and 2,862 employees respectively over this period.

• The annual growth rate of employment in New Zealand has been declining over the past five years. It has dropped from 4.1% p.a. to 1.8% p.a. and is on a downward trend.

• The annual growth rate of Australian employment has fluctuated over the past five years with a spike in 2018 and is on a general upwards trajectory.

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Employment - Australia

Overview

► Total employment in the Fresh Produce industry in 2018 was 130,614.

► This is a increase of 16.2% on the 2017 level representing 18,241 employees.

► Product reclassification in the Fruit and Vegetable Wholesaling in 2017 caused a drop in employment.

► Employment increased in five of nine subsectors between 2017 and 2018, being Under Cover Vegetable Growing, Table and Dried Grape Growing, Citrus and Other Fruit Growing, Fruit and Vegetable Retailing and Fruit and Vegetable Wholesaling.

Australia

► In 2018, the main employers in the Fresh Produce industry's subsectors are:


► These three sub-sectors represent 80.0% of the Fresh Produce industry's total employment in 2018.

► Between 2017 and 2018 there was a step jump in the number of employees in Fruit and Vegetable Retailing subsector. This subsector is the largest employer amongst the Fresh Produce industry's sub-sectors and saw a growth rate of 30.6%.

Comment

Total employment has increased by 16.5% since 2014. Of note, employment across the various subsectors is relatively stable over time when compared to turnover and IVA (which fluctuate significantly over time).

The exception to this is the step jump in 2017-18 caused almost exclusively by an increase in the Fruit and Vegetable Retailing sub-sector likely driven by product reclassification. Given that this subsector is the largest employer in the Fresh Produce industry, it drove a significant increase in total industry employment.


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Employment – New Zealand

Page 25

Overview

► Total employment is 36,013 in 2018.

► This is a 1.8% decrease on 2017 representing a reduction of 637 employees.

► The largest employer amongst the Fresh Produce industry's sub-sectors is Pome, Stone, Grape, Citrus and Other Fruit Growing accounting for 29% of total employment in 2018.

► All subsectors except Fruit and Vegetable Retailing saw decrease in employment between 2017 and 2018.

Comment

All subsectors experienced fluctuating annual growth rates in employment over the period 2014-2018. Despite the variation, total employment across the Fresh Produce industry has increased over the same period.

Of note, employment varied over time substantially more in New Zealand compared to Australia. Further, employment (and most other economic indicators) is more evenly spread across subsectors (the supply chain and product categories) in New Zealand.

New Zealand

► The main employers in the Fresh Produce industry in 2018 are:

► Pome, Stone, Grape, Citrus and Other Fruit Growing, Fruit and Vegetable Retailing, andFruit and Vegetable Wholesaling.

► These subsectors represent 68.3% of the Fresh Produce industry's total industry employment in 2018.

► Employment increased in all subsectors except Fruit and Vegetable Retailing between 2017 and 2018.

► These four subsectors saw increases in employment ranging from 0.6% to 7.9% from 2017.

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Wages - Overview

The gross total wages and salaries of all employees in the Fresh Produce industry and additional benefits (bonuses, etc.) and on-boarding costs are included in this figure. Wage growth shows the contribution to the Australian and New Zealand economies from worker income generated in the Fresh Produce industry.

• Total wages were AUD $4.5bn in Australia and NZD $1.1bn in 2018.

• This represents an increase of 13.2% on 2017 wages in Australia, an increase of AUD $522.1m.

• In New Zealand wages grew 2.5% on 2017 representing NZD $27.0m.

• Over the past five years, wages have grown 18.0% in Australia and 9.4% in New Zealand.

• These are increases of AUD $683.0m and NZD $95.4m respectively.

• The annual growth rate for Australia increased sharply between 2017 and 2018, from -5.2% in 2017 to 13.1% in 2018.

• Wage growth in New Zealand has been relatively flat since 2016.

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Wages - Australia

Overview

► Total wages earned in 2018 were AUD $4.5bn.

► This is an increase of 13.2% on wages earned in 2017 and 18.0% on the 2014 level. These represent increases of AUD $522.1m and AUD $683.0m respectively.

► This is driven largely by growth in the wages earned in the Fruit and Vegetable Retailing subsector.

► All except three of the subsectors experienced positive growth in wages earned between 2017 and 2018.

Australia

► The largest subsectors by wages earned in 2018 were:


► These three subsectors account for 84.7% of wages earned in the Fresh Produce industry in 2018.

► Six out of nine subsectors experienced positive wage growth between 2017 and 2018.

