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POTENTIAL OPPORTUNITIES FOR INCREASED PRODUCTION OF PROCESSED ASIAN FOODS IN AUSTRALIA

A report for the Rural Industries Research and Development Corporation

by Barry Lee and Karnig Momdjian Connectica International

RIRDC Publication No 98/64 RIRDC Project No CON-6A

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© 1998 Rural Industries Research and Development Corporation. All rights reserved. ISBN 0 642 54082 9 ISSN 1440-6845 "Potential for Increased Production of Processed Asian Foods in Australia”

RIRDC Publication No 98/64 RIRDC Project No CON-6A

The views expressed and the conclusions reached in this publication are those of the author and not necessarily those of persons consulted. RIRDC shall not be responsible in any way whatsoever to any person who relies in whole or in part on the contents of this report. This publication is copyright. However, RIRDC encourages wide dissemination of its research, providing the Corporation is clearly acknowledged. For any other enquiries concerning reproduction, contact the Communications Manager on phone 02 6272 3186.

Researcher Contact Details Barry Lee Connectica International Level 3, 2 Help Street Chatswood NSW 2067 Phone: (02) 94154200 Fax: (02) 9411 8188 Email: [email protected]

RIRDC Contact Details Rural Industries Research and Development Corporation Level 1, AMA House 42 Macquarie Street BARTON ACT 2600PO Box 4776 KINGSTON ACT 2604 Phone: 02 6272 4539 Fax: 02 6272 5877 Email: [email protected] Internet: http://www.rirdc.gov.au Published in July 1998 Printed on environmentally friendly paper by Union Offset

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FORWARD This report identifies opportunities to increase the production of Asian processed foods in Australia. Previous research funded by RIRDC has identified that the Australian market for processed Asian foods is a significant and growing market, represented by over $1 billion of retail sales annually. Most importantly, the demand for these processed Asian foods is largely satisfied by imports, and therefore represents potential import replacement opportunities for Australian industry. The report identifies the dual-market nature of Asian foods in Australia, and with case-studies demonstrates key factors and comparative advantages available to the Australian industry, for the local manufacture of Asian foods. Specific opportunities include ready meals (such as the ubiquitous instant noodles), sauces and pastes, snackfoods, sweets, and beverages and drinks. The project collaborated extensively with Australian industry, and culminated in a workshop which was sponsored by RIRDC, Ethnic Affairs Commission of NSW, the Industrial Supplies Office of NSW and key industry players in the processed Asian food industry in Australia. Their support of the workshop and the development of industry strategies in this project is gratefully acknowledged. This report forms part of RIRDC’s Asian Foods Research and Development Program which aims to foster the development of a viable Australian Asian foods industry. Indeed, this report highlights to both investors and industry the viability for the manufacture of many processed Asian foods in Australia. Peter Core Managing Director Rural Industries Research and Development Corporation

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FORWARDFORWARD ACKNOWLEDGEMENTS ACKNOWLEDGEMENTSACKNOWLEDGEMENTS Connectica International would like to acknowledge the advice and assistance of many people during this study:

Rural Industries Research and Development Corporation: Dr Jeff Davis.

Ethnic Affairs Commission of NSW: Mr Stepan Kerkyasharian.

Industry Associations: Australian Chinese Business Development Association, Business Australia, Sydney Food Network, Western Sydney Food Network.

Industry researchers: Dr Wendy Morgan, Ms Mandy Chew, Mr Grant Vinning.

Industry consultants: Mr Peter Webster, Industrial Supplies Office.

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CONTENTS DISCLAIMER ...........................................................................................................................ii FORWARD...............................................................................................................................iii ACKNOWLEDGEMENTS...................................................................................................... iv ABBREVIATIONS .................................................................................................................vii EXECUTIVE SUMMARY ...................................................................................................... ix 1.0 BACKGROUND TO THE PROJECT ..........................................................................1 2.0 OBJECTIVES OF THE PROJECT ...............................................................................3 3.0 INTRODUCTION .........................................................................................................5

3.1 Definitions .........................................................................................................5 3.2 Approach............................................................................................................5

4.0 RESEARCH METHODOLOGY...................................................................................7

4.1 General...............................................................................................................7 4.2 Literature Review ..............................................................................................7 4.3 Data Sources and Data Quality ..........................................................................8

5.0 OVERVIEW OF THE PROCESSED ASIAN FOODS INDUSTRY

IN AUSTRALIA............................................................................................................9..............................................................................................................................

5.1 Market Demand Update - Census 1996.............................................................9 5.2 Growth In the Market For Asian Foods.............................................................9 5.3 Categories Of Imports......................................................................................10 5.4 Importers and Distributors ...............................................................................11 5.5 Australian Manufacturers of Processed Asian Foods ......................................11

6.0 MARKET SURVEY OF THE PROCESSED ASIAN FOODS

INDUSTRY IN AUSTRALIA ....................................................................................13 6.1 General.............................................................................................................13 6.2 Survey Program ...............................................................................................13 6.3 Product Opportunity’s......................................................................................14 6.4 Qualitative Market Issues ................................................................................14 6.5 Market Size Estimates .....................................................................................16 6.6 Supply Chain Estimates ...................................................................................16

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7.0 COMMERCIAL FACTORS INFLUENCING PROCESSED

ASIAN FOOD MARKETS IN AUSTRALIA.............................................................17 7.1 Market Issues ...................................................................................................17 7.2 Business Planning Issues .................................................................................21 7.3 Summary ..........................................................................................................24

8.0 AUSTRALIAN INDUSTRY CASE STUDIES FOR PROCESSED

ASIAN FOODS ...........................................................................................................25..............................................................................................................................

8.1 Business Plan Case Studies..............................................................................25 8.2 Comparative Analysis......................................................................................31 8.3 Summary ..........................................................................................................32

9.0 ASSESSMENT OF OPPORTUNITIES AND PRIORITIES......................................33

9.1 General.............................................................................................................33 9.2 Dual Markets And Asian Foods ..............................................................33 9.3 Priority Opportunities ......................................................................................35 9.4 Comment for Processed Fresh Asian Foods ....................................................35

10.0 SUMMARY AND INDUSTRY FEEDBACK............................................................37

10.1 Summary ..........................................................................................................37 10.2 Industry Feedback............................................................................................37

11.0 RECOMMENDED INDUSTRY STRATEGIES ........................................................39

11.1 Product Identification and Market Positioning................................................39 11.2 Market Development .......................................................................................42 11.3 Developing New Products ...............................................................................44 11.4 Manufacturing Viability ..................................................................................45 11.5 Industry Development......................................................................................46

12.0 APPENDICES .............................................................................................................47

REFERENCES ..........................................................................................................114

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ABBREVIATIONS ABBREVIATIONSABBREVIATIONS ABARE Australian Bureau of Agriculture and Resource Economics. ABS Australian Bureau of Statistics. DIS Delivered Into Store DPIE Department of Primary Industries and Energy. ISO Industrial Supplies Office MNC Multi-National Corporation QA Quality Assurance R&D Research and Development. RIRDC Rural Industries Research and Development Corporation. SME Small and Medium-scale Enterprise

Potential Opportunities for Increased Production of Processed Asian Foods in Australia

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EXECUTIVE SUMMARY EXECUTIVE SUMMARYEXECUTIVE SUMMARY During 1994, RIRDC commissioned a study of the Asian foods sector in Australia.

This study confirmed that:

The retail size of the processed Asian foods market in Australia was over $1 billion.

This demand for Asian foods was largely satisfied by imports. These imports would make a negative contribution of up to $800 million to

Australia’s Balance of Payments.

One of the key findings of the study was that there was a significant opportunity to increase the production of processed Asian foods in Australia especially as only about 20% of the processed Asian foods consumed in Australia, were of Australian manufacture.

As a result, RIRDC commissioned this project to identify specific opportunities for

increased manufacturing of Asian foods in Australia. Emphasis has been upon research and economic analyses of specific product or food category opportunities which afford a unique comparative and sustainable manufacturing advantage to the Australian processed food manufacturing industry.

The principal objectives were:

To increase production of Asian processed foods in Australia To identify import replacement opportunities for Asian food products imported

into Australia

The study involved:

Market research to identify priority processed Asian food opportunities.

Business analysis of selected priority opportunities.

Identification of key factors influencing the Asian foods industry.

Strategies involving local Australian food processors and the existing Australian Asian foods industry.

Market research and a comparative analysis has confirmed opportunities for the

Australian manufacture of the following processed Asian food categories:

Noodles and Rice Processed Fresh Food Sauces and Pastes Spices, Condiments and Dry Goods


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Snacks and Sweets Beverages and Drinks Canned Goods and Soups

The Asian foods market is not one homogeneous market. Rather it is a dual market

structure consisting of the Australian supermarkets and the Asian retail grocery outlets.

A number of business plan case studies were reviewed, and it is noted that the following categories of Asian foods are significant for their positioning in the dual Asian and western markets:

Noodles Sauces and pastes Snacks and sweets Beverages and drinks

The following market factors were identified as the strategic drivers of industry growth

Taste and quality of products Market size and growth Marketing and pricing strategies Brand loyalty Investment capital

The following market factors were identified as constraints to industry growth:

Market size Competition Marketing costs Capital requirements

Priority Asian food opportunities for manufacture in Australia include:

Instant and cup noodles Soy based drinks Biscuits Asian sauces Seaweed products Rice cracker snacks Fried shrimp snacks Soups Asian teas Fresh foods

While fresh foods were not a major focus for this study, it is noted that there is

considerable anecdotal evidence indicating that this is a major area attracting consideration for overseas investment. Investment may be expected in the forms of


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capital and/or technology transfer.

Industry comments at an Asian foods workshop highlighted that:

1. The Australian market is an integrated market where many Asian foods have been Australianised.

2. Australian consumers have a high propensity to try new products. However, price

and quality are major issues for the Australian Asian and non-Asian consumer.

i. Branding and marketing shall be the critical success factor for the commercial viability of Asian foods in Australia; especially for the development of the market for the ‘new’ generation of younger consumers.

ii. Raw materials in Australia are generally a relatively small proportion of

manufacturing costs; rather labour and other manufacturing costs are the more significant costs especially for small and medium size enterprises. Niche or specialty products marketing is often used as a strategy to overcome such cost ‘impediments’.

3. Asian food products in Australia may be characterised as new products, or mature

products which are able to be integrated into other standard categories of foods.

4. As processed Asian foods in Australia ‘strides two cultures’, there is a need to employ local Asian product development experience.

5. Australian food companies often do not recognise that the skills for Asian food

development are available in the Australian Asian communities. There is a significant opportunity to network and work together with this resource.

6. Australia is not often perceived by consumers to be an ‘authentic’ manufacturing

source of processed Asian foods and therefore requires industry promotion and marketing. This is especially a relevant issue for exports of Australian manufactured Asian foods.

7. Australian manufactured Asian foods require to be differentiated in Australia.

Different packaging formats can form the basis for this differentiation. Recommended Industry Strategies 1. Product Identification and Market Positioning Strategy 1: Expand Australian Bureau of Statistics Product CategoriesStrategy 1:

Expand Australian Bureau of Statistics Product CategoriesStrategy 1: Expand Australian Bureau of Statistics Product Categories


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Objective: To expand the ABS statistical product sub-codes to provide more detailed product within category information for imports of processed Asian foods.

Issues:

The ABS statistical codes (suffix of the Australian Customs tariff number) can be expanded to define more detailed Asian food import listings.

More accurate monitoring of imports of Asian foods and opportunities for increasing local production.

This information should provide input to an industry database. Strategy 2: Develop an Industry DatabaseStrategy 2: Develop an Industry

DatabaseStrategy 2: Develop an Industry Database Objective: To provide market and technical support resources for industry. Issues:

Formal industry development of a database of all Asian food items available at a retail level in Australia. This study may form the basis for the development of the database.

This may be further extended to the food service and food manufacturing industries so as to maximise the size of any given market sector for an Asian food product.

Consolidation of other available sources of market information and reports.

Strategy 3: Disseminate Industry Database Information Strategy 3: Disseminate

Industry Database Information Strategy 3: Disseminate Industry Database Information

Objective: To ensure that Australian rural producers and food manufacturers have access to

information which facilitates business decision making. Issues:

Industry communication of market opportunities is fundamental. Identification of opportunities from the database, and communication to

industry may be achieved through existing industry networks; many of which have been previously established through the support of Government agribusiness programs.

Conduct keynote presentations of the Australian Asian food industry. Communications should be developed through food media columns and

regular features on Asian food opportunities Strategy 4 Develop a Communication Strategy with Rural Producers for the Ownership


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and Development of Asian Food Marketing StrategiesStrategy 4 Develop a Communication Strategy with Rural Producers for the Ownership and Development of Asian Food Marketing StrategiesStrategy 4 Develop a Communication Strategy with Rural Producers for the Ownership and Development of Asian Food Marketing Strategies

Objective: To develop ownership of product development through production and supply

management. Issues:

Liaison with marketing organisations for various agricultural commodities e.g. AMLC, AHC, ADC.

Quality Assurance and food safety. Development of integrated supply systems (‘plate to paddock’).

Strategy 5: Develop Sector-Specific Communication Strategies For The Food Industry and Business Networks

Objectives Utilisation of the industry database by sector for both Small and Medium Size

Enterprises (SME’s) and Multi-National Corporations (MNC’s). Issues:

For SME’s, support management in the development of outsourced product development and market research resources.

For MNC’s, liaise with their in-house product development management and assist with product development priorities.

Ausindustry Business Networks and industry organisations may be practical industry communication channels.

Strategy 6: Develop Asian Food Networks to Interface with MNC’s and SME’sStrategy 6: Develop Asian Food Networks to Interface with MNC’s and SME’sStrategy 6: Develop Asian Food Networks to Interface with MNC’s and SME’s

Objective: Encourage the formation of networks or alliances for product development and

utilise the resources and experience of Australian Asians. Issues:

Liaise with trade development and industry organisations such as Business Australia and State Government groups e.g. Supermarkets To Asia (STA), NSW Ethnic Affairs Commission, Australia - Asian Chambers of Commerce.

Improve industry communications in Asian foods - through networks and industry associations which link into Asia.

Make use of the local Asian background resources in assisting with


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policy development and priorities. Strategy 7: Identify Products from Current International ExperienceStrategy 7:

Identify Products from Current International ExperienceStrategy 7: Identify Products from Current International Experience

Objective: Develop product identification and development processes through liaison with

food industry suppliers e.g., equipment and ingredient suppliers. Issues:

Minimise ‘re-invention of the wheel’ and duplication of effort. Monitor existing and future product releases as a source of ideas.

Strategy 8: Identify Target Market Segment Position for the Asian Food

OpportunityStrategy 8: Identify Target Market Segment Position for the Asian Food OpportunityStrategy 8: Identify Target Market Segment Position for the Asian Food Opportunity

Objective: Assess market dynamics for Asian food market segments of ‘Asianised’

Australian foods and ‘Australianised’ Asian foods. Issues: Develop marketing strategies based on the following issues:

Market demand. Market segmentation. Market share. Competition. Market access.

2. Market Development Strategy 1: Develop Australian Market Demand for the Priority Asian Foods . Objectives: Promote Australian manufactured Asian foods through consumer education

relevant to the specific market segments of Australian foods in Asian markets, and Asian foods in Australian markets.

Issues:

The Australian market while small can form the basis for the development of an export strategy for processed Asian foods.

Australian and Asian consumers are not generally aware of the availability of Australian processed Asian foods.

The high quality of Australian products can support the development of a targeted market segment education and merchandising program.

Strategy 2: Develop Export Market Opportunities.Strategy 2: Develop Export


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Market Opportunities.Strategy 2: Develop Export Market Opportunities. Objective: Grow export market demand by using locally manufactured Asian foods which

have been developed through the local Australian market. Issues:

Opportunities identified in Strategy 1 above can form the basis for export market development.

Capitalise upon market research to define the emerging Asian food opportunities and those which favour Australia with a competitive advantage of supply and manufacture.

Study tours and trade missions to priority export markets in association with government trade development organisations.

Improve manufacturing viability through increasing market opportunity size using the small Australian market as a pilot test market.

Such pilot strategies are used by MNC’s e.g. Australia and New Zealand are often used as pilot markets prior to international product development launches.

Strategy 3 Increase Market Profile for Australian Asian Processed FoodsStrategy 3

Increase Market Profile for Australian Asian Processed FoodsStrategy 3 Increase Market Profile for Australian Asian Processed Foods

Objective Network with Australian agribusiness and trade development groups by

developing an Australian Asian foods promotion strategy. Issues

Identification of priority Asian markets and foods. Network with Asian industry food organisations and co-operatives. Development of promotional strategy and material. Liaison with Asian food media groups.

