Food for thought

14 June 2012

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Food and beverage CEOs reveal an industry on the cusp of change.

The Australian food and beverage industry is the largest retail and manufacturing sector in Australia. The opinion of this industry’s company CEOs give us unique insight into the challenges and opportunities it faces moving forward. This survey, carried out by Grant Thornton Australia, is indeed something to blog about.

Working in collaboration with Monash University and the Australian Food and Grocery Council, Grant Thornton surveyed 82 of Australia’s food and beverage CEO’s on important operations and strategy issues including, financial performance, industry competiveness, supply chain strategy, technological innovation, government regulations and future outlook.

“Our survey of food and beverage CEOs reveals an industry in relatively healthy shape but on the cusp of substantial change.” states Tony Pititto, National Industry Leader-Food & Beverage for Grant Thornton Australia, in the opening paragraph of their recently published ‘Food for thought’ report.

He goes on to say, “There is broad optimism about the future, tempered with a realisation that mergers and acquisitions (M&A) are likely to refashion the industry landscape.” The report shows how, on balance, CEO’s expect M&A activity to continue with only 25% not considering M&A activity over the next two years.

Many smaller companies, currently struggling to find the funds to spend on R&D and product innovation, will become less profitable and vulnerable to being taken over.

They are also being squeezed by larger competitors who are outgunning them on either brand exposure or price. That being said, there will always be room for agile, niche players to make their stand in a landscape dominated by large brands and supermarkets.

Other key findings of the report include:

  • Companies are in saving mode with 82% of respondents expecting to fund future revenue growth through either internally generated funds or existing debt lines.
  • 70% expect production volume in Australia to increase over the next two years.
  • 94% expect per unit manufacturing costs to rise across all inputs.

The keys to successfully surviving and thriving in the near future are focused around having a drive to reinvent, innovate, embrace new routes to market and maintain investment in new product development.

This report is aptly named and offers an industry snapshot which embraces the reality of the world’s shaky financial situation yet refuses to be arbitrarily restricted or reduced by it. Sure, you have to be smart, quick to adapt, know your competition and micro-manage your money, but when in business has this ever not been the case. 

The survey’s results, collated and presented in easy-to-digest charts and stat-driven statements unveils an industry full of commitment, courage and optimism with a view to building the kind of future everyone can prosper in.

Read the Food for thought report in full now.