► Outdoor Vegetable Growing, Floriculture Production, and Flower Retailing saw decreases in wages earned.

Comment

The Fruit and Vegetable Retailing subsector primarily drives growth in Fresh Produce wage levels in Australia. This subsector accounted for 52% of industry wages in 2018 and was largely responsible for the increase in wage levels between 2017 and 2018.

Comparing wages to employment, in five of the nine subsectors wages grew faster than employment from 2017 to 2018. Therefore, average wage rates have increased in the majority of subsectors. Further, there has been a broad trend of average wage growth from 2014 to 2018.

Note: due to reclassification of product level data for the Grape Growing subsector, this subsector is not included for 2014-15.

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Wages – New Zealand

Overview

► Total wages earned in New Zealand in 2018 were NZD $1.1bn.

► This is a 2.5% increase on 2017 representing wages of NZD $27.0m, and

► An increase of 9.4% on the 2014 level representing an increase of NZD $95.4m.

► One of the five subsectors experienced a contraction in the wages earned while four experienced an increase in wages earned between 2017 and 2018.

Comment

The growth paths of all subsectors follow the same pattern, albeit at different levels. This suggests that the industry is following a broad wage growth trend.

Between 2014 and 2018 wages began to grow faster than employment across the Fresh Produce industry in New Zealand.

The slowing of employment growth occurred at the same time as an increase in wage growth across the subsectors. This trend suggests that wages rates have increased (on average across the sector).

New Zealand

► The largest subsectors by wages earned in 2018 were:

► Fruit and Vegetable Wholesaling, Fruit and Vegetable Retailing, and Vegetable Growing.

► These three subsectors account for 74.7% of wages earned in the New Zealand Fresh Produce industry in 2018.

► Four out of five subsectors experienced positive wage growth between 2017 and 2018.

► This was all subsectors apart from Kiwifruit and Berry Fruit Growing.

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International Trade - Overview

• Total exports were AUD $1.3bn in Australia and NZD $3.2bn in New Zealand in 2018.

• This was an 9.6% increase on 2017 exports in Australia representing AUD $111.3m, and

• A 3.2% increase on the 2017 New Zealand exports representing NZD $101.2m.

• Both countries experienced at least one sharp increase in exports within the past five years

• Australian Fresh Produce industry exports experienced a 41.4% increase in 2015.

• New Zealand Fresh Produce industry exports experienced a 28.4% increase in 2016.

• Total imports were AUD $542.0m in Australia and NZD $272.6m in New Zealand in 2018.

• This was a 3.1% increase on 2017 imports in Australia representing AUD $16.1m, and

• A 0.4% increase in New Zealand on 2017 levels representing NZD $1.1m.

• The growth rate of New Zealand’s Fresh Produce industry’s importing activity has been steadily decreasing over the past five years.

• Australia had a 10.2% annual decrease in 2017 and returned a growth rate of 3.1% in 2018.

Some of the subsectors included in the Fresh Produce industry do not partake in international trading activity. Any subsector that involves wholesaling or retailing is excluded from this portion of the analysis for having zero international trade activity. Only those falling under the production phase of the supply chain undertake international trading activities.

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Australia - annual growth rate New Zealand - annual growth rate

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International Trade - Australia

Page 30

Overview

► Total exports were AUD $1.3bn in 2018.

► This is an 9.6% increase from 2017 representing exports of AUD $111.3m.

► Total imports were AUD $542.0m in 2018.

► This is a 3.1% increase on 2017 representing AUD $16.1m in imports.

► Total exports has increased 62.1% over the past five years while imports have remained relatively stable in Australia, decreasing by 1.3% over the same period.

► Exports have increased in all subsectors between 2017and 2018, with the exception of Outdoor Vegetable Growing.

Australia

► The largest export subsector was Citrus and Other Fruit Growing accounting for 54.2% of the Fresh Produce industry's exports in 2018.

► The 2015 spike in exports was driven by a 24% increase in Outdoor Vegetable Growing exports. This then drops to trend from 2016 onwards.

► In 2018, the largest importing subsector was Citrus Other Fruit Growing accounting for 43.7% of all Fresh Produce industry's imports.

► All subsectors saw growth in imports over the past 12months, with the exception of Outdoor Vegetable Growing.

Comment

The reduction in imports is seen at the same time (2016-17) as a worsening in Terms of Trade. Reduced terms of trade suggest that the price of imported Fresh Produce increased as a result of the AUD falling against the USD.