Strategy 4 Develop Strategies to Address Overseas CompetitionStrategy 4 Develop

Strategies to Address Overseas CompetitionStrategy 4 Develop Strategies to Address Overseas Competition

Objectives Differentiate Australian Asian processed foods from imported products. Issues

Brand development. Local sourcing of raw materials. Higher levels of service. Quality and food safety.

Strategy 5: Utilise Distribution Infrastructure to Enhance Market Access Strategy 5:

Utilise Distribution Infrastructure to Enhance Market Access


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Strategy 5: Utilise Distribution Infrastructure to Enhance Market Access Objective: Usage of existing distribution channels for processed Asian foods as necessary. Issues:

Access to well established distribution networks servicing over 600 Asian stores in Australia.

Strategy 6: Brand DevelopmentStrategy 6: Brand DevelopmentStrategy 6: Brand

Development Objective: Development of a brand name to enable SME’s to compete against larger more

established brand names. Issues:

Co-branding and effective marketing for SME’s. QA. Feedback. Trust and co-operation. Marketing co-operation. SME brands positioning and MNC brand positioning. Price positioning.

3. Developing New Products Strategy 1: Multi National Corporation (MNC) and Small and Medium Size Enterprises

(SME) Product DevelopmentStrategy 1: Multi National Corporation (MNC) and Small and Medium Size Enterprises (SME) Product DevelopmentStrategy 1: Multi National Corporation (MNC) and Small and Medium Size Enterprises (SME) Product Development

Objective: Development of Asian foods strategy. Issues:

For MNC’s, support of their in-house product development and market research resources.

For SME’s, support of outsourced product development and market research resources.

Employ Asian background staff in senior market and product development positions.

Develop business networks with the existing Australian Asian food processing industry.

Strategy 2: Asian Food Product Opportunities Strategy 2: Asian Food Product

Opportunities Strategy 2: Asian Food Product Opportunities


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Objective: Development of Asian foods for specific market segments and consumers. Issues:

Develop company specific business plans for the priority Asian food opportunities identified in this study.

Strategy 3: Utilisation of Australia’s Comparative Advantage for Manufacturing Asian

Foods.Strategy 3: Utilisation of Australia’s Comparative Advantage for Manufacturing Asian Foods.Strategy 3: Utilisation of Australia’s Comparative Advantage for Manufacturing Asian Foods.

Objective: Link new product development opportunities to Australia’s comparative

advantage for manufacture. Issues:

Direct sourcing from manufacturer thereby reducing costs. Overcoming price disadvantage. Perception of better manufacturing quality. Quality packaging. Marketing and after sales service.

4. Manufacturing Viability Strategy 1: For Specific Asian Food Opportunities, Attract Foreign Investment into

Local Australian Manufacturing of Asian FoodsStrategy 1: For Specific Asian Food Opportunities, Attract Foreign Investment into Local Australian Manufacturing of Asian FoodsStrategy 1: For Specific Asian Food Opportunities, Attract Foreign Investment into Local Australian Manufacturing of Asian Foods

Objective: Improve access to capital for manufacturing investment. Issues:

Strategic investment issues. Investment time frames. Production of finished product. Production of minimally or partly processed products.

Strategy 2: Capitalise Upon Existing Industry Facilities and Plant CapacityStrategy 2:

Capitalise Upon Existing Industry Facilities and Plant CapacityStrategy 2: Capitalise Upon Existing Industry Facilities and Plant Capacity

Objectives: Improved capital and plant utilisation. Issues:

Many Australian organisations have an installed base of large and


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diversified manufacturing equipment and facilities capable of the (customised, lower volume) production of Asian foods.

Batch production may in some cases be undertaken on a joint venture/contractual basis or as a separate business activity for the company.

Strategy 3: Supply Chain Management Strategy 3: Supply Chain Management

Strategy 3: Supply Chain Management Objective: Capitalise on the integration of raw materials, competitive Australian

manufacturing, distribution and marketing to customers. Issues: Strategic supply alliances for:

Raw materials. Manufacturing and distribution. Marketing.


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5. Industry Development Strategy 1 Industry Co-ordinationStrategy 1 Industry Co-ordinationStrategy 1

Industry Co-ordination Objectives: Promote Australia as a investment opportunity for Asian food manufacturing. Issues:

As this is a new and emerging industry, industry issues should be developed in a co-ordinated approach which supports: - Industry ownership. - Communication of strategic issues such as food safety and QA. - Development of industry promotion. - Promotion of successful case studies in Australia.

Promotion of ethnic community organisation initiatives e.g., NSW Ethnic

Affairs Commission.


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1.0 BACKGROUND TO THE PROJECT 1.0 BACKGROUND TO THE PROJECT1.0 BACKGROUND TO THE PROJECT During 1994, RIRDC commissioned a study of the Asian foods sector in Australia. This study confirmed that: - The retail size of the processed Asian foods market in Australia was over $1 billion. - This demand for Asian foods was largely satisfied by imports. - These imports would make a negative contribution of up to $800 million to Australia’s

Balance of Payments. Since the 1970's, changes in the Australian demography has been a catalyst for the spread of Asian food tastes into the wider community of Australia. The demand for processed Asian foods has grown during the 1980's, and in the most recent industry retail survey (Retail World, 1996) the demand for processed Asian foods had increased by up to 16% during 1996. Processed Asian foods are now in demand from consumers of both Asian and non-Asian background. One of the key findings of the previous RIRDC study was that there was a significant opportunity to increase the production of processed Asian foods in Australia especially as only about 20% of the processed Asian foods consumed in Australia, were of Australian manufacture. With the exception of a few cases, larger Australian food processors did not appear to be investing to meet the growing demand for processed Asian foods in Australia. It was also noted that small-scale manufacturers of Asian foods could not be expected to replace many of the imports due to the global size of overseas manufacturers. It is considered that the current Asian population in Australia (and over 600 Asian food retail outlets), and other Australian consumers increasingly influenced by Asian cuisine, represent a significant ‘local market’ business opportunity. Moreover, this local market may well be used as a product development ‘test bed’ for the development of an export strategy into Asian markets. As a result, RIRDC commissioned this project to identify specific opportunities for increased manufacturing of Asian foods in Australia. Emphasis has been upon research and business analyses of specific product or food category opportunities which afford a unique comparative and sustainable manufacturing advantage to the Australian processed food manufacturing industry.


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2.0 OBJECTIVES OF THE PROJECT .0 OBJECTIVES OF THE PROJECT.0 OBJECTIVES OF THE PROJECT The principal objectives are: - To increase production of Asian processed foods in Australia - To identify import replacement opportunities for Asian food products imported into

Australia Specifically the key issues to be addressed in this study include:

Market research to identify priority processed Asian food opportunities.

Business analysis of selected priority opportunities.

Identification of key factors influencing the Asian foods industry.

Strategies involving local Australian food processors and the existing Australian Asian foods industry.

The study aims to collaborate with industry and define priority opportunities and strategies to increase the manufacture of processed Asian foods in Australia.


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3.0 INTRODUCTION .0 INTRODUCTION.0 INTRODUCTION 3.1 DEFINITIONS .1 DEFINITIONS.1 DEFINITIONS RIRDC’s previous report reviewed the difficulty in determining a concise definition of Asian foods. Asian foods were considered to include those ‘cultural’ processed food products from east and south-east Asia which pre-dated European influence. Chinese, Korean, Japanese and Vietnamese foods were the major focus and included products ranging from fresh and dried noodles, frozen snack foods, preserved, dried or canned meat and vegetable products, confectionery, Asian drinks, juices, teas and beverages through to spices, condiments and sauces. Fresh fruit, vegetables, meat and seafood were not considered processed food. Fresh foods have a natural inherent advantage to be supplied fresh due to proximity of location. Accordingly, fresh food was not the major focus of this study. Industry discussions during the early stages of the project has shown that the Australian market for processed Asian foods may be defined as the following ‘priority’ categories of foods:

Noodles and Rice Processed Fresh Food Sauces and Pastes Spices, Condiments and Dry Goods Snacks and Sweets Beverages and Drinks Canned Goods and Soups

Accordingly, in view of the origins of this project, and for the purposes of consistency, the working definition of Asian foods from the previous RIRDC study has been adopted for this study. 3.2 APPROACH .2 APPROACH.2 APPROACH The Asian foods market in Australia is not one homogeneous market. Rather it is a collection of markets especially as consumers of processed Asian foods may be found in a range of Asian and non-Asian food outlets such as major supermarkets. As this study has a major focus upon markets and products, Figure 1 below details a market segmentation approach to Asian food products. Figure 1 Market Segmentation of Processed Asian Foods


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Asian

1

4

Western

2

3

M a r k e t s

Western

Asian

Processed Foods In this study, Asian processed foods and markets have been further analysed in market segments 1, 3 and 4 in Figure 1. This study seeks to identify those production, supply and marketing factors which link the industry to the market. What are the market expectations of retailers, distributors, manufacturers and producers?


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4.0 RESEARCH METHODOLOGY .0 RESEARCH METHODOLOGY.0 RESEARCH METHODOLOGY The methodology aims to provide practical strategies for further development by the industry. 4.1 GENERAL .1 GENERAL.1 GENERAL The research involved an extensive program of industry consultation and was conducted in four stages:

Stage 1.

Market research of processed Asian foods in Sydney and Melbourne.

Stage 2.

Liaison with Asian food distributors/wholesalers and Australian food manufacturers.

Stage 3.

Case Studies of market and business analyses of selected Asian foods.

Stage 4.

Identification of Asian food processing opportunities and strategies. 4.2 LITERATURE REVIEW .2 LITERATURE REVIEW.2 LITERATURE REVIEW Information searches were conducted through reviews of world-wide databases, the Internet, Australian import statistics, industry organisations and related research organisations. The purpose of the literature review was to assist with the:

Identification of processed Asian food categories, products and trends from which market research may be developed.

Identification of major international and Australian Asian food traders and wholesalers. Key references have been identified from the literature consisting of reports from:

Australian Government organisations. Australian industry groups. International consultants Trade publications. Food directories.

Similarly the Internet review assisted with the literature review, and identified a number of major international and Australian Asian food traders.


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4.3 DATA SOURCES AND DATA QUALITY .3 DATA SOURCES AND DATA QUALITY.3 DATA SOURCES AND DATA QUALITY The primary source of secondary data was from the Australian Bureau of Statistics (ABS). This data was used to assist with:

Identification of categories of processed Asian food imports from which market research may be developed.

Identification of major Australian food commodity manufacturers. The distribution of ethnic and non-ethnic Asian populations from the latest census

survey. Published data from the Australian Bureau of Statistics (ABS) were found to provide insufficient detail on Asian food imports. In particular, it was considered that the ABS statistical codes (suffix of the Australian Customs tariff number) could be expanded to define more detailed Asian food import listings. This would facilitate a more accurate understanding of demand and imports of Asian foods,

and hence opportunities for increasing local production.


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5.0 OVERVIEW OF THE PROCESSED ASIAN FOODS INDUSTRY IN AUSTRALIA

.0 OVERVIEW OF THE PROCESSED ASIAN FOODS INDUSTRY IN AUSTRALIA.0 OVERVIEW OF THE PROCESSED ASIAN FOODS INDUSTRY IN AUSTRALIA ‘Asian foods are not for Asian consumers only’ 5.1 MARKET DEMAND UPDATE - CENSUS 1996 .1 MARKET DEMAND UPDATE - CENSUS 1996.1 MARKET DEMAND UPDATE - CENSUS 1996 RIRDC’s previous study has estimated that in 1994 there was a market demand for processed Asian foods of some $1 billion per annum. Using the recent ABS 1996 census data, the same rationale as the RIRDC study has been applied to update the nature and extent of demand for processed Asian foods in Australia. Accordingly, in 1997 the demand for processed Asian foods in Australia is estimated to have grown to over $1.4 billion. This trend is further corroborated by the ABS 1996 Census (Appendix A) which shows that there has been a 23% increase in the number of immigrants of Asian origin since the 1991 Census. In addition, the spending propensity of this group has also increased with 55% of the immigrants having an annual income band of $15,600 - $20,748 compared to only some 46% in 1991. Table 1 Asian Immigration and Income 1991-1996

1991

1996

Number of Migrants from Asian Countries

577,350

710,648

% of Asian Migrants with Annual Incomes Greater than $15,600 - $20,748

46%

55%

(Source: ABS, 1997) 5.2 GROWTH IN THE MARKET FOR ASIAN FOODS .2 GROWTH IN THE MARKET FOR ASIAN FOODS.2 GROWTH IN THE MARKET FOR ASIAN FOODS The total Asian foods market including retail and food service is estimated to be over $1 billion, however the major growth segment is considered to be the retail sector (RIRDC, 1996, Retail World, 1996). The food service market is difficult to survey and analyse for Asian foods due to the wide and


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diverse nature of the industry. However, while the major trade channel for Asian foods is Asian restaurants, BIS Shrapnel’s recent survey shows that Asian restaurants have declined in number since 1994. BIS Shrapnel’s 1996 Food Service survey has shown that the number of Asian restaurants has decreased by 39% since its 1994 survey, although many of these restaurants may now be grouped as ‘Modern Australian with an Asian influence’. Data on the retail market for Asian foods market is more readily available. ‘Western’ supermarkets and grocery stores are estimated to represent a market of $37 million annually and is growing at an annual rate of 26.6% according to AC Nielsen. The demand for Asian foods is supported by recent industry research which indicated that at least 40% of all Australian households own a wok, and that 64% of users stir-fry at least twice a week. Similarly, Retail World’s 1996 Annual Report shows that the market value for Asian food products such as Instant Noodles have increased in annual value by over 7%, and Oriental Sauces have increased its category value by over 16% since 1995. The number and growth in Asian food retail outlets provides an indirect measure of the market demand for processed Asian foods in Australia. It is difficult to determine the exact number and location of Asian retail outlets throughout Sydney and Melbourne. The most recent available information for Asian retail outlets occurs in a RIRDC (1994) report. The report estimates that there are over 400 Asian outlets in Sydney and Melbourne, and that 86% of Australia’s retail Asian outlets are located in Sydney and Melbourne, with some 60% in Sydney and 26% in Melbourne. However, further discussions with other industry sources estimate that the market has grown to over 600 Asian grocery retail outlets throughout Australia in 1997. 5.3 CATEGORIES OF IMPORTS .3 CATEGORIES OF IMPORTS.3 CATEGORIES OF IMPORTS Not withstanding the ‘broadness’ of the ABS data, an initial assessment of the major categories of processed Asian food imports is shown at Table 2.


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Table 2 Selected Major Asian Food Imports 1992-1996

Import Value ($A mill)

Import/ Category

Example Australian Products

1992/93

1993/94

1994/95

1995/96

Average Annual Increase (%)

Soy Sauce

Soy Sauce

9.0

10.0

11.4

11.0

5.6

Other Sauces

Oyster Sauce

34.2

42.6

45.1

50.4

11.8

Pasta

Instant noodles Rice Noodles

27.3

36.9

41.8

54.9

25.3

Tea

Green Tea

2.2

1.8

1.7

1.7

0

Soups

Chicken Broth

8.2

8.5

9.5

10.4

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5.4 IMPORTERS AND DISTRIBUTORS .4 IMPORTERS AND DISTRIBUTORS.4 IMPORTERS AND DISTRIBUTORS A survey of Sydney and Melbourne identified that there are a significant number of import and distribution organisations for Asian foods. Estimates indicate that there are over 30 firms in Sydney and over 20 in Melbourne. A listing of these organisations is shown at Appendix B. 5.5 AUSTRALIAN MANUFACTURERS OF PROCESSED ASIAN FOODS .5 AUSTRALIAN MANUFACTURERS OF PROCESSED ASIAN FOODS.5 AUSTRALIAN MANUFACTURERS OF PROCESSED ASIAN FOODS The survey of Sydney and Melbourne identified that there are a small number of Australian manufacturers of processed Asian foods. The majority of these manufacturers focussed principally upon processed, fresh foods with a relatively short shelf-life. There are however, an estimated number of some 50 manufacturers in Sydney and Melbourne who are manufacturing or processing shelf-stable foods. A listing of these organisations is shown at Appendix C.


