PMA share of wholesale fruit and vegetable market Commercial and in confidence for Perth Market Authority www. freshlogic.com.au Perth Market Authority: Assess and define the Perth Market share of the wholesale fruit and vegetable market April 2012 – Final Prepared by Freshlogic Martin Kneebone, Director Phone: +613 9818 1588; Mobile: +61 418 372 988 Email: [email protected]Level 3, 192B Burwood Road Hawthorn, VIC - 3122 Melbourne, Australia
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PMA share of wholesale fruit and vegetable market
Commercial and in confidence for Perth Market Authority www. freshlogic.com.au
Page 2 Commercial and in confidence for Perth Market Authority www.freshlogic.com.au Final
Executive summary
This project has collated the best available information to map and define the
wholesale market share held by tenants operating on the Market City site
operated by the Perth Market Authority (PMA). The analysis was undertaken for
the year ending 30 June 2011.
The wholesale market was quantified as $908.9m and the PMA share as 49% of
the volume and 66% of the value of externally traded product. This is despite the
two largest supermarket buyers operating from facilities outside the PMA. This
level of share is deemed to leave the PMA able to assert some influence on the
WA fruit and vegetable market.
There are a number of pressures on the local supply chain which reflect long-term
changes in market structure and in some instances, tactical pressure on market
segments that support the PMA. These pressures invite some influences on the
PMA investment agenda.
Below is a summary of key implications for the PMA, resulting from the analysis
outputs outlined in the following pages.
Key Implications Page
→ The retail channel dominates the distribution of fresh fruit and
vegetables.
7
→ There is a substantial level of internal trade between the PMA
tenants.
7
→ There is a substantial level of value added trading in the wholesale
market place that reflects that at times, wholesalers are selling a
bundle of product and services.
7
→ The majority of investments in central market facilities are driven
by tenants’ needs and involve aspects of the handling
infrastructure. It appears that the sum impact of these
developments, on the central markets capacity to compete as a
wholesale option, has not been considered.
8
→ There are a range of pressures on the WA fresh fruit and vegetable
supply chain that span from changing structure to sharp tactical
trading pressure on PMA users. Most pressures have the
momentum to evolve on their own and some combine to put sharp
pressure on some market segments. All indications are that PMA
can take some actions to complement how fruit and vegetable
market stakeholders deal with these pressures and/or exploit the
apparent opportunities.
11
→ Greengrocers and fruiterers remain an important distribution
channel to consumers and are valued by consumers for their
quality, range, location, and pricing benefits. These are a
defendable set of advantages that will be tested by changes in
retail trading hours that will allow competing supermarkets.
14
→ The high frequency of top-up shops and increasing demand for
convenience (including part processed products) represent a market
opportunity for smaller portioned product and high-service levels.
Infrastructure development should ideally incorporate facilities that
would support this growth area.
14
→ Despite the fact that a proportion of total food spend dedicated to
eating out is lower than it was two years ago, the foodservice
sector remains an important channel that has a long-term need for
the core services which fruit and vegetable wholesalers provide.
14
PMA share of wholesale fruit and vegetable market
Page 3 Commercial and in confidence for Perth Market Authority www.freshlogic.com.au Final
Project overview
The project assesses the share of the wholesale fruit and vegetable market held
by Perth Market Authority, within the state-wide market of Western Australia.
The components of our approach include:
� Quantify the volumes and values of product supplied into the Perth region
and define the volumes consumed by all distribution channels in all forms.
� Confer with the PMA and key stakeholders on the data they have
available that can be used to quantify their product volumes.
� Reconcile total market size with Mealpulse™ household and foodservice
consumption and THRUchain™ market model benchmarks.
� Calculate the PMA wholesale market share with a method that can be
replicated at a later point in time.
� Identify key changes/trends in overall value chain operations.
� Prepare a concise summary report that includes a methodology for a
repeat of this measurement at a later point in time.
Market model methodology profile
Assumptions:
To arrive at market share, there is a need to define the market in which PMA
operates. This is defined below as the products sold and the distribution channels
serviced. The diagram below profiles how the model has collated and reconciled
data from both ends of the supply chain.
Products sold:
• Fresh whole fruit and vegetables in their harvested from.
• Minimally processed fruit and vegetables that maintain a fresh chilled
shelf life.
Distribution channels serviced (F&V products = “product sold” as defined above):
• WA-based retailers of fruit and vegetable products.
• WA-based foodservice buyers of fresh or minimally processed fruit and
vegetables.
• WA-based wholesalers of fruit and vegetable products who operate as
further processors or in a break-to-sell mode, where they buy in large
Total
supply
WA production
Imports International
Imports Interstate
Retail
Food Service
Exports international
Wholesale
demand
Exports interstate
*
*
*
*
PMA
data
PMA
share
Model framework - A reconciliation of supply & demand
* = higher data accuracy
PMA share of wholesale fruit and vegetable market
Page 4 Commercial and in confidence for Perth Market Authority www.freshlogic.com.au Final
quantities (pallets lots) and sell in smaller quantities (cartons or individual
pieces).