Therefore, as a result of reduced imports, it appears that Australian consumers are price sensitive and are easily able to substitute away from imports to locally produced produce. The diversity of the Australian produced Fresh Produce allows Australian consumers to choose based on price as they are able to source products locally when the price of imports increases.

This suggests that despite a strong domestic market many Australian producers may be competing on price in the international market.

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International Trade – New Zealand

Overview

► Total exports were NZD $3.2bn in 2018.

► This is a 3.2% increase on 2017 representing a increase in exports of NZD $101.2m.

► Total imports were NZD $272.6m in 2018.

► This is a 0.4% increase on 2017 representing NZD $1.1m in importing activity.

► Total exports have increased 61.5% over the past five years. As a comparison total imports have increased 10.9% since 2014.

► In 2018, New Zealand was a net exporter across all subsectors.

Comment

There is more limited diversity in the categories of products exported from New Zealand relative to Australia. Fresh Produce industry exports are focused on three subsectors. Similar to Australia, New Zealand saw worsening in the Terms of Trade between 2015-17, increasing the price of imports. However, unlike Australia there was no corresponding decrease in imports over this time.

The diversity of the product range produced in New Zealand may inhibit the ability to substitute to domestically produced products based on their price. Noting limitations (such as growing conditions), there may be an opportunity for New Zealand producers to consider growing different products to meet some of this demand.

New Zealand

► Largest exporting subsector was Kiwifruit and BerryGrowing accounting for 59.3% of the Fresh Produce industry's New Zealand exports in 2018.

► Exports have increased in the three subsectors between 2017 and 2018.

► In 2018, the largest importing subsector was Pome, Stone,Grape, Citrus and Other Fruit Growing accounting for 68.7% of the Fresh Produce industry's New Zealand imports.

► Two of three subsectors’ imports increased over the past 12 months. Both Kiwifruit and Berry Growing and Pome, Stone, Grape, Citrus and Other Fruit Growing increased over this period.

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International Trade – Understanding Exports

• New Zealand is a mature export market and is internationally focused. This can be seen in the Export: Import ratio of 11.86:1.00 in 2018. This means that for every $1 of imports there are $11.86 of exports in the Fresh Produce industry.

• The high Export: Revenue ratio (0.22:1 in 2018) supports the idea that New Zealand is an internationally focused Fresh Produce market.

• This means that the economic drivers of the New Zealand Fresh Produce industry are international. Should New Zealand seek to increase its industry performance it would have to target the international consumer trends in New Zealand’s main exporting countries such as China and Australia.

• New Zealand saw an increase in the exports to revenue ratio in 2016. At the same time there was a worsening in the Terms of Trade. This is an increase in the price of New Zealand’s exports.

• Conversely, Australia has a more domestically focused Fresh Produce industry, while remaining a net exporter of Fresh Produce. Australia has an Export: Import ratio of 2.34:1.00 in 2018, meaning for every dollar of imports there are $2.34 of exports.

• This is further evidenced by the Export: Revenue ratio. Australia has a ratio of 0.03:1 in 2018. For every dollar of revenue there are $0.03 of exports. This is significantly lower than New Zealand’s ratio of 0.22:1, indicating Australia’s domestic focus.

• Australia saw reduced growth over the Terms of Trade downturn in 2016. This indicates either a price sensitive market for Australian Fresh Produce or a domestically focused supply.

Some of the subsectors included in the Fresh Produce industry do not partake in international trading activity. Any subsector that involves wholesaling or retailing is excluded from this portion of the analysis for having zero international trade activity. Only those falling under the production phase of the supply chain undertake international trading activities.

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4. Consumer trends impacting the Fresh Produce industry


Fresh Produce industry’s drivers of change

Drivers of change are the underlying factors or actions that bring about changes to an overall industry. These drivers compel industry participants to change their actions which leads to substantial industry change. Drivers of change originate from both the outer and inner macro economic environment and have the overall effect of creating a trend. For the Fresh Produce industry, there are multiple industry drivers of change and these are all forces which have created the mega trends identified on page 35. The core drivers of change are identified below. These were identified with PMA A-NZ members during the FutureConsumer.Now workshop held as part of this project.