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6.0 MARKET SURVEY OF THE PROCESSED ASIAN FOODS INDUSTRY IN AUSTRALIA

.0 MARKET SURVEY OF THE PROCESSED ASIAN FOODS INDUSTRY IN AUSTRALIA.0 MARKET SURVEY OF THE PROCESSED ASIAN FOODS INDUSTRY IN AUSTRALIA Some 105 Asian food stores have been surveyed in Sydney and Melbourne to determine the ‘priority’ processed Asian foods in the market . 6.1 GENERAL .1 GENERAL.1 GENERAL The overall purpose of the market research was to identify the initial specific product opportunities to increase processed Asian food production in Australia. It is important to recognise that the purpose of the survey was not to conduct a comprehensive quantitative market survey of the processed Asian food market in Australia. Rather the purpose of the market research was to identify by value, ‘priority’ categories of processed Asian food, and specific products within these categories. The survey should identify those major food opportunities which may form the basis for further review and analysis with industry groups, such as distributors and manufacturers. 6.2 SURVEY PROGRAM .2 SURVEY PROGRAM.2 SURVEY PROGRAM The program involved:

Surveys of over 105 Asian store retail outlets in Sydney and Melbourne with a focus on Chinese, Vietnamese, Japanese, Korean and Thai ethnic cuisines.

Confirmation of the survey results with importers and distributors.

Review of the supply chain for processed Asian foods.

Identification of the priority (higher value) processed Asian foods.

The survey form was based upon a format developed during previous studies of Asian foods (RIRDC, 1996) during which the University of New South Wales provided input on form design and biometrics. The survey form (Appendix H) was also developed in conjunction with Asian food wholesalers and distributors, and was presented in English and Chinese to clearly identify the Asian food products. Within defined ethnic Asian population centres (Chinese, Vietnamese, Japanese, Korean and Thai), a random sample of food retail outlets were chosen. On average the response rate to the survey was over 60%, and 105 actual surveys were completed in Sydney and Melbourne as shown in Table 3.


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Table 3 Number of Surveys in Sydney And Melbourne

Outlets

Sydney

Melbourne

Total

Asian Grocery Stores

85

20

105

Supermarket Chains (*)

4

3

7

Total

89

23

112

(*) - These supermarket surveys were conducted at the Head offices/State offices for the supermarket chains. 6.3 PRODUCT OPPORTUNITY’S .3 PRODUCT OPPORTUNITY’S.3 PRODUCT OPPORTUNITY’S As a result of the survey, the top 3 ‘ranking’ Asian food products (based upon value) are shown in Table 4. In general, the results of the surveys showed that the Asian food markets in Sydney and Melbourne were relatively similar in terms of products. 6.4 QUALITATIVE MARKET ISSUES .4 QUALITATIVE MARKET ISSUES.4 QUALITATIVE MARKET ISSUES In consultation with industry groups, the following market issues were also recommended to be included in the survey:

Consumer issues Retail outlet issues Market positioning Price Brand loyalty Changing tastes of the new generation of Asian food consumer

It was considered that these were important issues especially in identifying the ‘market factors and drivers of industry growth’ in both the Asian retail outlets and Australian supermarket groups. The survey results for these issues and the assessment of the ‘drivers and constraints’ to industry growth is discussed in Chapter 7.


15

Table 4 Sydney - Top 3 Ranking Asian Food Products Rank

Noodles & Rice

Processed Fresh Foods

Sauces & Pastes

Condiments & Spices

Snacks & Sweets

Beverages & Drinks

Canned Goods & Soups

1 Instant noodles

Beancurd (tofu)

Soy sauce (light)

Bean curd sheet

Biscuits

Soya based drinks

Longan fruit

2

Cup noodles

Rice noodles (fresh)

Oyster sauce

Bean curd stick

Rice cracker snacks

Jasmine tea

Soup - chicken

3

Rice noodles (Dry)

Fish balls/ sausages

Soy sauce (dark)

Seaweed dried sheets

Fried shrimp crackers

Coconut extract/ milk

Soup - beef

Melbourne - Top 3 Ranking Asian Food Products Rank

Noodles & Rice


Sauces& Pastes

Condiments & Spices

Snacks & Sweets

Beverages & Drinks

Canned Goods & Soups

1 Instant noodles

Beancurd (tofu)

Fish sauce

Rice flour

Fried shrimp crackers

Coconut extract/ milk

Lychees

2

Verm’clli

Fish balls /sausages

Soy sauce (light)

Bean curd stick

Biscuits

Soya based drinks

Champignons

3

Nil

Rice noodles (fresh)

Oyster sauce

- Seaweed - Dried mushrooms - Shrimp seasoning

Peanuts

Nil

Straw Mushrooms


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6.5 MARKET SIZE ESTIMATES .5 MARKET SIZE ESTIMATES.5 MARKET SIZE ESTIMATES The estimated wholesale market size for these above Asian food product categories (ie, Table 4) are shown at Appendix D. However, Table 5 lists those products and market sizes which are considered to be of more significant value. Table 5 Estimated Australian Wholesale Market Size (Selected Retail Products)

Product

Estimated Market Size ($Mill)

Instant Noodles (Dry)

70 - 80

Soya Based Drinks

60-70

Cup Noodles

15 - 20

Soy Sauce

15-25

Champignons - Canned

10-20

Biscuits - Asian

10-15

Oyster Sauce

5-10

Seaweed products

5-10

6.6 SUPPLY CHAIN ESTIMATES .6 SUPPLY CHAIN ESTIMATES.6 SUPPLY CHAIN ESTIMATES Supply chain costings are obviously product specific, however an indication of the ‘typical’ costs are shown in Table 6 below. Table 6 Supply Chain Cost Estimates

High Volume

Low Volume

CIF into Australia Product specific

Product specific

Customs duty 0-5%

0-5%

Sales tax Product specific

Product specific

Custom clearance $95 per shipment

$95 per shipment

Cartage to warehouse 1%

2%

Distributor’s margin 3-10%

10-15%

Distribution cost - to retail outlet 5-10%

7.5-15%

Retailer’s margin 3-15%

25-50%

Recommended Retail Price Product specific

Product specific


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7.0 COMMERCIAL FACTORS INFLUENCING PROCESSED ASIAN FOOD MARKETS IN AUSTRALIA

.0 COMMERCIAL FACTORS INFLUENCING PROCESSED ASIAN FOOD MARKETS IN AUSTRALIA.0 COMMERCIAL FACTORS INFLUENCING PROCESSED ASIAN FOOD MARKETS IN AUSTRALIA 7.1 MARKET ISSUES .1 MARKET ISSUES.1 MARKET ISSUES 7.1.1 Consumer Issues The market survey identified a number of key consumer issues as shown in Table 7, influencing the Asian foods market in Sydney and Melbourne. Table 7 Consumer Buying Factors For Asian Food Products Sydney & Melbourne

Sydney

Melbourne

What would encourage your customers to buy more Australian made processed Asian foods?

Sample 82

%

Sample 20

%

Price

59

28

17

40

Availability

27

13

1

2

Customer demand

29

14

2

5

Product and packaging quality

25

12

9

21

Industry marketing

20

9.5

2

5

Taste quality

50

23

10

24

Other

1

0.5

1

2

Totals

211

100

42

100

While price is clearly a determining factor, the ‘taste quality’ of the Asian food product was a major issue. Both Asian food retail outlets and Australian supermarket groups cited authenticity of their Asian foods, and the propensity of consumers to try ‘new Asian food tastes’ as a key issue affecting consumer loyalty.


18

7.1.2 Retail Outlet Issues The survey showed that both the Asian food retailers and the Australian supermarket groups were generally positive in respect to increasing the local Australian production of processed Asian foods. As Table 8 shows, the importers and Asian food retailers specifically highlight the benefit of local manufacture in terms of better quality, ready access to manufacturers, ability to return spoilage, and shorter lead times for delivery. Table 8 Asian Retail Buying Factors For Asian Food Products Sydney & Melbourne

Sydney

Melbourne

What would encourage you to buy more Australian made processed Asian foods?

Sample 82

%

Sample 20

%

Price

53

24.5

7

33

Availability

25

11.5

0

0

Customer demand

38

17.5

13

65

Product and packaging quality

24

11

7

33

Industry marketing

17

8

4

20

Taste quality

58

27

9

45

Other

1

0.5

1

1

Totals

216

100

41

100

Further discussions with Australian supermarket groups highlighted the importance of:

Quality and hygiene of the food products. The balance of positioning products as either Asian foods or ‘mature’ food items. Differentiation of products based upon packaging.


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7.1.3 Market Positioning As Figure 1 highlights, there are at least two broad market positions for Asian foods in Australia. Industry feedback generally considered that these two consumer market segments were inherently different. In Asian food retail outlets, the consumer market is predominantly of Asian background, and their product knowledge is relatively well-developed. In general, the products are positioned and marketed as relatively mature market products. By comparison, consumers in Australian supermarkets are relatively less familiar and less aware of many processed Asian foods. Depending upon the maturity of the Asian food product in Australian supermarkets, the issues of marketing, promotion, positioning within categories, and consumer education were considered most important for the success of the products. In addition to the ‘Asian foods sections’, the Australian supermarkets positioned Asian foods in a variety of other consumer market segments including:

Convenience foods eg, instant noodles. Prepared meals eg, fresh noodles. Frozen foods eg, spring rolls. Drinks and beverages, eg soy milk. Snack foods eg, prawn/rice crackers. Ingredients and condiments eg, oyster sauce. Health foods eg, Asian teas.

7.1.4 Price In all the surveys and industry discussions, price was a major determining factor for consumer acceptance of any locally manufactured Asian food products. However, this does not necessarily mean that the products must be low priced. Rather, the products must be competitive with similar or other competitive food products for the various consumer market segments. It was emphasised by Australian supermarket groups that well-planned pricing strategies were necessary for products to succeed.


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7.1.5 Branding and Marketing Support With increasing competition in the Asian foods market, branding and marketing support are considered essential factors for market success. The marketing issues and significant marketing budgets associated with brand development is well-established in the Australian food industry. These issues are no different in the Asian foods market, and branding is considered to be a point of major differentiation in both the Asian food retail outlets and the Australian supermarkets. The growth of brand loyalty was considered to be dependent upon the local success of promotion and marketing by both established overseas brand names and more recent market entrants from Australia. Brand loyalty for the overseas products may be more established with the older generation or more elderly migrants, however the newer or younger generation consumer markets shall be developed as a result of Australian ‘customised’ merchandising programs. 7.1.6 Changing Tastes of the New Generation Asian foods have had a ubiquitous impact on Australian food consumers. It is commented that there is not one Australian food outlet which has not had to change its menu or food product range due to the influence of Asian foods. ‘It is reported that even the humble meat pie now competes with Asian noodles in many pubs in Sydney and Melbourne’ Food Market Research Analyst, Melbourne With Australia’s ethnic diversity, and the propensity for consumers to try new products, many Asian foods are being ‘Australianised’ and many Australian/Western foods are being ‘Asianised’. An interesting comment received from some manufacturers and importers was that the new generation of younger Asians have adapted to the western tastes, and find some of the ‘authentic’ spicy Asian tastes as unpalatable. The ability of Asian food manufacturers and marketers to respond to these ‘changing tastes’ of new generation consumers is a key element of any Asian foods market development strategy.


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7.2 BUSINESS PLANNING ISSUES .2 BUSINESS PLANNING ISSUES.2 BUSINESS PLANNING ISSUES 7.2.1 Market Size Many large volume manufacturers expressed concern that the size of the Australian Asian foods market was relatively small when compared to their manufacturing capacity. These manufacturers considered that their competitive advantage for manufacture was in their investment in volume or large scale production, technology and packaging. However, such competitive advantages are capital intensive, and can only be justified based upon large market sizes. For example, a sauce manufacture stated that in a one and a half week production run, they could produce one years supply of some Asian food products for the Australian domestic market. These manufacturers feel that increased local production is often limited by the size of the Australian market, and large scale manufacturing necessitates the development of larger export markets for Australian manufactured Asian foods. 7.2.2 Marketing Costs One of the major concerns of local small manufacturers was the high marketing costs required to increase market awareness and market share for their Asian food products in order to compete with established overseas products. In addition to the increasing competitive pressures in the Asian foods market, Australia is not readily perceived by consumers and distributors as a quality source of (Australian) manufactured Asian foods. 7.2.3 Capital Requirements Whilst smaller Australian manufacturers expressed support of manufacturing Asian foods their major barrier was capital establishment costs. As indicated above, returns on investment may not be feasible if the market size and revenues are insufficient. Essentially large capital investments, required larger markets and revenues. However, it was considered that this issue could be addressed by:

Utilisation of available or excess capacity in existing manufacturing systems. Joint ventures with overseas companies, not only for capital investment but also for

technology transfer and expertise, and access to overseas markets. Fresh processed foods were cited as an example for such strategies.


22

7.2.4 Availability of Raw Materials and Supplies With a few exceptions, the Australian manufacturers considered that in general there was no major impediment or constraint associated with raw materials or manufacturing supplies. The exceptions were those products which were difficult to procure or manufacture cost-effectively. For example, seaweed product is not a readily available commercial resource for manufacture, and while soy beans are available, the fermentation technology and recipes for the manufacture of soya sauce are closely guarded and highly valued as intellectual property. (Wells, 1993) With the exception of seaweed, Table 9 highlights the general availability of the raw materials for those selected products in Table 5 which were considered to be of more significant market value. Table 9 General Availability of Raw Materials

Product

Source of Availability

Instant Noodles (Dry)

Noodle Wheats from Western Australia, Victoria, NSW

Soy Based Drinks

Soy Beans from Australia & imported

Cup Noodles

Noodle Wheats from Western Australia, Victoria, NSW

Soy Sauce

Soy Beans from Australia & imported

Champignons - Canned

Champignons from Australia

Biscuits - Asian

Australian wheats/flour and other Australian ingredients

Oyster Sauce

Oyster sauce food ingredients and concentrates from Australian imports

Seaweed products

Dried seaweed from Australian imports

Most materials were either available from within Australia (eg, noodle wheats), or other materials were available as imported world commodity products (eg, soy beans). Specific issues of continuity of supply and quality of the materials is reviewed in Chapter 8.


23

Manufacturers cited that the key measurement for the viability of manufacture was the ex-factory price of the product rather than the price or availability of raw materials. This price had to be at least competitive with equivalent products imported from overseas. 7.2.5 Competition from Overseas Imports Overseas manufactured products gain from the advantage that they are usually able to supply exports to Australia based on a developed consumer market in Asia. Their scale of manufacture may accordingly confer upon them an advantage to supply at very competitive unit prices. Australian manufacturers acknowledged their advantage of Australian market knowledge, and the need for effective marketing strategies. However, Australian manufacturers expressed concern that overseas manufacturers may establish and expand in Australia following on from the success of Australian manufacturers. 7.2.6 Lack of Australian Industry Awareness of the Asian Foods Market During discussions with Australian food manufacturers, it was often clear that many of these organisations had not considered the local Asian retail outlets as potential markets (it is estimated that today there are some 600 Asian retail outlets and such numbers are broadly equivalent to some of the major supermarket groups such as Woolworths, Coles or Franklins). One major manufacturer conceded that their strategy should take into account the local Asian market, and should initially develop and test products for these local Asian stores as a strategic platform. This may then form the basis for expansion into the major Australian supermarket groups and the Asian export markets.