• International or interstate sellers of fruit and vegetable products into the
WA market.
• International or interstate export market buyers of WA-produced fruit and
vegetable products.
Volume supplied and purchased:
• The project has been based on a THRUchain™ analysis of the WA fruit and
vegetable supply chain, identifying the value and volume flows, from
source/production through the wholesale channels to the retail and
foodservice channels to the household.
• WA production volumes were defined using best available data. The
primary sources of data used were Ag Produce Commission, DFAT import
export data, and ABS/ABARE data.
• Wholesale demand was modelled based on market intelligence of retail
outlet sales of supermarkets, specialist greengrocers/markets, and other
retailers. The value of the annual of sales in the retail channel reconciles
with the Mealpulse™ panel data household spend on fruit and vegetables.
Market intelligence was provided from industry sources for foodservice
purchase volumes and values.
• All volumes are reconciled through the WA supply chain from production
through to the distribution channel at a product level. Where the WA
production plus imports was above WA wholesale volumes, it led to
assumptions on interstate exports. Similarly, where WA production less
international exports was lower than WA wholesale volumes, it led to
assumptions on interstate imports. Where these assumptions were
formed, activity in these categories was confirmed through wholesale
market data that revealed product origin.
• All PMA-based tenant sales included PMA share.
Distribution Channel outlet numbers:
• The following table specifies the assumed outlet numbers by sub-channel.
The summary share chart on the following page profiles the outputs from the
analysis and can be summarised as:
• Total supply of 468,416 tonnes.
• Total WA consumption, being retail and foodservice, of 383,268 tonnes.
• Total exports of 85,148 tonnes, of which 75% is international and within
that, 54,179 tonnes are carrots.
• The PMA share of external traded for the wholesale volume is 49% and
wholesale value is 66%. Note that this assumes that PMA is operating as a
wholesale option for all product supplied into and out of the WA market,
including exports.
Source: FOODmap & Freshlogic analysis
PMA share of wholesale fruit and vegetable market
Page 5 Commercial and in confidence for Perth Market Authority www.freshlogic.com.au Final
Perth Market Authority - WA wholesale fruit and vegetable market size & share
This section defines the supply chain in which the Perth Market Authority (PMA) operates and the distribution channels that acquire fresh fruit and vegetables. It profiles the
volumes that flow from total supply into these distribution channels and the PMA share of the wholesale market interface. The diagram below is based on external trade
volumes and shows the PMA wholesale market share at 49% of volume and 66% of market value.
Foodservice62,041 t 13%
Retail
Distribution Channels
468,416 t
Production
376,025 t
Imports
Imports International
12,269 t
Imports Interstate
80,122 t
63,741 t
468,416 t
WA Fresh Fruit & Vegetable Supply
$908.9 M
468,416 t229,770 t
$908.9 M $595.5 M
49%
66%
Total
WholesaleTotal PMA
PMA
Share
WA Wholesale Fresh Fruit & Vegetable Market
Central Trading Agent 199,720 t 43%
Secondary Wholesaler
Inside PMA30,050 t 6%
Secondary Wholesaler
Outside Perth 22,380 t 5%
Other Wholesale
Outside PMA
(Including direct &
export)
216,266 t 46%
21,407 t
Total wholesale
product purchased by
distribution channels
WA Supply
321,227 t 68%
Exports
International
Exports
Interstate
14%
5%
Volume T
Value $
External Trade
Total External Trade 468,416 t
$1.27B
Retail market
value
85%
Carrots
Source: Freshlogic analysis
PMA share of wholesale fruit and vegetable market
Page 6 Commercial and in confidence for Perth Market Authority www.freshlogic.com.au Final
The diagram below identifies and profiles the volume of value added (internal) trade undertaken by both PMA tenants and other wholesalers. The PMA wholesale market
share is maintained at 49% of volumes and 66% of market value when all the value added trade for the whole market is taken into account. The volumes of this added value
trade is identified in the chart below and explained on the following page.
Source: Freshlogic analysis
Foodservice62,041 t 13%
Retail
Distribution Channels
468,416 t
Production
376,025 t
Imports
Imports International
12,269 t
Imports Interstate
80,122 t
63,741 t
468,416 t
WA Fresh Fruit & Vegetable Supply
$908.9 M
545,916 t267,270 t
$908.9 M $595.5 M
49%
66%
Total
WholesaleTotal PMA
PMA
Share
WA Wholesale Fresh Fruit & Vegetable Market
Central Trading Agent 199,720 t 43%
Secondary Wholesaler
Inside PMA30,050 t 6%
Secondary Wholesaler
Outside Perth 22,380 t 5%
Other Wholesale
Outside PMA
(Including direct &
export)
216,266 t 46%
21,407 t
Total wholesale
product purchased by
distribution channels
WA Supply
321,227 t 68%
Exports
International
Exports
Interstate
14%
5%
Volume T
Value $
37,500 t
External TradeValue Added
Trade
Total External Trade 468,416 t
$1.27B
Retail market
value
85%
Carrots
This internal trade is considered valid distribution and
occurs in a number of circumstances explained on the
following page
40,000 t
PMA share of wholesale fruit and vegetable market
Page 7 Commercial and in confidence for Perth Market Authority www.freshlogic.com.au Final
Adding Value Trading
This value adding occurs in a number of circumstances and is essentially driven by
the efficiency of wholesalers, buyers and sellers specialising in what they do and
employing the services of others to support their needs. These activities are
assessed as market efficiencies, and reflect that PMA tenants and other
wholesalers are selling services as well as products.