Social and cultural• Transnational grassroots movements• Multiculturalism• Diversity• Sustainability• Government led de-urbanisation• The rise of mega slums• Urbanisation• Social engineering• Intergenerational tensions• Open innovation• Declining hierarchical systems• Circular economy• Gamification of everything• Multifunctional spaces• Absolute accountability• Value experience over product• Rise of visual engagement

Technology• Smart evolving products• Internet of Things• Data mining• Cyber crime• Consumer data monetisation• Virtual reality• Artificial Intelligence (AI) concierges• Seamless technology integration• Internet• Autonomous vehicles• Smart evolving products• End to end integration• Smart manufacturing• Complication of everything• Drones• Blockchain

People• Travel time becoming productive• Freedom of movement• Self healthcare• Optimised self • Integrating work and life• Purpose• Empowered consumers• Mental health de-stigmatisation• Denormalisation of unhealthy

increases• Balancing privacy with convenience• Desire for immediacy• Ubiquitous connectivity• Direct consumer• Curated consumer choice

Products• Sustainable packaging• Reduced waste• DNA tailored nutrients• Personalisation• Nanomaterial• Move from products to services• Smart servicing • Transparent & traceable supply chain• Resource scarcity• Plant based• Engineering food• Organic materials• Demanding eco-ethical and local

products• “Always on” operations


Fresh Produce’s industry trends

The mega trends that are impacting the Fresh Produce industry are globalisation, demographics and technology. These trends are evolving from a range of drivers of change including AI, robotics, urbanisation, ageing populations, millennial workforces and social media.

These drivers are disrupting the industry and are anticipated to continue disruption in the future. Below are the sub trends which directly impact PMA A-NZ members and will continue to be of importance to achieve industry success. Each of these are discussed in further detail on the following pages.

1. Conscious and empowered consumer

2. Resourceful planet

3. Social media

4. Health

5. Future of smart

Each sub trend identified is important to the Fresh Produce industry and cannot be considered in isolation. The trends have interrelated elements which stem from the mega trend technology.

The use of technology has disrupted all industries and destroyed those who failed to adapt (e.g. video stores). For the Fresh Produce industry, disruption must be viewed as an opportunity to adapt to the current environment and strive forward as a leading industry.

Globalisation

Resourcefulplanet

Conscious and empoweredconsumer

Social media

Future ofsmart

Health



Conscious and empowered consumer

Today’s consumer understands their commercial value. They expect to be fully understood and receive personalised products and services. They place value on the service provided over the product and want transparency of supply chain and general operations. This is evident through the consumers low brand loyalty and high sensitivity to price. This makes creating lasting relationships with consumers difficult especially in a food related industry.

Consumers are less likely to accept mediocracy or settle for ‘close enough’. Further, consumers are willing to use a range of mediums to shop, including brick and mortar and online. However, consumers value convenience and this is highlighted by the rise of online food delivery.

Consumers also value transparency, which includes knowing the origin of their product and ingredients, and whether it was sourced ethically and ingredients were locally grown. Consumers want variety and convenience and are willing to pay a premium for these services. This has seen the rise of meal kit delivery services like Hello Fresh and Marley Spoon. Consumers are also becoming invested in diet and life style trends such adopting a vegetarian, paleo, keto or vegan diet.

Resourceful planet

There is increased focus on sustainability and preserving the environment. This has become a leading trend recently due to increased media attention over the extinction and endangerment of natural resources. Further increasing deforestation and mass pollution is creating irreparable damage to the earth. This has led to manufacturers having to rethink the way they package their products. Many are adopting renewable and recyclable materials, consumers are now focusing on packaging that can decompose quickly.

The increased awareness of the earth’s health has been driven through political advocation of climate change and media attention on damage to natural resources.

Consumers want to know that the products and services they consume are sustainable. There has been a greater focus on organic and renewable products. Consumers expect businesses to operate sustainably throughout their supply chain (e.g. optimising food waste). This has lead to a launch of a food waste apps such as FoodPrint or Y Waste which heavily discount restaurants’ end of day stock.

Further, consumers and restaurants are placing more importance on consuming seasonally and avoiding placing strains on the food chain to consume products out of season. This is paired with the increased emphasis on organic and local produce. Consumers also want to know if their products are sourced eco ethically, which is sourced in an environmentally and socially responsible way, an example of this is red tipped bananas.

Social media

This trend began with the rise of websites such as Facebook, Instagram, Reddit, Pinterest and more. These sites allow consumers and/or companies to directly interact with each other over the internet via chatting to each other or posting content (e.g. photos or videos).

Social media has changed the way consumers behave and has created a 24/7 online presence. Social media has had a range of impacts on consumers and the environment. This includes the ability to easily contact consumers through advertising or social media influencers. It also means consumers have a high expectation of companies and are willing to post negative feedback at the click of a button.