24

7.3 SUMMARY .3 SUMMARY.3 SUMMARY Market Factors and Drivers of Industry Growth

Taste and quality of products

Market size and growth

Marketing, branding and pricing strategies

Investment capital and technology

Market Factors and Constraints to Industry Growth

Market size

Recognition of Australia as a supplier or manufacturer of Asian foods

Commercial viability of the manufacturing capacity

Competition

Marketing costs


25

8.0 AUSTRALIAN INDUSTRY CASE STUDIES FOR PROCESSED ASIAN FOODS

.0 AUSTRALIAN INDUSTRY CASE STUDIES FOR PROCESSED ASIAN FOODS.0 AUSTRALIAN INDUSTRY CASE STUDIES FOR PROCESSED ASIAN FOODS 8.1 BUSINESS PLAN CASE STUDIES .1 BUSINESS PLAN CASE STUDIES.1 BUSINESS PLAN CASE STUDIES Business plan case studies have been developed to provide demonstration cases of the commercial viability of selected categories and products of processed Asian foods. These case studies have been conducted for three processed Asian food products as shown in Table 10. The business plans have been prepared consistent with the approach accredited by the Ausindustry Business Networks Program, and it is emphasised that the companies and products have not been identified for reasons of commercial confidentiality. Table 10 Business Plan Case Studies Case Study

Processed Asian Food

1

Instant Noodles

2

Oyster Sauce

3

Champignon Mushrooms

The detailed business plans for theses case studies are shown at Appendices J, K and L and summaries of the case studies are shown below. 8.1.1 Summary of Case Study 1 - Instant Noodles There are many types of noodle products made from both wheat flour and rice flour. Wheat flour based noodles include Chinese noodles, wet and dry noodles, wet or boiled (Hokkien style) noodles, steamed and dried noodles, Japanese or white noodles, and modern instant noodles. The instant noodle has become very popular in Australia, and continues to increase in popularity. The noodles are produced by kneading wheat flour, additives, salt and water together, and the resultant dough is passed through pairs of rollers of progressively finer clearance, after which the thin dough sheets are cut, steamed or fried and dried for packaging with a sachet of flavouring. Case Study 1: Instant Noodles


26

Introduction Deep fried noodles can be made from a flour of lower protein content than raw noodles. Australia has a natural advantage for the availability and quality of existing exports of noodle wheats which are grown in Western Australia, Victoria and southern NSW. Major noodle wheat varieties include Cadoux, Eradu, Gamenya and Rosella. Multi-national groups such as Nestle with their Maggi brand have already demonstrated the commercial viability for the manufacturing of noodles in Australia. This case study demonstrates the opportunity for other groups to further develop the instant noodle market in Australia. The dry and fresh noodle market is estimated to have a market size of almost $100 million, and this market has the potential to increase further due to the market growth in noodles and Asian foods in supermarkets. It is anticipated that a significant amount of this growth shall occur from the growth of the Home Meal Replacement market and the introduction of ‘instant noodle’ meals. A key issue shall be the development of ‘instant noodle’ meals with accompanying products (eg, sauces and vegetables) which have a long shelf-life of up to 5 weeks. The Opportunity To expand the instant noodle market size by increasing Australian production of premium packaged dry noodles targeting the family meal or Home Meal Replacement market in supermarkets. Critical Success Factors The business plan at Appendix J shows the cost effectiveness, availability and quality of noodle materials for manufacturing is viable and is also well demonstrated by existing industry investment. The marketing and distribution of the noodles were considered to be the critical success factors for the commercial viability of the product, and accounted for almost 20% of the budgeted revenues. Conclusion The estimated wholesale unit price for the product is $1.50, and it is considered that this is competitive with other noodle products due to product differentiation with long shelf life meal ingredients. Market development is considered to be the critical success factor for this product.


27

8.1.2 Summary of Case Study 2 - Oyster Sauce Asian sauces are a rapidly growing and mature category of Asian foods. ABS statistics (1996) show that imported sauces as a category (excluding soy and tomato sauces) are valued at $50.4 million and have been growing at an annual rate of 15.7% since 1994. Similarly in Retail World’s 1996 annual survey publication, it was estimated that the oriental sauces market in retail outlets was valued at $25.2 million per annum, and was growing at an annual rate of 16%. Asian sauces are often referred to as a classic example of how Asian foods may be marketed as either authentic or Australianised products in Australian supermarkets. Indeed, the growth in demand for Asian sauces is often linked to not only the influence of Asian cuisine in Australia, but also to recent research (Retail World, 1997) that shows that some 65% of Australians own a wok and cook stir-fry at least twice a week. In many supermarkets, Asian sauces have become sufficiently ‘mature’ and well-established, that they are no longer marketed within the Asian foods sections, but are rather positioned as an integrated and mature product within the overall category of sauces. Industry discussions emphasised that the commercial viability of (Asian) sauces in Australia was related to the availability of the following:

Food ingredients and technology. Recipe formulations. Manufacturing capacity which matched the market demand. Branding and marketing.

The following case study reviews the opportunity for an existing manufacturer of branded sauce products to extend their product range to Oyster sauce.


28

Case Study 2: Oyster Sauce Introduction The key objective is to focus on the strategic development of products for the Asian markets using the Australian market as a ‘pilot market’. The company is currently manufacturing a range of sauce products for main meal foods. It has some 6% retail market share in the oriental sauces segment, and its brand recognition, and manufacturing and marketing resources, provides a competitive advantage for product range extension and export development into Asia. The Opportunity To utilise available company plant capacity to extend the current range of branded sauce products to include oyster sauce. Critical Success Factors The business plan at Appendix K shows that the availability of food ingredients, technology and sauce recipe are the key factors for the success of manufacture. The business plan provides an ex-factory unit price for the product and is inclusive of raw material ingredient and manufacturing costs. The key commercial measure is the competitiveness of the ex-factory unit price compared to comparable imported products. The company plans to utilise its existing marketing network, and would use its brand recognition to target ‘oyster sauce for main meals’ in both supermarkets and Asian retail outlets. Conclusion The estimated wholesale unit price of the product is $2.50 and this would be competitive with similar imported products.


29

8.1.3 Summary of Case Study 3 - Canned Champignon Mushrooms Mushrooms are used extensively in Asian cuisine to bring out flavours of other food components. In addition, mushrooms are a primary source of dietary nutrition for vegetarians which has become a growing consumer segment for retailers. There are a wide variety of mushrooms as shown in a RIRDC study (Vinning, 1995) which lists 18 types used in Asian cuisine. Mushrooms are used in a wide range of forms including fresh whole, dried, canned, brined, granulated, powdered and smoked. Mushroom production occurs under near-factory conditions and is a capital and technology intensive process. French mushrooms or champignons are grown in China, Thailand and Taiwan, and are processed in brine, and canned for export to world markets including Australia. Retail World’s annual survey lists the canned champignon market size at over $10 million, and industry sources estimate that the market size in Asian retail outlets is $5 - 8 million.


30

Case Study 3: Canned Champignons Introduction This Australian organisation contract manufactures Australian canned champignons for a major Australian brand which is distributed in mainstream Australian supermarkets. There is an opportunity to re-package the product for the Asian supermarkets in Australia. The point of difference is that the Australian A-grade button mushroom is greatly superior in flavour to imported champignons. The Opportunity The objective is to pack champignons under the organisation’s brand, and market the product as a premium price product for distribution into Asian retail outlets in Australia. Critical Success Factors The business plan at Appendix L shows that the availability of champignons is not a key issue, rather the cost effectiveness of manufacturing is critical. The business plan provides an ex-factory unit price for the product and is inclusive of raw material ingredient and manufacturing costs. The key commercial measure is the competitiveness of the ex-factory unit price compared to comparable imported products. The company plans to utilise its existing marketing network and would use its brand recognition to market it product as a premium product in Asian retail outlets. Conclusion The estimated wholesale unit price of the product is over $1.70, and it is considered that this price is at too high a premium for the Australian product to be competitive with imported products which range in wholesale unit price of $0.38 - $0.60.

In summary, Tables 11 and 12 below show the comparison of the above ‘case study’ products on a financial and non-financial basis.


31

Table 11

Financial Comparison for the Three Processed Asian Foods Products

Processed Asian Food Products

Australian

Manufactured DIS Unit Cost ($)

Imported

DIS Unit Cost ($)

nstant Noodles

1.50

1.10 - 1.50 *

yster Sauce

2.50

1.80 - 3.00

hampignons

1.70

0.38 - 0.60

* No comparable imported product exists, consequently this is an estimated price to allow

for additional manufacturing costs. Based upon financial comparisons, the instant noodles and oyster sauce products are commercially competitive. However, despite the above results, further discussions and feedback from industry collaborators (and other groups) confirmed that Australia=s competitive advantage for manufacture of Asian foods could not always be based upon ‘traditional’ financial costing parameters alone. Industry considered that Australia could improve its commercial competitive advantages based upon other factors such as marketing, distribution, branding and quality of product. For example,

Instant Noodles The Australian product is differentiated from the imported product by including sauces and vegetable sachets and positioning the product as a main meal rather than a snack food product.

Champignons The Australian product is differentiated from

the imported product by the high quality of taste and texture of product.

8.2 COMPARATIVE ANALYSIS .2 COMPARATIVE ANALYSIS.2 COMPARATIVE ANALYSIS Accordingly, the following Table 12 outlines industry feedback on the comparative advantages for the above three Asian food products:


32

Table 12

Australian Competitive Advantages for the Manufacture of Processed Asian Foods

Competitive Advantage

Products Raw Material

Labour

Manufactg

Freight/ Distrib’ n

Packaging

Quality

Sales & Market’g

Instant Noodles

High

Low

High

High

High

High

High

Oyster Sauce

High

Low

High

High

High

High

High

Champignons

High

Low

Low

High

High

High

High

8.3 SUMMARY .3 SUMMARY.3 SUMMARY In summary, when the comparison includes the non-financial analysis as shown in Table 11, industry considered both instant noodles and oyster sauce to be competitive with overseas manufactured product. Similarly for the “2 minute” instant noodle products, this view is further supported by the Australian manufacturing operations of Nestle, where instant noodles manufactured in Australia are reported to be cost competitive with Nestle’s Asian manufactured noodles. However, champignons appear to be excluded as a potentially competitive local manufactured product. It is considered that the local product’s superior quality would be insufficient to justify the price differential when compared to the imported product.


33

9.0 ASSESSMENT OF OPPORTUNITIES AND PRIORITIES .0 ASSESSMENT OF OPPORTUNITIES AND PRIORITIES.0 ASSESSMENT OF OPPORTUNITIES AND PRIORITIES 9.1 GENERAL .1 GENERAL.1 GENERAL An evaluation of the comparative advantage of the Asian foods has been conducted using a 3-dimensional semi-quantitative approach which integrates the factors of:

Market demand Capability to manufacture Competition (from imports)

This approach is shown in Figure 2, and provides the framework to allow for non-financial factors such as quality of product and sales and marketing infrastructure, rather than simply the lowest cost of raw material or lowest cost manufacturing. The shaded section in Figure 2 shows conceptually the products which would be evaluated as higher priority. 9.2 DUAL MARKETS AND ASIAN FOODS .2 DUAL MARKETS AND ASIAN FOODS .2 DUAL MARKETS AND ASIAN FOODS Dual markets for Asian foods - Supermarkets and Asian retail outlets The market for processed Asian foods in Australia is a dual market structure comprising Australian supermarkets and Asian retail outlets. As shown earlier in Figure 1, processed Asian foods are a range of foods covering a broad range of market segments and retail outlets. Accordingly, it is more appropriate to identify the opportunities in terms of these various market segments. The major categories or products have been shown in Figure 3 relative to their market size and market position based upon industry feedback. It is noted that the following categories of Asian foods are significant for their positioning in both the supermarket and Asian retail markets:

Noodles Sauces and pastes Snacks and sweets Beverages and drinks

Figure 2


34

Figure 3


35


36

This above approach provides the basis for the further assessment of the Asian food opportunities using the model of the case studies from Chapter 8. The further assessment as shown in Appendix E consisted of a further ranking of all the Asian foods for their competitiveness for manufacture in Australia. The factors reviewed in the competitiveness analysis included:

Availability of raw materials Labour Manufacture Freight/distribution Packaging Quality Sales and marketing

9.3 PRIORITY OPPORTUNITIES .3 PRIORITY OPPORTUNITIES.3 PRIORITY OPPORTUNITIES The higher ranking Asian food opportunities for manufacture in Australia is shown in Table 13 and include:


9.4 COMMENT FOR PROCESSED FRESH ASIAN FOODS .4 COMMENT FOR PROCESSED FRESH ASIAN FOODS.4 COMMENT FOR PROCESSED FRESH ASIAN FOODS While fresh foods were not a major focus for this study, it is noted that there is considerable anecdotal evidence indicating that this is a major Australian area attracting consideration for overseas investment. This is consistent with the observation that compared to processed Australian fresh foods, there are few MNC’s involved with processed fresh Asian foods in Australia. Future investment may be expected in the forms of capital and/or technology transfer.


37

Table 13 Priority Rankings for Asian Food Opportunities

Market Segment

Processed Asian Food Products

Australian Foods in Asian Markets

Asian Foods in Australian markets

Asian Foods in Asian Markets

Instant/cup noodles

-

High

High

Soy based drinks -

High

High

Biscuits High

Low

High

Oyster/fish sauce -

High

High

Fried shrimp snacks -

High

High

Rice cracker snacks -

Moderate

High

Seaweed -

Moderate

Moderate

Soup - Chicken/beef -

Moderate

Moderate

Asian teas -

Moderate

-

Longan/Lychees - Can -

Low

Moderate

Soy sauce -

Low

Low

Mushrooms Champignon -

Low

-

Mushrooms Straw -

Low

-

Mushrooms Shiitake - dry -

Low

-

Beancurd sheets -

Low

-

Shrimp seasoning -

Low

-

Coconut extract/milk -

Low

-


38

10.0 SUMMARY AND INDUSTRY FEEDBACK .0 SUMMARY AND INDUSTRY FEEDBACK.0 SUMMARY AND INDUSTRY FEEDBACK It would be marketing short-sightedness for Australian food companies to ignore the Asian foods opportunity in Australia 10.1 SUMMARY .1 SUMMARY.1 SUMMARY The Asian foods market is not one homogeneous market. Rather it is a dual market structure consisting of the Australian supermarkets and the Asian retail grocery outlets. This fundamental market characteristic is fundamental to the identification of opportunities and strategies for processed Asian foods in Australia. The following processed Asian foods were assessed to be of a higher priority for manufacturing in Australia:


10.2 INDUSTRY FEEDBACK .2 INDUSTRY FEEDBACK.2 INDUSTRY FEEDBACK On 1 October 1997, an industry workshop was conducted to review the draft results of the study. The workshop was supported by RIRDC, Ethnic Affairs Commission of NSW and the Industrial Supplies Office, and was attended by manufacturers, distributors and retailers of Asian foods. The following industry comments were provided as feedback to the study:

The Australian market is an integrated market where many Asian foods have been Australianised.

Australian consumers have a high propensity to try new products. However, price


39

and quality are major issues for the Australian Asian and non-Asian consumer.

Branding and marketing shall be the critical success factor for the commercial viability of Asian foods in Australia; especially for the development of the market for the ‘new’ generation of younger consumers.

Raw materials in Australia are generally a relatively small proportion of

manufacturing costs, rather labour and other manufacturing costs are the more significant costs especially for small and medium size enterprises. Niche or specialty products marketing is often used as a strategy to overcome such cost ‘impediments’.

Asian food products in Australia may be characterised as new products, or mature

products which are able to be integrated into other standard categories of foods.

As processed Asian foods in Australia ‘strides two cultures’, there is a need to employ local Asian product development experience.

Australian food companies often do not recognise that the skills for Asian food

development are available in the Australian Asian communities. There is a significant opportunity to network and work together with this resource.

Australia is not often perceived by consumers to be an ‘authentic’ manufacturing

source of processed Asian foods and therefore requires industry promotion and marketing. This is especially a relevant issue for exports of Australian manufactured Asian foods.

Australian manufactured Asian foods require to be differentiated in Australia.

Different packaging formats can form the basis for this differentiation.


40

11.0 RECOMMENDED INDUSTRY STRATEGIES .0 RECOMMENDED INDUSTRY STRATEGIES.0 RECOMMENDED INDUSTRY STRATEGIES 11.1 PRODUCT IDENTIFICATION AND MARKET POSITIONING .1 PRODUCT IDENTIFICATION AND MARKET POSITIONING.1 PRODUCT IDENTIFICATION AND MARKET POSITIONING Strategy 1: Expand Australian Bureau of Statistics Product

CategoriesStrategy 1: Expand Australian Bureau of Statistics Product CategoriesStrategy 1: Expand Australian Bureau of Statistics Product Categories

Objective: To expand the ABS statistical product sub-codes to provide more

detailed product within category information for imports of processed Asian foods.

Issues:

The ABS statistical codes (suffix of the Australian Customs tariff number) can be expanded to define more detailed Asian food import listings.

More accurate monitoring of imports of Asian foods and opportunities for increasing local production.

This information should provide input to an industry database.

Strategy 2: Develop an Industry DatabaseStrategy 2: Develop an Industry

DatabaseStrategy 2: Develop an Industry Database Objective: To provide market and technical support resources for industry. Issues:

Formal industry development of a database of all Asian food items available at a retail level in Australia. This study may form the basis for the development of the


41

database. This may be further extended to the food service and food

manufacturing industries so as to maximise the size of any given market sector for an Asian food product.

Consolidation of other available sources of market information and reports.

Strategy 3: Disseminate Industry Database Information Strategy 3:

Disseminate Industry Database Information Strategy 3: Disseminate Industry Database Information

Objective: To ensure that Australian rural producers and food manufacturers

have access to information which facilitates business decision making.

Issues:

Industry communication of market opportunities is fundamental.

Identification of opportunities from the database, and communication to industry may be achieved through existing industry networks; many of which have been previously established through the support of Government agribusiness programs.

Conduct keynote presentations of the Australian Asian food industry.