Social media influencers advertise their lifestyle online and get paid by companies to endorse their products or services. Consumers are more likely to purchase products that are endorsed by someone they trust and like. A recent social media trend is for companies to focus product promotion on micro influencers versus macro influencers as they are seen to have greater consumer trust.



Health

Health has been reinvented by the increasing search for economic sustainability and digital disruption. This change is due to the shift in demographics (e.g. an ageing population) and increase globalisation (e.g. urbanisation and sedentary lifestyles). Further, millennials have a large focus on personal health and lifestyle which is linked to increased levels of education and use of social media.

There is a large focus on technology and health with the increase in wearables and real time self monitoring health devices. There is an increasing use of artificial intelligence and heuristic problem solving to test symptoms and resolve health issues. Influencers and celebrities are focusing their social media profiles towards healthy lifestyles which has had an impact on millennials, who are now willing to pay premiums for health products and services. The fitness industry is worth $2.5 billion in Australia and has had 15% of growth in revenue over the past five years. There has not been the same correlated growth in the Fresh Produce industry despite the direct relationship to health and fitness, this highlights large growth potential.

There has been increasing consumer interest in nutritional information of all products consumed including macros, health benefits and calories. Wearable technology has seen a rise of interest in health and wellbeing data with consumers using wearable health tracking devices and apps to monitor all aspects of health (e.g. sleep, consumption, exercise, mood). Further to this, consumers are being drawn to new superfoods and their health benefits, for example cauliflower, avocado, berries and nuts.

Future of smart

The rise of technology and access to data has created smart technology. This is technology that has been bought to life through the Internet of Things, artificial intelligence and robotics to create solutions that can think and act. Some of which is faster and better than what humans can do and at a lower cost. The increase in smart technology means more roles and jobs will become automated. This has both positive and negative effects. The benefits include shorter production time and lower costs of operating. The negatives include jobs being made redundant and the assocoiated flow on economic impact.

Manufacturers are automating aspects of their supply chains, replacing manual jobs with smart technology and software all interlinked through the internet. Additionally, new ways of growing fresh produce have been implemented. For example, produce has been grown in nutrient rich polymer film instead of earth meaning that vertical farming is becoming increasingly feasible as a production method and beginning a shift away from traditional farming methods.

Going forward consumers are also moving towards technology to keep track of their consumption. For example, smart fridges that track the groceries bought and consumed sends consumers updated shopping lists or reorders food when produce levels run low using the internet.


Current and future state assessment

A current “as is” and future ‘to be” state assessment is critical for understanding what growth is required in order to meet the goals of the industry. PMA A-NZ members identified what their industry currently looks like and what their ideal future state is during the FutureConsumer.Now workshop held as part of this project. An overview of the findings is presented below. AS IS

TO BE

Current State

• A industry that tends to be reactive to consumer trends.

• The industry has limited engagement with social media and takes for granted that they produce ‘commodity’ products.

• The industry does not fully use e-commerce platforms.

• The industry is heavily reliant on brick and mortar retailersfor fresh produce.

• Consumers are using more food delivery apps for restaurant and café food such as Ubereats or Deliveroo.

Future State

• Access to enhanced contact and interaction with customers, this includes easier access, greater transparency and traceability with multiple communications and access points.

• Ability to create new ways to consumer fruit and vegetables (i.e. cauliflower rice or banana ice cream) or enhance the offering of fresh produce as a health and indulgence product.

• An industry that is highly proactive to climate change and sustainability issues, including food waste.

• A personalised service to customers on delivery of produce. • Customers with a detailed understanding of products they are consuming. This

has already started with Woolworths trialling Datamatrix GS1 2D codes for retail point of sale to cut product recall food waste and improve traceability.

• Increasing pressure on the Government to protect and regulate data to enhance privacy and security.

• A strong understanding of data trends. Utilisation of smart technology to drive change and to produce unique product offerings.

• Use of leading technology to enhance the output of production systems and optimised supply chain enable high levels of responsiveness to consumer demand.

Growth drivers

• Investing in smart technology to reduce cost (e.g. manufacturing) and increase efficiency (e.g. farm sensors).

• Using smart technology and data to understand consumer behaviour.

• Investing in sustainability techniques and tools to reduce the environmental impact of production.

• Increasing supply chain transparency for customers.

• Engaging with customers on social media to increase market share and/or value.

• Providing more information to customers about the health benefits of products.



The majority of the industry trends identified in this section have emerged over the last 10 years and remain present within the A-NZ and global market. During this period, there has been a dramatic change to all industries with the rise of social media, an increased focus on health, the environment and the advancement of technology. These changes have occurred quickly and are anticipated to grow exponentially over the next decade. The figures below and overleaf depict some to the future influences, ideas, and thoughts that were discussed at the FutureConsumer.Now workshop held as part of this project to identify consumer trends impacting the Fresh Produce industry.

The five illustrations below and on the next page depict the five stages of becoming future focused

1. See the Future: Set the context

2. See the Future: Drivers of change

3. Operate the Future: Paradigm Shifts

4. Build the Future: Products or Services

5. The Future? Are you prepared?

Figure One: See the Future: Set the context Figure Two: See the Future: Drivers of Change



Figure Three: Operate the Future: Paradigm Shifts Figure Four: Build the Future: Products or Services Figure Five: The Future? Are you prepared?

Appendix A: Methodology


Methodology

Ke

y a

cti

vit

ies

► The ‘Fresh Produce industry’ has not previously been defined as a standalone industry representing economic activity across the supply chain.

► The first step of the project was therefore to work with PMA A-NZ to confirm the subsectors to be included in reporting.

► With the parameters of the industry defined, data was collected on the subsectors covered by PMA A-NZ’s members.

► Data was collected for each of the key economic indicators: Industry Turnover, Industry Value Add, Employment, Wages, Number of Firms and Trade.

► Undertake industry economic analysis.

► Remove products not related to Fresh Produce industry.

► Calculate the value of each PMA A-NZ sector for each economic indicator.

► Aggregate the sectors to identify the economic indicators for the defined industry for the last five years.

► Undertake trend analysis to capture industry performance over time.

► Undertake research to identify drivers of change and consumer trends impacting the industry.

► Hold FutureConsumer.Now workshop to identify and discuss consumer trends.

► Draft report combining both industry economic analysis and trend analysissubmitted to PMA A-NZ for review and feedback.

► Final report written incorporating comments from PMA A-NZ.

Ou

tco

me

s ► Defined industry. ► Complete data book for economic performance.

► Industry economic analysis.

► Analysis of consumers trends.

► Draft report.► Final report.

The methodology consisted of four main phases which are detailed below.

ReportingData collection Data analysisIndustry definition Consumer trends

Phase 1 Phase 2 Phase 3 Phase 4


Sources

Source

IBISWorld Report “A0122 Under Cover Vegetable Growing in Australia”, 2013-2019 IBISWorld Report “A0132NZ Kiwifruit and Berry Growing in New Zealand”, 2013-2019

IBISWorld Report “A0123 Outdoor Vegetable Growing in Australia”, 2013-2019 IBISWorld Report “A0120NZ Vegetable Growing in New Zealand”, 2013-2019

IBISWorld Report “A0130 Apple, Pear and Stone Fruit Growing in Australia”, 2013-2019IBISWorld Report “G4110NZ Supermarkets, Grocery Stores and Convenience Stores in New Zealand”, 2013-2019

IBISWorld Report “A0131 Grape Growing in Australia”, 2013-2019 IBISWorld Report “F3601NZ General Line Grocery Wholesaling in New Zealand”, 2013-2019

IBISWorld Report “A0139 Citrus Fruit, Nut and Other Fruit Growing in Australia”, 2013-2019

IBISWorld Report “F3605NZ Fruit and Vegetable Wholesaling in New Zealand”, 2013-2019

IBISWorld Report “G4111 Supermarkets and Grocery Stores in Australia”, 2013-2019 Trading Economics “Australia - Terms of Trade”

IBISWorld Report “F3601 General Line Grocery Wholesaling in Australia”, 2013-2019 Trading Economics “New Zealand - Terms of Trade”

IBISWorld Report “F3605 Fruit and Vegetable Wholesaling in Australia”, 2013-2019 NZ Stat “Gross Domestic Product”

IBISWorld Report “A0116 Floriculture Production in Australia”, 2013-2019 ABS “1345.0 Key Economic Indicators”

IBISWorld Report “G4274 Flower Retailing in Australia”, 2013-2019 ABS “8155.0 Business Indicators”

IBISWorld Report “F4122 Fruit and Vegetable Retailing in Australia”, 2013-2019EY “Mega trends”, https://www.ey.com/gl/en/issues/business-environment/ey-megatrends

IBISWorld Report “A0139NZ Apple, Citrus and Other Fruit and Nut Growing in New Zealand”, 2013-2019

IBISWorld Report “A0131NZ Grape Growing in New Zealand”, 2013-2019

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