Communications should be developed through food media columns and regular features on Asian food opportunities

Strategy 4 Develop a Communication Strategy with Rural Producers for

The Ownership and Development of Asian Food Marketing StrategiesStrategy 4 Develop a Communication Strategy with Rural Producers for The Ownership and Development of Asian Food Marketing StrategiesStrategy 4 Develop a Communication Strategy with Rural Producers for The Ownership and Development of Asian Food Marketing Strategies

Objective: To develop ownership of product development through production

and supply management. Issues:

Liaison with marketing organisations for various


42

agricultural commodities e.g. AMLC, AHC, ADC. Quality Assurance and food safety. Development of integrated supply systems (‘plate to

paddock’).

Strategy 5: Develop Sector-Specific Communication Strategies for the Food Industry and Business Networks

Objectives Utilisation of the industry database by sector for both Small and

Medium Size Enterprises (SME’s) and Multi-National Corporations (MNC’s).

Issues:

For SME’s, support management in the development of outsourced product development and market research resources.

For MNC’s, liaise with their in-house product development management and assist with product development priorities.

Ausindustry Business Networks and industry organisations may be practical industry communication channels.

Strategy 6: Develop Asian Food Networks to Interface with MNC’s and SME’sStrategy 6: Develop Asian Food Networks to Interface with MNC’s and SME’sStrategy 6: Develop Asian Food Networks to Interface with MNC’s and SME’s

Objective: Encourage the formation of networks or alliances for product

development and utilise the resource experience of Australian Asians. Issues:

Liaise with trade development and industry organisations such as Business Australia and State Government groups e.g. Supermarkets To Asia(STA), NSW Ethnic Affairs Commission, Australia - Asian Chambers of Commerce.

Improve industry communications in Asian foods - through networks and industry associations which link into Asia.

Make use of the local Asian background resources in assisting with policy development and priorities.

Strategy 7: Identify Products from Current International

ExperienceStrategy 7: Identify Products from Current


43

International ExperienceStrategy 7: Identify Products from Current International Experience

Objective: Develop product identification and development processes through

liaison with food industry suppliers e.g., equipment and ingredient suppliers.

Issues:

Minimise ‘re-invention of the wheel’/duplication of effort.

Monitor existing and future new product launches. Strategy 8: Identify Target Market Segment Position for the Asian Food

OpportunityStrategy 8: Identify Target Market Segment Position for the Asian Food OpportunityStrategy 8: Identify Target Market Segment Position for the Asian Food Opportunity

Objective: Assess market dynamics for Asian food market segments of

‘Asianised’ Australian foods and ‘Australianised’ Asian foods. Issues: Develop marketing strategies based on the following issues:

Market demand. Market segmentation. Market share. Competition. Market access.

11.2 MARKET DEVELOPMENT .2 MARKET DEVELOPMENT.2 MARKET DEVELOPMENT Strategy 1: Develop Australian Market Demand for the Priority Asian Foods

. Objectives: Promote Australian manufactured Asian foods through consumer

education relevant to the specific market segments of Australian foods in Asian markets, and Asian foods in Australian markets.

Issues:

The Australian market while small can form the basis for the development of an export strategy for processed Asian foods.

Australian and Asian consumers are not generally aware of the availability of Australian processed Asian foods.

The high quality of Australian products can support the


44

development of a targeted market segment education and merchandising program.

Strategy 2: Develop Export Market Opportunities.Strategy 2: Develop

Export Market Opportunities.Strategy 2: Develop Export Market Opportunities.

Objective: Grow export market demand by using locally manufactured Asian

foods which have been developed through the local Australian market.

Issues:

Opportunities identified in Strategy 1 above can form the basis for export market development.

Capitalise upon market research to define the emerging Asian food opportunities and those which favour Australia with a competitive advantage of supply and manufacture.

Study tours and trade missions to priority export markets in association with government trade development organisations.

Improve manufacturing viability through increasing market opportunity size using the small Australian market as a pilot test market.

Such pilot strategies are used by MNC’s e.g. Australia and New Zealand are often used as pilot markets prior to international product development launches.

Strategy 3 Increase Market Profile for Australian Asian Processed

FoodsStrategy 3 Increase Market Profile for Australian Asian Processed FoodsStrategy 3 Increase Market Profile for Australian Asian Processed Foods

Objective Network with Australian agribusiness and trade development groups

by developing an Australian Asian foods promotion strategy. Issues

Identification of priority Asian markets and foods. Network with Asian industry food organisations and co-

operatives. Development of promotional strategy and material. Liaison with Asian food media groups.


45

Strategy 4 Develop Strategies to Address Overseas CompetitionStrategy 4 Develop Strategies to Address Overseas CompetitionStrategy 4 Develop Strategies to Address Overseas Competition

Objectives Differentiate Australian Asian processed foods from imported

products. Issues

Brand development. Local sourcing of raw materials. Higher levels of service. Quality and food safety.

Strategy 5: Utilise Distribution Infrastructure to Enhance Market Access

Strategy 5: Utilise Distribution Infrastructure to Enhance Market Access Strategy 5: Utilise Distribution Infrastructure to Enhance Market Access

Objective: Usage of existing distribution channels for processed Asian foods as

necessary. Issues:

Access to well established distribution networks servicing over 600 Asian retail outlets in Australia.

Strategy 6: Brand DevelopmentStrategy 6: Brand DevelopmentStrategy 6:

Brand Development Objective: Development of a brand name to enable SME’s to compete against

larger more established brand names. Issues:

Co-branding and effective marketing for SME’s. QA. Feedback. Trust and co-operation. Marketing co-operation. SME brands positioning and MNC brand positioning. Price positioning.


46

11.3 DEVELOPING NEW PRODUCTS .3 DEVELOPING NEW PRODUCTS.3 DEVELOPING NEW PRODUCTS Strategy 1: Multi National Corporation (MNC) and Small and Medium Size

Enterprises (SME) Product DevelopmentStrategy 1: Multi National Corporation (MNC) and Small and Medium Size Enterprises (SME) Product DevelopmentStrategy 1: Multi National Corporation (MNC) and Small and Medium Size Enterprises (SME) Product Development

Objective: Development of Asian foods strategy. Issues:

For MNC’s, support of their in-house product development and market research resources.

For SME’s, support of outsourced product development and market research resources.

Employ Asian background staff in senior market and product development positions.

Develop business networks with the existing Australian Asian food processing industry.

Strategy 2: Asian Food Product Opportunities Strategy 2: Asian

Food Product Opportunities Strategy 2: Asian Food Product Opportunities

Objective: Development of Asian foods for specific market segments and

consumers. Issues:

Develop company specific business plans for the priority Asian food opportunities identified in this study.


47

Strategy 3: Utilisation of Australia’s Comparative Advantage for Manufacturing Asian FoodsStrategy 3: Utilisation of Australia’s Comparative Advantage for Manufacturing Asian FoodsStrategy 3: Utilisation of Australia’s Comparative Advantage for Manufacturing Asian Foods

Objective: Link new product development opportunities to Australia’s

comparative advantage for manufacture. Issues:

Direct sourcing from manufacturer thereby reducing costs.

Overcoming price disadvantage. Perception of better manufacturing quality. Quality packaging. Marketing and after sales service.

11.4 MANUFACTURING VIABILITY .4 MANUFACTURING VIABILITY.4 MANUFACTURING VIABILITY Strategy 1: For Specific Asian Food Opportunities, Attract Foreign

Investment into Local Australian Manufacturing of Asian FoodsStrategy 1: For Specific Asian Food Opportunities, Attract Foreign Investment into Local Australian Manufacturing of Asian FoodsStrategy 1: For Specific Asian Food Opportunities, Attract Foreign Investment into Local Australian Manufacturing of Asian Foods

Objective: Improve access to capital for manufacturing investment. Issues:

Strategic investment issues. Investment time frames. Production of finished product. Production of minimally or partly processed products.

Strategy 2: Capitalise Upon Existing Industry Facilities and Plant

CapacityStrategy 2: Capitalise Upon Existing Industry Facilities and Plant CapacityStrategy 2: Capitalise Upon Existing Industry Facilities and Plant Capacity

Objectives: Improved capital and plant utilisation.


48

Issues:

Many Australian organisations have an installed base of large and diversified manufacturing equipment and facilities capable of the (customised, lower volume) production of Asian foods.

Batch production may in some cases be undertaken on a joint venture/contractual basis or as a separate business activity for the company.

Strategy 3: Supply Chain Management Strategy 3: Supply Chain

Management Strategy 3: Supply Chain Management Objective: Capitalise on the integration of raw materials, availability of

competitive Australian manufacturing, distribution and marketing to customers.

Issues: Strategic supply alliances for:

Raw materials. Manufacturing and distribution. Marketing.

11.5 INDUSTRY DEVELOPMENT .5 INDUSTRY DEVELOPMENT.5 INDUSTRY DEVELOPMENT Strategy 1 Industry Co-ordinationStrategy 1 Industry Co-

ordinationStrategy 1 Industry Co-ordination Objectives: Promote Australia as a investment opportunity for Asian food

manufacturing. Issues:

As this is a new and emerging industry, industry issues should be developed in a co-ordinated approach which supports: - Industry ownership. - Communication of strategic issues such as food safety and QA. - Development of industry promotion. - Promotion of successful case studies in Australia.

Promotion of ethnic community organisation initiatives


49

e.g., NSW Ethnic Affairs Commission.


50

12.0 APPENDICES .0 APPENDICES.0 APPENDICES


51

APPENDIX A Australian Bureau of 1996 Census of Population and Housing Including Weekly Individual Income for Persons Born in SE Asia NE Asia


52

Australian Bureau of Statistics 1996 Census of Population Weekly Individual Income for Persons Born in SE Asia ad NE Asia

Total Australia

Vietnam

Rest of SE Asia

Total SE Asia

China (excl TWN)

Honk Kong

Japan

Korea

Rest of NE Asia

Total NE Asia

Total

Negative Income

816

2,325

3,141

875

490

478

694

333

2,870

6,011

Nil Income

10,571

36,162

46,733

14,891

13,234

5,545

6,500

6,676

46,846

93,579

$1-$39

2,531

7,796

10,327

2,451

2,178

482

448

766

6,325

16,652

$40-$79

6,854

10,917

17,771

2,948

2,770

486

863

975

8,042

25,813

$80-$119

8,268

11,393

19,661

4,334

2,953

567

1,061

1,295

10,210

29,871

$!20-$159

32,648

27,371

60,019

14,123

3,615

747

1,902

1,158

21,545

81,564

$160-$199

12,555

16,330

28,885

8,057

2,333

707

1,229

747

13,073

41,958

$200-$299

11,007

24,135

35,142

10,057

4,275

1,554

2,337

1,342

19,565

54,707

$300-$399

17,191

28,057

45,248

12,686

4,378

1,422

2,221

1,044

21,751

66,999

$400-

13,629

26,530

40,159

10,514

4,148

1,329

1,902

915

18,808

58,967


53

Total Australia

Vietnam

Rest of SE Asia

Total SE Asia

China (excl TWN)

Honk Kong

Japan

Korea

Rest of NE Asia

Total NE Asia

Total

$499 $500-$599

8,007

21,461

29,468

6,663

3,667

1,370

1,465

720

13,885

43,353

$600-$699

4,353

13,746

18,099

3,616

2,811

963

883

447

8,720

26,819

$700-$799

2,900

9,998

12,898

2,544

2,336

741

607

297

6,525

19,423

$800-$999

2,570

11,511

14,081

2,693

3,021

844

667

359

7,584

21,665

$1000- $1499

1,602

8,991

10,593

1,708

2,965

848

550

316

6,387

16,980

$1500 or more

575

4,117

4,692

798

1,298

1,152

261

153

3,662

8,354

Not Stated

6,314

12,136

18,450

4,061

1,761

1,252

1,843

1,203

10,120

28,570

Not Applicable

8,667

32,431

41,098

7,987

10,196

2,526

4,663

2,893

28,265

69,363

Total

151,058

305,407

456,465

111,006

68,429

23,013

30,096

21,639

254,183

710,648


54

APPENDIX B Major Wholesalers & Distributors of Processed Asian Foods in Australia


55

Major Importers and Distributors - Sydney

Supplier/distributor

Product

A Clovett Pty Ltd

Oyster sauce Instant noodles

Arnotts Biscuits Ltd Biscuits

BKK Aust Pty Ltd Canned fruit Longan Instant Noodles Cup Noodles Chilli sauce

Burlington Centre Supermarket Bean curd stick Beancurd/Tofu

Daily Fresh Services Pty Ltd Rice noodles fresh

DCB Trading Soya Sauce - Light

E S Imports Exports Rice cracker snacks

Ettason Pty Ltd Oyster sauce Bean curd sheet Bean curd stick Cup Noodles Instant Noodles Vermicilli Soups chicken

Fortune Food Rice noodles fresh Beancurd/Tofu

Fujian holding Vermicilli Jasmine tea

Fujian Aust Pty Ltd Jasmine tea

Gold Medal Snacks Pty Ltd Fried shrimp cracker snacks

Grand Coral P/L Instant noodles Cup Noodles

Grocery Wholesaler Pty Ltd Coconut extract /milk

Hakka Fish balls/sausages

Han Yang Import Export

Cup Noodles

Han Yang Import Export



56


Product

Instant noodles Happy Lamb Trading Pty Ltd

Fish balls/sausages

Hong Aust corp Pty Ltd

Beancurd/Tofu Bean curd sheet Oyster sauce Chilli sauce

Hung=s Trading Co. Ltd Vermicilli

Kikkoman Aust

Soy sauce light

Light Star Dist. Pty Ltd

Beancurd/Tofu

Lims Australia

Instant noodles

Meigor Pty Ltd

Cup Noodles

Mitsubishi Aust Ltd

Cup Noodles Instant noodles

New Eastland Pty Ltd

Seaweed Dried Sheets

Oceania Holding Pty Ltd

Rice noodles -dry

Ong Trading Company Bean curd sheet

Oriental Merchants

Soy sauce light Coconut extract /milk Oyster sauce Instant noodles Soy sauce dark

Rockman Australia Pty Ltd

Seaweed dried sheets Soy sauce light Rice noodles dry

Shin Mi Ltd Soups beef

Sin Ma Food Pty Ltd

Rice noodles -dry Rice noodles fresh

Tixana Manufacturing Pty Ltd

Beancurd/Tofu

TLY Pty Ltd

Beancurd/Tofu

Unigreen Food Pty Ltd Soya based drinks

Viet Huong Food Co. Fish sauce


57


Product

Vina Tept Aloevera & Lime Wei Wah Pty Ltd

Rice noodles fresh Soy sauce light Soy sauce dark Vermicilli

Win Ho Trading Co. Bean curd stick Canned fruit longan Rice cracker snacks

Yakult Aust. Pty Ltd Yakult


58

Major Importers and Distributors - Melbourne


Product

Chien Wah Trading Vermicelli

Chien Wah Trading Soya Sauce - light

Chung Hing Beancurd Manufacturer Beancurd

Conga International Foods Coconut extract/Milk

Ettason Pty ltd Rice Flour

Fu Sheng Foods Rice Noodles Fresh

Fujian Holding Champignons

Hakka Pty Ltd Fish Balls /sausages

Han Yang Imports Exports Pty ltd Seaweed Dried Sheets

Hoa Australia Soya Based drinks Straw mushrooms

Kien -Fat Trading Coconut Drink

Kung Shing Pty Ltd Rice Noodles Fresh

Lam Bros, Instant Noodles

Lay Bros Soya Based Drinks Fried shrimp cracker snacks Rice Flour

Lim Australia,

Instant Noodles Coconut extract/milk Coconut Drink

Mitsubishi Aust Ltd Instant Noodles

Nam Fong Trading

Beancurd Stick Shrimp stock Seasoning

Nan Fong Trading co Biscuits

Nan Fong Seaweed Dried Sheets

New Eastland Fried Onion Spice Canned fruit Lychees

Oriental Merchants

Rice Flour Oyster Sauce Coconut extract milk

Perfect Fine Foods Aust

Adzuki Beans Peanuts

Shuey Shing Pty Ltd

Coconut extract/milk


59


Product

Smooth Food Processing Beancurd Wah Lien Trading

Canned fruit Lychees Fish Sauce Dried Chinese Mushrooms

Winho Trading Canned fruit Lychees

Yenson=s Fresh Beancurd Beancurd


60

APPENDIX C Major Manufacturers of Processed Asian Foods in Australia


61

Major Manufacturers of Asian Foods - Sydney/Melbourne

Manufacturer

Address

Telephone

Products

1,2,3 Food P/L

02 97551235 tel

Rice noodles

Ardmona Foods Ltd 818 Whitehorse Rd Box Hill VIC 3128

03 98965500 tel 03 98965555 fax

Canned fruits

Banh Pho Vien Dong Food processors

41 Whitaker Street Yennora NSW 2161

Rice noodles fresh

Chung Hing Beancurd Manufacturer

4/61 Osborne Ave Springvale VIC 3171

03 95481418 tel

Straw mushrooms

Continental

Mr Peter Boyden 20-22 Cambridge Street Epping NSW 2121

02 98696100 tel 02 98696221 fax

Instant Noodles

Edgells Birdseye

02 943 688668 tel 02 99013245 fax

Tinned Mushrooms

Fortune Food Manufacturer Pty Ltd

20 Meeks Road Marrickville NSW 2204

02 95574639 tel

Soy Drink, Rice noodles, Fresh noodles

Friend Trading N.S.W

95574840

Soya bean drink

Fu Sheng Foods 343 Little Collins Street Melbourne VIC 3000

03 96060006 tel

Straw mushrooms

Golden Circle Ltd

Earnshaw Road Northgate QLD 4013

07 2660000 tel 07 2605994 fax

Canned fruits

Goodman Fielder International

5/476 Gardners road Alexandria NSW 2015

02 93176300 tel 02 96995408 fax

Soup


62

Manufacturer

Address

Telephone

Products

Guzzi’s Pasta Manufacturing 14 Melissa Pl Kings Park NSW 2148

02 9831 6611 tel 02 9831 6833 fax

Packet Noodles

Hakka Pty Ltd

3 Wood Street, Tempe NSW 2044

02 95588188 tel 02 95588155 fax

Fish Balls /sausages

Harry Hee Noodles Manufactures

489 King Georges Road Beverly Hills NSW 2209

02 95805662 tel

Rice noodles

Way Lup Food Manufacturing

397 Harris Street Ultimo NSW 2007

02 96608793 tel

Rice noodles fresh

Kraft Foodservice

Leitchville VIC 3567

03 96765555 tel 03 96765340 fax

Packet Noodles

Kung Shing Pty Ltd

Rice Noodles Fresh

Lan Chu Asian Food Pty Ltd 6/107 Tangerine Street Fairfield NSW 2165

02 97268086 tel

Fried pork

Lanes Biscuits Pty Ltd

Cnr Blair & Riggall Streets Broadmeadows Vic 3047

03 93010732 tel 03 93092110 fax

Biscuits

Light Star Dist. P/L

1/21 Childe Rd, Chipping Norton, N.S.W, 2170

97242446 Fax- 027257075

Beancurd fresh

Madura tea

Clothiers Creek Road Murwillumbah NSW 2484

066 777215 tel 066777451 fax

Tea

Makmur Enterprises Pty Ltd

20-126 Murphy Street Richmond Vic 3121

03 94295966 tel 03 94299862 fax

Frozen snacks

Massel Pty Ltd

1-17 Stanton Road Seven Hills NSW 2147

02 96747999 tel 02 97647900 fax

Dry soups and spices


63

Manufacturer

Address

Telephone

Products

Master Foods of Australia 4 Corella Close Berkleyvale NSW 2261

043 896700 tel 043 896799 fax

Various sauces including oriental sauces

Nestle Australia (Maggi Brand)

60 Bathurst Street Sydney NSW 2000

02 99312345 tel 02 99312610 fax

Instant Noodles Cup Noodles Vermicilli

Pecks (Aust) P/L 16 Kellogg Road Rooty Hills NSW 2166

1800677774 tel

Cup Noodles (Suimin Brand)

Perfect Fine Foods (Aust) Oty Ltd

2/Lot 6 Oliver Gr Keysborough Vic 3173

03 97987611 tel

Peanuts,Adzuki Beans

Pureharvest

15 Ardena Court East Bentleigh Vic 3165

03 95793422 tel 03 95793312 fax

Soya based Drinks

Rice Growers Cooperative Ltd

Bruce Coomber Yanco Road Leeton NSW 2075

069 530411 tel 069 534733 fax

Rice cracker snacks,Jasmine Long grain rice, Jasmine short grain rice,Rice noodles, Vermicilli

Rinoldi Hancock (Aust) P/L Rick Jordan 2 Elizabeth Street South Yarra Vic 3141

03 98278848 tel 03 98270619 Fax

Instant Noodles Vermicilli

San Remo Macaroni NSW pty Ltd

100 Derby St. Auburn NSW 2144

02 97480371 tel


Sanitarium Health Food Co

14 Hudson Avenue Castle Hill NSW 2154

02 98991499 tel 02 98991429 fax

Soya Based drinks


64

Manufacturer

Address

Telephone

Products

Simplot Australia Pty Ltd 41-125 Tennyson St Kensington Vic 3031

03 92799656 tel 03 92799701 fax

Canned Mushrooms

Smooth Food Processing

81 Murphy Street Richmond VIC 3121

03 94296430 tel

Beancurd

SPC Ltd

3-9 Wrecklyn Street North Melbourne VIC 3165

03 93213700 tel 0393213728 fax

Canned fruits

Tixana Pty Ltd

17 Elizabeth Street Campsie NSW 2194

02 97188255 tel 02 9718 8772 fax

Soya Based drinks,Beancurd fresh, Tofu

TLY Pty Ltd

20 Melbourne Street Riverstone NSW 2765

02 96275834 tel 02 96275863 fax

Tofu

Uncle Tobys

580 Church Street Richmond VIC 3121

03 92458666 tel 03 92458610 fax


Unibic

10 18 Norfolk Court North Coburg Vic 3058

03 93505111 tel 03 93545713 fax

Biscuits

Unifoods Pty Ltd

20-22 Cambridge Street Epping NSW 21121

0208696100 tel 0298696221 fax

Soup,Soup Noodles

Uni Green Food Pty Ltd

28/31 Wentworth street Greenacre NSW 2190

02 96427648 tel

Tofu Puff, Soya based drink

Food Processors Pty Ltd

6/92 Seville Street Fairfield NSW 2165

02 97256871 tel

Rice noodles fresh

Vina Tept Holdings

PO BOX 12240, Melbourne VIC 3000

03 3920555 tel

Aloevera +lime drink


65

Manufacturer

Address

Telephone

Products

Windsor Farm Food Group Pty Ltd 74 Mileham Street Windsor NSW 2756

045 774255 tel 045774814 fax

Canned Mushrooms

Yakult Australia

6 Boundary Road Northmead NSW 2152

02 98901900 tel

Yakult

Yenson’s Soya Bean product

68 Bird Street Springvale VIC 3171

03 95623702 tel

Beancurd


66

APPENDIX D Estimated Market Sizes of Processed Asian Foods in Australia


67

Estimated Australian Wholesale Market Size

Rank

Asian Food Product Estimated Australian Market Size (Wholesale $ mill)

1 Instant Noodles

75

2 Soya based drinks

62

3 Cup Noodles

18

4 Soy sauce

15

5 Champignon - canned

12

6 Biscuits

10

7 Oyster sauce

6

8 Seaweed sheets/products

6

9 Fish sauce

<5

10 Beancurd sheets and sticks

<5

11 Shrimp seasoning

<5

12 Rice Cracker snacks

<5

13 Fried shrimp crackers

<5

14 Peanuts

<5

15 Coconut extract/milk

<5

16 Longan fruit - canned

<5

17 Lychees fruit - canned

<5

18 Soup - Chicken/beef

<5

19 Straw mushrooms - canned

<5

20 Dried shiitake mushrooms

<5

21 Asian teas

<5

22 Fresh Rice Noodles

N/A

23 Fresh fish balls

N/A

24 Fresh/preserved sausages

N/A

25 Fresh Beancurd

N/A

Notes: I. Based upon data from AC Nielsen, Retail World Annual Survey and industry discussions. II. Data based upon Asian retail stores representing 11% of the retail outlets for Asian foods

* 5,600 Australian retail supermarkets and 136,000 retail food outlets (Australian Supermarket Institute) * Estimated 600 Australian Asian retail stores/outlets (Industry discussions)

III. N/A Not appropriate as these are fresh foods which are not a major focus of the project.


68


69

APPENDIX E Competitiveness Analysis for the Australian Manufacture of Processed Asian Foods

Ranked Priority

Competitive Advantages Product Opportunities

Availability of Raw Materials

Labour

Manufacture

Freight/ Distribution

Packaging

Quality

Sales/Marketing

High

Instant noodles

High

Low

High

High

High

High

High

High Soya based drinks

High

Low

High

High

High

High

High

High Cup Noodles

High

Low

High

High

High

High

High

Low Soy sauce

Low

Low

Low

High

High

Low

Low

Low Champignon - canned

High

Low

Low

High

High

High

High

High Biscuits

High

Low

High

High

High

High

High

High Oyster sauce

High

Low

High

High

High

High

High

Mod Seaweed sheets/products

Low

Low

Low

High

Low

High

Low

High Fish sauce

High

Low

High

High

High

High

High

Low Beancurd sheets and sticks

High

Low

Low

High

High

Low

Low

Low Shrimp seasoning

High

Low

Low

High

High

High

Low

High Rice Cracker snacks

High

Low

High

High

High

High

High

High Fried shrimp crackers

High

Low

High

High

High

High

High

High Peanuts

High

Low

High

High

High

High

High

Low Coconut extract/milk

Low

Low

Low

High

High

High

High

Low Longan fruit - canned

Low

Low

High

High

High

High

High

Low Lychees fruit - canned

High

Low

Low

High

High

High

High

Mod Soup - Chicken/beef

High

Low

Low

High

High

High

High


70

Ranked Priority

Competitive Advantages Product Opportunities

Availability of Raw Materials

Labour

Manufacture

Freight/ Distribution

Packaging

Quality

Sales/Marketing

Low Straw mushrooms - canned High Low Low High High Low High Low

Dried shiitake mushrooms

Low

Low

Low

High

High

Low

High

Mod Asian teas

Low

Low

Low

High

High

Low

High

High Fresh Foods

High

High

High

(Small scale)

High

High

High

High


71

APPENDIX F PLANNING CHECKLIST The list below is intended as a prompt to key questions that should be answered by prospective manufacturers of processed Asian foods as part of the Concept Appraisal. This should be completed as “pre-requisite” guide prior to development of the Business Plan.

YES

NO

Have you identified the Asian food product?

Are you targeting an existing market with an existing product?

Are you targeting a new market with an existing product?

Are you targeting a new product in an existing market?

Are you targeting a new product in a new market?

Have you done a SWOT of your product?

Is there a market for the product?

Does the product meet Australian and /or international standards?

Has the total market been defined?

To what extent is the market segmented?

Is there a defined market segment you are targeting?

Is your product an “Asianised” western food?

Is your product a “Westernised” Asian food?

Is your product an authentic Asian food?

Is your product an authentic Australian food?

Is this segment growing?

Has there been an assessment of the competition?

Is brand loyalty an issue?

Do you have sustainable competitive advantage?

Do you have a marketing and promotional strategy?

Are you targeting export markets?


72

YES

NO

Are customer needs and expectations well understood? Do you have the skill to make and sell the product?

Do you have the production facilities?

Do you require access to capital?

Do you have access to research and development facilities?

Do you have a distribution model?

Can you deliver the product to the market and at the right time?

Can the market share targeted be achieved?

Have you done revenue and cost forecasts?

Is the business strategy sound?

73

APPENDIX G SURVEY FORM PROCESSED ASIAN FOODS AUSTRALIAN MARKET SURVEY

PART 1 PLEASE TELL US ABOUT YOUR BUSINESS 1. What is your business and its postcode?

(Enter Postcode after box) Postcode

Retail Supermarket ........

Retail Asian groceries ........

Chinese ........

Japanese ........

Vietnamese ........

Korean ........

Other (Pls specify) ........

Wholesaler ........

Other (Please Specify) ........ 2. Business Name ................................................................... 3. Contact Person ...................................................................

/Position 4. Contact Number ................................................................... 5. What do you think of Australian made processed Asian foods? ............................................................................................

74

............................................................................................

............................................................................................ 6. What would encourage your CUSTOMERS to buy more Australian made

processed Asian foods?

Price Availability Customer Demand Product and packaging

Quality Industry Marketing Taste quality

Other (Specify)............................................................................. 7. What would encourage YOU to buy more Australian made processed Asian

foods?

Price Availability Customer Demand Product and packaging

Quality Industry Marketing Taste quality

Other (Specify)............................................................................. 8. Do you have any other comments on the processed Asian foods industry in

Australia? .........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

9. Would you like to make any other comments?

..........................................................................................................................................

..........................................................................................................................................

..........................................................................................................................................

........................................................................................... 10. Survey conducted by: ......................................................

75

Phone number: ............................

76

Product

Cat

Rank (top 15)

Australian

Imported bulk

Imported ready

Supplier

Manufacturer

Brand

Source

inc/dec

Source

inc/dec

Source

inc/dec

Noodles & Rice

Chinese

Cup noodles

1c

Instant noodles

1c

Jasmine broken rice

1c

Jasmine glutinous rice

1c

Jasmine long grain rice

1c

Rice noodles - dried

1c

Japanese

77

Product

Cat

Rank (top 15)

Australian

Imported bulk

Imported ready

Supplier

Manufacturer

Brand

Source

inc/dec

Source

inc/dec

Source

inc/dec

Ramen noodles 1j Soba noodle

1j

S_men noodle

1j

Udon noodles

1j

Korean

Cup Style Ramen

1k

Ramen (Korean noodles)

1k


Chinese

Beancurd fresh

2c

78

Product

Cat

Rank (top 15)

Australian

Imported bulk

Imported ready

Supplier

Manufacturer

Brand

Source

inc/dec

Source

inc/dec

Source

inc/dec

Black bean (processed) 2c Fish balls/sausages

2c

Rice noodles - fresh

2c

Japanese

Crab sticks

2j

Fish cake (Kamaboko)

2j

freezed prawn fry, freezed croguette

2j

Mori-Nu Tofu

2j

retort packed food (retoruto Kar_ etc)

2j

79

Product

Cat

Rank (top 15)

Australian

Imported bulk

Imported ready

Supplier

Manufacturer

Brand

Source

inc/dec

Source

inc/dec

Source

inc/dec

Sauces and Pastes

Chinese

BBQ sauce

3c

Bilis fish stock seasoning

3c

Chilli paste

3c

Chilli sauce

3c

Crab sauce

3c

Fish chilli paste

3c

Green curry paste

3c

Oyster sauce

3c

Red curry paste

3c

Satay powder seasoning

3c

Soya sauce Kikoman

3c

Soya sauce - light

3c

80

Product

Cat

Rank (top 15)

Australian

Imported bulk

Imported ready

Supplier

Manufacturer

Brand

Source

inc/dec

Source

inc/dec

Source

inc/dec

Soya sauce -dark

3c

Sweet plum sauce

3c

Yellow curry paste

3c

Japanese

Fish stock (dasi)

3j

Frozen crayfish paste

3j

Japanese curry paste

3j

Kikkoman milder soy sauce

3j

Memmi Sauce

3j

Miso paste

3j

3j

81

Product

Cat

Rank (top 15)

Australian

Imported bulk

Imported ready

Supplier

Manufacturer

Brand

Source

inc/dec

Source

inc/dec

Source

inc/dec

Products made with boiled fish paste (chikuwa, hampen etc)

Sauce for Tonkatsu

3j

Sauce for Soba noodle

3j

Sukiyaki sauce

3j

Tempura Sauce

3j

Teriyaki sauce

3j

Tontatsu sauce

3j

Yakiniku sauce

3j

Condiments /Spices/Dried goods

Chinese

Beancurd sheet

4c

Beancurd stick

4c

Coconut powder

4c

4c

82

Product

Cat

Rank (top 15)

Australian

Imported bulk

Imported ready

Supplier

Manufacturer

Brand

Source

inc/dec

Source

inc/dec

Source

inc/dec

Dried chilli spice Dried longan Pulp

4c

Dried fish products

4c

Fried onion spice

4c

Fried garlic spice

4c

Glutinous starch

4c

Rice flour

4c

Seaweed dried shredded flakes

4c


4c

Seaweed powder

4c

Shrimp stock seasoning

4c

Soya Bean powder

4c

Tamarind spice

4c

83

Product

Cat

Rank (top 15)

Australian

Imported bulk

Imported ready

Supplier

Manufacturer

Brand

Source

inc/dec

Source

inc/dec

Source

inc/dec

Japanese

Aji-Mirin

4j

chilli powder (shichimi)

4j

chilli oil (R_yu)

4j

Curry sauce mix

4j

Curry powder

4j

Dried bonito flakes

4j

Dried fishes

4j

Dried Negi Shallots

4j

Fermented Soy beans(Nattou)

4j

Flour for Okonomiyaki

4j

Japanese mayonnaise

4j

Jelly pudding mix,

4j

84

Product

Cat

Rank (top 15)

Australian

Imported bulk

Imported ready

Supplier

Manufacturer

Brand

Source

inc/dec

Source

inc/dec

Source

inc/dec

dessert mix (Fruche etc) kanpy_

4j

Kombu seaweed

4j

Konnyaku (shirataki)

4j

Mirin

4j

Ochazuke mix

4j

Onigiri mix

4j

Panko (bread Crumbs)

4j

Pickled ginger (Beni- sh_ga)

4j

Pickled plum (Umeboshi)

4j

Pickles (Takuan, tsukemono)

4j

Powdered sushi mix (Sudinoko)

4j

Powdered rice vinegar

4j

Rice vinegar

4j

85

Product

Cat

Rank (top 15)

Australian

Imported bulk

Imported ready

Supplier

Manufacturer

Brand

Source

inc/dec

Source

inc/dec

Source

inc/dec

Seaweed nori sheets 4j Shichimi Togarashi (condiment like our pepper)

4j

Tastily seasoned dried food for sprinkling on rice (Furkake)

4j

Tempura powder seasoning

4j

Teryaki Nori

4j

Wakame seaweed

4j

Wasabi Karashi (Japanese mustard)

4j

Korean

Barley based products

4k

dried seaweed

4k

dried kelp

4k

86

Product

Cat

Rank (top 15)

Australian

Imported bulk

Imported ready

Supplier

Manufacturer

Brand

Source

inc/dec

Source

inc/dec

Source

inc/dec

dried fish

4k

gin Seng

4k

Ground Pine nuts

4k

red bean based products

4k

seasoned pollack entrails

4k

seasoned squid

4k

Sesame based products

4k

soy bean based products

4k

Snacks and Sweets

Chinese

Biscuits

5c

Confectionary

5c

87

Product

Cat

Rank (top 15)

Australian

Imported bulk

Imported ready

Supplier

Manufacturer

Brand

Source

inc/dec

Source

inc/dec

Source

inc/dec

Fried shrimp cracker snack

5c

Jelly dessert

5c

Rice cracker seaweed snack

5c

Rice cracker snack

5c

Soya based snack foods

5c

Japanese

Kakinotane (hot rice craker)

5j

Rice cake (mochi)

5j

Beverages/Drinks

Chinese

Asian beer and wines

6c

Coconut drink

6c

88

Product

Cat

Rank (top 15)

Australian

Imported bulk

Imported ready

Supplier

Manufacturer

Brand

Source

inc/dec

Source

inc/dec

Source

inc/dec

Coconut extract/milk

6c

Green tea

6c

Jasmine tea

6c

Lychees Drink

6c

Oolong tea

6c

Soya based drinks

6c

Japanese

Japanese tea ( Gemmai tea,h_ji tea)

6j

Yakult

6j

Canned Goods/Soups

89

Product

Cat

Rank (top 15)

Australian

Imported bulk

Imported ready

Supplier

Manufacturer

Brand

Source

inc/dec

Source

inc/dec

Source

inc/dec

Chinese Baby clam

7c

Canned fruit lychees

7c

Canned fruit longan

7c

Crab meat

7c

Soups - abalone

7c

Soups - chicken

7c

Japanese

Aka miso

7j

Dashi-no-moto (clear basic soup stock made of dried kelp and dried bonito)

7j

Miso soup

7j

Korean

beef soups

7k

Fish stews

7k

Kim Chi port stews

7k

90

Product

Cat

Rank (top 15)

Australian

Imported bulk

Imported ready

Supplier

Manufacturer

Brand

Source

inc/dec

Source

inc/dec

Source

inc/dec

Seaweed soup 7k spicy bean paste stews

7k

91

APPENDIX H

Rural Industry Research Development Corporation (RIRDC) Conference/Workshop 1 October 1997 Ethnic Affairs Commission 164 Liverpool Road Ashfield NSW

Potential for Increased Local Production of Processed Asian Foods AGENDA

Time Presenter

Topic

11:00 am - 11:10 am

Dr Jeff Davis - General Manager Research RIRDC

Welcome and Introduction

11:10 am - 11:30 am

Mr Stepan Kerkyasharian - Chairman NSW Ethnic Affairs Commission

Multicultural Marketing and Productive Diversity

11:30 am - 12:15 pm

Mr Barry Lee - Connectica International

Opportunities for Increased Local Production of Processed Asian Foods

12:15 pm - 12:25 pm

Break

12:25 pm - 12:40 pm

Mr Peter Webster - Industrial Supplies Office

Industry Alliances

12:40 pm - 1:00 pm

Mr Tony Spencer - Bamboo Pot

Industry Case Study

1:00 pm - 1:40 pm

Lunch

1:40 pm - 2:00 pm

Mr Sam Yiu - Oriental Merchants

Industry Comment

2:00 pm - 2:45 pm

Open Forum

2:45 pm - 3:00 pm

Mr Barry Lee - Connectica International

Summary and Close

92

APPENDIX I Processes Asian Foods Workshop 1 October 1997 Attendees List

Company

Invited Attendee

Contact

Coles Myer Supermarket

Mr Rod Korff Toorak Road Tooronga VIC 3146

Ph: 03 98295766 fax: 0398296517


Mr Peter Cushman Toorak Road Tooronga VIC 3146

Ph: 03 98295766 fax: 0398296517


Mr Terry Long Toorak Road Tooronga VIC 3146

Ph: 03 98295765 fax: 0398296517

Cookieman Liverpool

Mr Shen William Kiosk 600 Westfield, Macquarie Liverpool NSW 2170

Ph: 96015372 fax: 98949638

Arnott’s Biscuits Limited

Mr Peter Geofrey George Street Homebush NSW 2140

Ph: 93943673

Austrade

Ms Rowena Gould GPO Box 5301 Sydney NSW 2001

Ph: 93902000

Austral China Liaison & Trade Pty Ltd

Mr Wai Yook Lee 35A-37 Hawthorne Pde Haberfield NSW 2045

Ph: 97160801

Australian Supermarkets Institute

Mr Ken Hendricks Level 1, 20 York Street Sydney NSW

Ph: 92996126

Australian Business Chamber

Ms Heidi Moran 140 Arthur Street North Sydney NSW 2060

Ph: 99277477

93

Company

Invited Attendee

Contact

Australian Business Chamber

Mr Graham Ferguson 140 Arthur Street North Sydney NSW 2060

Ph: 99277477

Banksia Food Products Pty Ltd

Mr Monty Williams 7 Helles Avenue Moorebank NSW 2170

fax: 98214168 Ph: 96006299


Mr Darrell Williams Toorak Road Tooronga VIC 3146

Ph: 0398295664

Connectica International

Mr Barry Lee Level 3, 2 Help Street Chatswood NSW 2067

Ph: 94154200

Connectica International

Mr Karnig Momdjian Level 3, 2 Help Street Chatswood NSW 2067

Ph: 94154200

Dept. of Primary Industries and Energy

Ms Deborah Gifford Rural Division GPO 858 Canberra ACT 2601

Ph: 062723787

Ernest Hall and Sons

Mr Tony Hall 141 McAvoy Street Alexandria NSW 2015

Ph: 96982854 Fax: 96982854

Freight on Board

Mr Kevin Sheppard 9th Floor, 100 Christie Street St Leonards NSW 2065

Ph: 94394199 Fax: 94376396

Global Trends

Ms Karen McLeod

Gourmet Asian Cuisine Ms Carol Selva Rajah 14 Duntroon Ave Wollstonecraft

Ph: 94374362

Grand Coral P/L

Mr Peter K C Tsung 37-41 Dunning Ave Alexandria NSW 2018

Ph.6631311

Henli Sales and Marketing

Mr Tony Spencer 68 Tennyson Road Mortlake NSW 2137

Ph: 97363222

Institute for Horticultural

Ms Mandy Chew Private Bag 15

Ph; 0392109302

94

Company

Invited Attendee

Contact

Development South Eastern Mail Centre Victoria 3176

Institute for Horticultural Development

Dr Wendy Morgan Private Bag 15 South Eastern Mail Centre Victoria 3176

Ph; 0392109302

Kerry Ingredients

Mr Bill Cameron 7 Powers Road Seven Hills NSW 2147

Ph: 98389811 fax: 98389810

Lillyvale Mushrooms Pty Ltd

Ms Helen Woodward 30 Bingara Crescent Baulkham Hills NSW 2153

fax: 98388870 Ph: 96246000

Lillyvale Mushrooms Pty Ltd

Mr Phillip Woodward 30 Bingara Crescent Baulkham Hills NSW 2153

fax: 98388870 Ph: 96246000

Massell Pty Ltd

Mr Christopher Vorbach 1-17 Stanton Road Seven Hills NSW 2147

Ph: 96747999

MasterFoods Of Australia

Mr Bruce Perkins 4 Corella Close Wyong NSW 2259

Ph. 04389600

Mauri Foods

Mr Barry Parker 15 Grand Avenue Camellia NSW 2142

Ph: 96844000

NSW Ethnic Affairs Commission

Mr Paula Masselos 164 Liverpool Road Ashfield

Ph: 97162282

NSW ISO Ltd

Mr Peter Webster Suite 313 Henly Lawson Business Centre Birkenhead Point Drummoyne NSW 2047

Ph: 98197200

NSW Ethnic Affairs Commission

Mr Stepan Kerkyasharian 164 Liverpool Road Ashfield

Ph.: 97162200

Oriental Merchants

Mr Sam Yiu Ph.: 03

95

Company

Invited Attendee

Contact

70/422 Somerville Rd, Footscray Vic, 3012

92508166

Oriental Merchants

Ms Hanna Yiu 70/422 Somerville Rd, Footscray Vic, 3012

Ph.: 03 98779812

Perfect Fine Foods Aust Pty Ltd

Mr Bill Yao Factory 2 Drive Grove Keysborough VIC 3173

Ph: 03 97987611

Primary Industry Bank of Australia

Mr Daniel Kwan 7th Floor 115 Pitt Street Sydney NSW 2000

Ph: 92315655

Riviana Foods Pty Ltd

Mr Steve Weston Private Bag 50 Knoxfield Vic 3180 Australia

Ph: 0397643622


Mr Raymond Tsang 17 Enterprise Road Wetherill Park NSW 2164

Ph: 97251211


Mr Dean Ng 17 Enterprise Road Wetherill Park NSW 2164

Ph: 97251211


Mr Johnny Yip 17 Enterprise Road Wetherill Park NSW 2164

Ph: 97251211

Sam Remo

Mr Michael Cullinane 4 Boden Court Windsor Gardens NSW 5087

Ph: 0395436111

Simplot

Mr Andrew Logan Level 4 77 Parramatta Road Silverwater NSW 2128

Ph: 97357800

SPC Ltd

Ms Kathy Marmaras 3-9 Wrecklyn Street North Melbourne VIC 3165

Ph: 03 93213700 Fax: 0393213728

The Peninsular Group

Mr Cedric C K Wong Unit D9 11-15 Moxon Rd Punchbowl NSW 2196

Ph: 97963248

96

Company

Invited Attendee

Contact

The Peninsular Group

Mr Robert Black Unit D9 11-15 Moxon road PunchBowl NSW 2196

Ph: 97963248

Tixana Pty Ltd

Ms Carolyn Davies 17 Elizabeth Street Campsie NSW 2194

Ph: 02 97188255 fax: 02 9718 8772

Total Packaging Mr Michael Laurence 10 Sydenham Road Sydenham NSW 2100

Ph 99385166

University of Western Sydney

Mr M Khan Bourke Street Richmond NSW 2753

Ph: 045701359 fax: 45701383

Wheat Board

Ms Anna-Lisa Smith Sussex St Sydney NSW 2000

Ph: 0392092067

98

APPENDIX J BUSINESS PLAN FOR THE PRODUCTION OF INSTANT NOODLES BY

COMPANY Y

99

1. DESCRIPTION OF THE COMPANY AND ITS RATIONALE Company Y Enterprises Pty Ltd has three major shareholders: - One Enterprises Pty Ltd The architect of the concept name, responsible for sales, marketing and administration. - Two Kitchen Pty Ltd Manufacturers of frozen Italian foods for the catering industry. Providers of Company Y sauces. - Three Foods. Noodle manufacturers, Three Foods has the major interest (45%) with the others shares divided equally. Noodles are produced at a specialised noodle factory, 5000 sq ft, air conditioned and hygienically engineered to comply with stringent HACCP conditions. Sauces are prepared in Two’s factory which is set up to comply with standard HACCP. conditions. Both manufacturing units are working 8 hour shifts, 6 days a week. This is not always the case at Two’s where frozen needs are greatest during winter. Noodle production capacity is at 90% of 6 x 8 hr shifts at the factory and the Company’s immediate objectives have been achieved. This plan aims to develop a future strategic product development opportunities.

100

2 THE PRODUCT OR SERVICES OFFERED BY THE COMPANY Company Y as a brand was conceived August 1995 as the prospective means by which fresh fully cooked noodles could be marketed. Distribution of six varieties of fully cooked ready to eat noodles are now distributed through the Eastern Australian States and South Australia. The product range includes:

Hokkien Rice Ramen-Japanese Chow Mein Thin egg Laksa

The noodles sells from refrigerated cabinets of supermarkets. The success of Company Y has spawned wider ambitions, however the primary objective has been to establish the brand as the first, most reliable, premium quality, fully cooked, ‘Ready To Eat’ noodle available in Australia. Priority has been afforded to unique production methods and capacity of manufacture. Accordingly, a completely new food category has been developing around this Company Y’s brand of product. A range of complementary sauces sold fresh, are also marketed by Company Y. With rising consumer awareness and popularity for this convenience food, Company Y’s aspirations have broadened to encompass dry, long life noodles. Company Y 2 Minute Noodle Most 2 minutes Noodles are consumed as snacks. Research shows that noodles in the cup drive the eating regime since instant noodles were introduced into the market. Nestle acknowledges this in their advertising but are seeking to widen consumption habits by appealing to the family. Herein lies the opportunity to market well packaged premium quality noodles as a family food staple. The product It is planned to market 3 x 85g slabs including 3 dried vegetable sachets and 3 pouches of wet sauce. These units are to be contained in a plastic tray hermetically sealed and over -wrapped in foil with a graphics label. Retail product noodle weight is to be 255 gms and full unit pack weight including sauce and vegetables shall be 300gms. Position

101

The product will be sold as Company Y brand: Family pack or 2 single serves with fresh sauces and vegetables. Costing/Pricing ($)

Cost of manufacture 0.833

Overheads/Indirect costs .367

Ex Factory Price 1.20

Distribution cost 0.3

Wholesale price into store 1.50

Recommended Retail Price

$1.99

Potential Gross Margin

$0.49

102

3. MARKET SITUATION AND ANALYSIS There are many types of noodle products made from both wheat flour and rice flour. Wheat flour based noodles include Chinese noodles, wet and dry noodles, wet or boiled (Hokkien Style) noodles, steamed and dried noodles, Japanese or white noodles, and modern instant noodles. The instant noodle has become very popular in Australia, and continues to increase in popularity. The noodles are produced by kneading wheat flour, additives, salt and water together, and the resultant dough is passed through pairs of rollers of progressively finer clearance, after which the thin dough sheets are cut, steamed or fried and dried for packaging with a sachet of flavouring. Deep fried noodles can be made from a flour of lower protein content than raw noodles. Australia has a natural advantage for the availability and quality of existing exports of noodle wheats which are grown in Western Australia, Victoria and southern NSW. Major noodle wheat varieties include Cadoux, Eradu, Gamenya and Rosella. While multi-national groups such as Nestle with their Maggi brand have already demonstrated the commercial viability of the Australian manufacturing of noodles, this plan demonstrates the further opportunity for other groups to further develop the instant noodle market in Australia. The dry and fresh noodle market is estimated to have a market size of almost $100 million, and that this market has the potential to increase due to the growth in the Asian foods category in supermarkets. It is anticipated that a significant amount of this growth shall occur from the growth of the HMR market and the introduction of ‘instant noodle’ meals. It is difficult to forecast how far or how fast this noodle consumption will go. There is no doubt it is beginning to erode the established fresh pasta market which currently exceeds $100 million per annum, but dry noodles are having little or no impact on the dry pasta market. A key issue shall be the development of ‘instant noodle’ meals with accompanying products (eg, sauces and vegetables) which have a long shelf-life of up to 5 weeks.

103

Current Product Range- Noodle Only Wet Noodle Refrigerated Market size $4million Market Share Brand

Market Share %

Market Size $

Company Y

65

2,600,00 Noble house

7.5

300,000

Wok Stock

10

400,000 Other*

17.5

706,201

100

4,006,201 * No frills, South & West Australia and Tasmania In Company Y’s current circumstances fresh noodles can reach $5 millions turnover. Urgent forward planning is required as it is now believed $5 millions turnover will be reached by December 1998. Company Y 2 minute Noodle The dry, lightly fried , 2 minute noodle market is growing at over 12% per annum Current estimates (Source A.C. Nielsen) have the market size at $69,000,000 nationally with the market shares are as follows

%Retail

$M

Maggi (Nestle)

62.3

43.0 Other & House brands

12.4

8.6

Trident

11.8

8.1 Changs

6.8

4.7

Fantastic (San Remo)

6.7

4.6

100

$69.0

Company Y seeks to achieve a $6.9 million turnover in 2 years and $10 millions in 3 years. Company Y is reasonably well placed financially to grow to the next level however it is Company Y’s very strong view that it will need specific brand advertising in 1998 to establish Company Y’s premier position within the market. There are many “local”/”boutique” noodle makers in major capital cities evidenced by the preponderance of noodle bars popping up in major capital cities. They are all potential marketers, however Company Y has developed a competitive advantage with a product shelf-life of some 5 weeks.

104

4. THE FINANCIAL PLAN Company Y 2 Minute Noodle Financial projection for 2 years from commencement:

Year 1

Year 2

Revenue

6,900,000

10,000,000 Cost of goods

3,831,300

5,553,333

Trade

1,380,000

2,000,000 Overheads

1,304,100

1,890,000

Advertising

100,000

200,000 Net Profit

284,600

356,667

Overheads are calculated as follows: Item

% Costs

Sales Marketing Commission Marketing Costs Administration Merchandising Freight

5 2

2.6 3.8 1.5 4

Total

18.9

Projected Wet and Dry Noodle Revenue for Company Y

Year 1

Year 2

Revenue

10,103,438

15,000,000 Cost of goods

5,665,506

8,418,333

Trade

2,007,874

2,980,000 Overheads

1,816,192

2,690,000

Advertising

100,000

200,000 Net Profit

513,866

711,667

105

APPENDIX K

BUSINESS PLAN

OR THE PRODUCTION OF

OYSTER SAUCE

BY

COMPANY X

106

1. EXECUTIVE SUMMARY Company X is a major manufacturer of sauce products for main meal foods. It has some 6% market share in the oriental sauces retail sector (Retail World, 1996). Its products include products X X stir fry sauces, XY sauces and other products such as herbs and spices, mustards and canned beans under the X brand. Company X’s brand recognition and its manufacturing marketing resources provides Company X with a competitive advantage for the development of other sauces which shall extend their current range of oriental sauces. Greater potential business benefits may accrue if these new products can provide a basis for strategic export development into Asia. Sauces for Asian main meals is an existing product range for Company X and the opportunity to extend this range to include ‘Oyster Sauce’ for main meals and/or cooking is the subject of this business plan. The unique feature of the X Oyster sauce product shall be its development and positioning as a main meal sauce rather than as a condiment sauce only. All other oyster sauces are imported and are used essentially as condiments rather than as sauces for main meals. Sauces for main meals which target today’s busy lifestyle provides speed and convenience in the preparation of foods and is a demonstrably successful product strategy for Company X. 2 DESCRIPTION OF THE COMPANY AND ITS RATIONALE X is a world leader in each of its main business’s:

Branded snack foods Petcare Products. Main meal foods Electronic payment systems and Drink vending.

MX’s parent has annual sales in excess of US$13 billion with markets in over 100 countries and manufacturing facilities in more than 60 countries. The Australian operations of Company X includes a state-of-the-art manufacturing plant in Sydney. The plant has significant manufacturing capacity and currently manufactures for not only the Australian market, but also the export markets of Asia and South America. A key objective of Company X Australia is to focus on the strategic development of products for the Asian markets. The management structure of Company X reflects this objective. For example, it is noted that the Research and Development Manager has the joint responsibilities of product development and export development for Asia.

107

3 THE PRODUCT OR SERVICES OFFERED BY THE COMPANY Company X is a major manufacturer of sauce products for main meal foods. It has some 6% market share in the oriental sauces retail sector (Retail World, 1996). Its products include XX stir fry sauces, XY pasta sauces and other products such as herbs and spices, mustards and canned beans under the X brand. This manufacturing experience, and its existing distribution and marketing infrastructure for such sauce products provides Company X with a competitive advantage for the development of other sauces which shall extend the product range of their sauces. Greater potential business benefits may accrue if these new products can provide a basis for strategic export development into Asia. Sauces for Asian main meals is an existing product range for Company X and the opportunity to extend this range to ‘Oyster Sauce’ for main meals and/or cooking is the subject of this business plan. The oyster sauce product requires further developmental work in terms of: Formulation - Development of the product based upon liquification or rehydration of

‘oyster powder’ food ingredients. Taste Profile - Flavour, consistency, and other sensometric issues. Branding - X have major brand recognition and brand development strategies with X X

and other related products. The unique feature of the X Oyster sauce product shall be its taste, branding, retail market position and its potential to be recognised and utilised by both Asian and Australian consumers of Asian style foods. All other oyster sauces are imported and are used essentially as condiments rather than as sauces for main meals. Sauces for main meals which target today’s busy lifestyle provides speed and convenience in the preparation of foods and this is a demonstrably successful product strategy for Company X.

108

4. MARKET SITUATION AND ANALYSIS Situation Analysis ABS statistics (1996) show that imported sauces as a category (excluding soy and tomato sauces) are valued at $50.4 million and have been growing at an annual rate of 15.7% since 1994. Similarly in Retail World’s 1996 annual survey, it was estimated that the oriental sauces market in retail outlets was valued at $25.2 million pa, and was growing at an annual rate of 16%. Industry comments confirm that this rate is similar for oyster sauce specifically, and this is supported by the growing consumer market of non-Asian consumers who are developing the taste for Asian flavours and cuisine. The Oyster sauce market is currently dominated by four leading brands as shown by Table 1 below: Table 1 Leading Brands of Oyster Sauce in Australia Brand

Source

Target Market

Target Use

Lee Kum Kee Singapore/Malaysia

Asian Grocery Stores

Condiment

Maggi Malaysia

Supermarkets

Condiment

Ayam Malaysia Asian Grocery stores and supermarkets

Condiment

Kikkoman

Japan

Asian Grocery stores and supermarkets

Condiment

As Table 1 shows Lee Kum Kee is mainly distributed in Asian grocery/supermarket stores, Maggi is predominantly in the mainstream supermarkets whilst Ayam and Kikkoman are marketed in both. In all cases, the oyster sauce is marketed as a condiment rather than as a sauce for main meals.

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Market Size The total retail market size including Asian grocery stores for oyster sauce in Australia is estimated to be $5.5 million pa. The approximate market shares by brand are shown in Table 2 below: Table 2 Approximate Market Share for Oyster Sauce in Australia

Brand Estimated Market Size ($ Million)

Lee Kum Kee

3.0 Maggi

1.5

Ayam

0.5 Kikkoman

0.5

Total

5.5 Strategies and Competitive Advantages It is estimated that Company X has some 5.7% of the oriental sauces market in the retail (excluding Asian grocery stores) sector. Company X shall focus on complementing its existing range of oriental or Asian sauces for main meals with an ‘Oyster sauce for main meals’ targeted at both the main supermarkets and Asian grocery stores. Oyster sauce as a condiment can also form part of the product range. Company X has a well established distribution channel and a product range into the mainstream supermarkets and would focus its initial target on the mainstream supermarkets using an “Asian” look product. Based on Company X projections and market research of prices in the Asian stores, the product should be able to compete on price , subject to consumer acceptance of taste and the packaging is appealing to Asian and non-Asian consumers.

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Manufacturing The Company X plant has available capacity for the manufacture of food products of very high quality and standard. Flexible manufacturing scheduling allows the company to adopt a just-in-time or make-to-order approach that can assist with its existing marketing strategies for supermarkets and Asian food exports. While the company’s primary target is South East Asia, the Australian market and the Asian grocery stores provides the opportunity of a good testing ground especially for the Asian market. This focus can be based upon both the Asian food shelves in the mainstream supermarkets and the Asian grocery stores. The company has in the past attempted ‘scallop sauce’ for the Asian market which was not successful. However this experience shall be used in the development of a packaging and distribution model for the oyster sauce.

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5. THE FINANCIAL PLAN Plan for Oyster Sauce (Unit: 350 ml bottle) Projected Sales:

$900,000

Cost of manufacture $1.66

Overheads/Indirect costs/margins 0.67

Ex Factory Price 2.33

Distribution cost 0.17

Wholesale price into store $2.50 per unit

Recommended Retail Price

$3.33

Potential Gross Margin

0.83

Given the current philosophy of the company, the availability of raw material, capacity and technical expertise, the company no longer bases its production decisions on long term financial projections. Each transaction is evaluated on its merits and its returns. For examples based on direct comparisons in this case, Company X believes that they can produce a 350 ml bottle of oyster sauce at a direct into store cost (DIS) at $2.50 per bottle. Market survey results have indicated that on average the leading opposition products are priced at $3.00 DIS. Summary Financial Plans

Year 1

Year 2

Revenue

$900,000

$990,000 Cost of Manufacture

448,648

493,513

Overhead /indirect costs

181,080

199,189 Distribution Costs

45,956

50,540

Gross Profit

224,316

246,758

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6 PROMOTIONAL SUPPORT Company X currently has 30 full time field based sales associates, and over 400 part time merchandisers, who visit most supermarkets in Australia on a weekly basis. It is planned that this resource be utilised to help drive distribution and in store presence of the product. Like other Company X products, the Oyster Sauce can be demonstrated in store using the fully trained demonstration team which is used by Company X on weekly basis. Allowance has been built into the cost to allow in store promotional activity at a level similar to other Company X products such as price off deals, off location displays, shelf talkers, recipe cards and neck tags. Company X uses a 1800 toll free consumer telephone line on all it’s products to facilitate consumer feedback and service, and each product is supported by a full on label “Guarantee of Satisfaction”. It is planned that the Oyster Sauce will also carry this guarantee and toll free number. Based on forecast sales for the product of $900,000 annually, it is envisaged that the launch of this product be supported with a small scale media campaign probably using magazines.

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APPENDIX L BUSINESS PLAN FOR THE PRODUCTION OF CHAMPIGNONS BY COMPANY Z

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1 DESCRIPTION OF THE COMPANY AND ITS RATIONALE Company Z is an Australian-owned unlisted public company, established originally as the ZZ Coop in 1975. Since that time, the operation has undergone significant changes and today dominates the domestic market for Australian processed mushrooms. The Company Z division has also built significant business in the manufacture of salad dressings under private labels. The Jam division produces a range of products which includes jams, baker’s fillings, and honey. The Foods division manufactures and blends an extensive range of dry food products including soups, sauces, seasonings, boosters and herbs & spices. Each division in the Group produces for the industrial food market, food service market and retail market. Company Z operates from three sites; each site has achieved accreditation to the international quality standard ISO 9002, demonstrating the commitment of Company Z to quality and continuous improvement. A flexible approach to development, production and packaging ensures that Company Z is able to cater to the changing needs of its customers and the market in general. Ongoing commitment to quality, innovation and product diversification are the basis of Company Z’s continued growth in prominence in the food industry in Australia and beyond. Financial Summary The company turnover is $16 M p.a., and retail sales account for $6.2M (39%) of total sales. Canned mushrooms under both the Company Z and private/generic brands contribute 60% of the company’s retail sales. Company Z dominate the mushroom processing industry in Australia and process around 70% of all canned retail mushrooms.

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2 THE PRODUCT OR SERVICES OFFERED BY THE COMPANY Company Z Foods currently process and sell mushrooms in a variety of forms to the food service and retail markets in Australia and New Zealand, under the Company Z brand as well as under private label and generic brands. The company is focussed on a program of new product development over the next five years, with the primary focus being on new retail mushroom products. One of the products Company Z contract manufactures is Australian canned champignon, for distribution under a major Australian brand, in mainstream Australian supermarkets. There is an opportunity to re-package the product for the Asian supermarkets in Australia. In addition, the Foods division has expertise in sauce development, and has taken the opportunity to capitalise on the growing Asian food trend, by working closely with a local Asian company to develop and produce a range of six authentic Asian sauces and seasonings to be sold in retail markets overseas and in the Australian market. The sauces were developed over a period of two years, and considerable effort went into carefully re-creating authentic Asian flavours, using specially imported ingredients. Samples have been produced for presentation to potential customers in countries including China, Hong Kong, Canada, USA, and Chile. The next step is to determine the opportunities for the product range in the Australian retail market. Objective The objective is to pack champignons under the Company Z brand, in 425g and 220g cans, and target the product for distribution into Asian supermarkets in Australia. Product description A-grade button mushroom, processed in brine. The point of difference over imported champignons is greatly superior flavour. The flavour of the mushroom is evident, as opposed to champignons which provide the texture and colour of mushrooms, but with only a salty flavour. The product will be priced at a premium compared to imported products. The product is Australian, and Company Z is ISO accredited, so there is a greater assurance of quality, compared to imported products. The benefit to Asian distributors in Australia is that they can deal more easily with a local supplier.

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Pricing Product

220g x 12 ctn

220g x 24/ctn

425g x 12 ctn

Cost of manufacture 15.58

30.11

27.95

Overheads/indirect cost included

included

included

Distribution cost 5%

5%

5%

Wholesale price into store 20.75

40.15

37.25

Rec. Retail Price $27.67 / ctn (12 x $2.30)

$53.53 (24 x $2.23)

$49.67 (12 x $4.13)

Potential Gross Margin 25%

25%

25%

3. MARKET SITUATION AND ANALYSIS According to Retail World 1996 report on supermarkets lists the canned champignon market size at $10.3 million. It is estimated the Asian grocery stores represent another $ 5 - 8 million Strategy In view of the fact that Company Z is already packaging for a major Australian brand for the mainstream supermarket, an opportunity exists for Company Z to develop packaging appropriate to the Asian supermarkets, and to present the product to Asian distributors, along with a range of Asian sauces and seasonings. A program of promotion and product sampling will be conducted in-store to demonstrate the superior flavour of the product to consumers. This market segment can be used as a test bed for the Asian market leading to export opportunities into Asia. Competitive Scenario Imported champignons available on the retail market are sourced from India, China and Indonesia. They are available in a range of sizes, including 425g and 220g cans. Competitor Brands (in Asian supermarkets) The market is saturated with a wide variety of imported mushrooms which sell primarily on price (in non-Asian supermarkets). It is considered that the product quality is inferior, in terms of flavour, to the proposed Company Z champignons. Currently there are no Australian produced champignons available through Asian supermarkets. The competitor brands and source are as follows:

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IV. Narcissus - China V. Weitram - Taiwan VI. Valcom - Thailand 4. THE FINANCIAL PLAN Based on the market size and the feedback from Asian distributors it is estimated that Company Z should be able to capture about 5-8 % share of the Asian grocery store market during the first year of launch.

Year 1

Year 2

Revenue

250,000

400,000 Cost of Goods

139,750

223,600

Distribution

125,000

200,000 Trade costs/advertising

35,250

56,400

Gross Profit

62,500

100,000 5. THE IMPLEMENTATION PLAN Given the existing production capacity of Company Z and the availability of supplies, Company Z’s is in a position to produce commercial samples within a week of expressions of interest, subject to artwork which may take 4-8 weeks. For normal production we should allow 1-2 weeks for incubation of the canned product for quality assurance. Taste samples, without labelling, can be delivered within days from an order.

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REFERENCES REFERENCES REFERENCES BIS Shrapnel (1997) - The Australian Food Service Market Department of Primary Industries - Innovate Australia and Energy (1994) Outcomes of the National Consultation Program

Report for Senator the Hon. Peter Cook Minister for Industry, Science and Technology

Instate Pty Ltd (1995) - Corporate Strategies and Structures Penetrating Asian Markets - A Strategic

Perspective Rural Industries Research and Development

Corporation Research Paper No.95/7 Retail World (1996) - Annual Report, December 1996 Retail World (1997) - Various issues, March - October, 1997 Ripe, C (1993) - Goodbye Culinary Cringe, Allen and Unwin 1993 RIRDC (1996) - Australian Asian Vegetables - An Assessment of

Market Demand in Australia Rural Industries Research and Development

Corporation Research Paper No. 96/7 RIRDC (1994) - Asian Food in Australia - Getting a Bigger Bite

Rural Industries Research and Development Corporation Research Paper No. 94/5

Rolls E, (1992) - Sojourners

Flowers and the Wide Sea Macmillin Press

Vinning G, (1993) - Asian Food - Market Trends and Prospects

Report for Rural Industries Research & Development Corporation. Research Paper 93/3

Vinning G, (1995) - Compendium of Asian Vegetables

Report for Rural Industries Research & Development Corporation, Research Paper 95/12

Wells I, (1993) - Soy Sauce Product Development Study

Qld Dept of Primary Industries 1993

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