In these instances product is traded more than once in the wholesale market
before it is sold to the last distributor.
The situations where this added value trading occurs include;
• A buyer organising for a selected wholesaler to buy, consolidate and deliver all
their requirements. In this instance the wholesaler will need to source product
of other wholesalers.
• A wholesaler importing a large freight efficient semi load quantities and once it
is delivered, selling pallet or carton quantities to other wholesalers.
• A wholesaler specialising in the sourcing and or conditioning/ripening of a
product, which leaves that wholesaler with unique investments and product
expertise. Other wholesalers have not made that investment or hold that level
of expertise, will buy product from the specialist wholesaler to meet their
buyer’s needs.
• A grower appointing a wholesaler to manage the marketing of a complete
crop. This creates situations where some of the crop is sold to other
wholesalers for the likes of prepacking and or sale in broken carton quantities
to smaller buyers.
These types of trades are common and efficient ways of distributing fruit and
vegetable products, as it is not feasible for all wholesalers to be primary sourcing
agents, for all types of fruit & vegetable products. Equally it is not efficient for
every buyer to trade with every wholesaler to buy what they need.
Notes:
1. Sales of non-fruit and vegetables, including eggs and honey etc., are
valued at $12 million, and are excluded from PMA wholesaler sales.
2. Allowances have been made for wholesale sales not captured in available
wholesale trading data.
3. Banana volumes and values have been normalised to remove the price
spike caused by cyclone damage in the March to June 2011, which was in
the year under review.
4. There is a level of “added value trading” where product is sold more than
once before being sold to the final distributor. It is estimated at 87,500 in
volume or 14% of the total wholesale market external sales.
5. Sales to fresh processors (GSF and Harvest Fresh Cuts) are transacted by
all wholesale options.
6. All export sales are included in the definition of the wholesale market and
PMA tenants engage in some export activity. If these sales were excluded
from this assessment it would serve to increase PMA market share by 6.0%
7. This assessment is based on the year ending June 2011.
Key implications for Perth Market Authority
→ The retail channel dominates the distribution of fresh fruit and vegetables.
→ There is a substantial level of value added trading in the wholesale market
place that reflects that at times, wholesalers are selling a bundle of product
and services.
→ The share levels held by the PMA are substantive enough for it to be an
influence on the Perth Fruit and Vegetable market.
PMA share of wholesale fruit and vegetable market
Page 8 Commercial and in confidence for Perth Market Authority www.freshlogic.com.au Final
Other central markets
This section provides analysis of the trends in the usage of other central markets
within Australia by producers, wholesaler/distributors, and commercial buyers
trading in fruit and vegetables. Some these trends are echoed in the section of this
report that profiles supply chain pressure points.
Settings
Factors that influence the development agenda of central markets:
• Availability and proximity of alternative real estate:
o Can weaken the position of the central market where lower cost options
within close proximity provide a competitive alternative to positions
available within the markets.
o Can also strengthen the role of the market where operators would not
otherwise take a position within the market, but are attracted by the
opportunity to be within close proximity to wholesaler buyers and to
capture logistical efficiencies.
• Location of full-service supermarket distribution centre: That is if a full-
service supermarket or large independent supermarket distribution centre has
established itself within close proximity or within the market. If these buyers
have established elsewhere with new facilities, it is a long-term challenging
task to attract these larger buyers back to facilities in the wholesale market.
The location of these facilities also flows onto to make the buyers for these
operations available. If these buyers are in the market, they will be exposed to
available product and are more likely to buy other product. The volume share
held by the major supermarkets essentially frames their capacity to receive
product and capture logistical efficiencies on their own.
• Transportation and logistics infrastructure: The location, efficiencies, size of
facilities of transportation, and logistics infrastructure. This includes major
transport routes, logistical facilities that go to the core of the market being the
most efficient logistical hub for the market being serviced. If this advantage is
maintained, it provides a platform for other development.
• Trends within the food market including: The share between retail and
foodservice, demand for pre-cut product, and minimal processed product.
• The location of supply sources, as produce that travels longer distance is
more likely to align with central markets to capture logistical efficiencies.
• The proportion of imported product being supplied into a market. This is
relevant as imported product will typically be more consistent graded and
therefore have less quality issues and be likely to use a logistical hub that
makes it possible to travel direct to larger buyers.
• Existence of supporting services: retail markets, technical training facilities,
commercial premises, and other services, which impart attractiveness to both
businesses and their employees.
• Supporting facilities for export and import, particularly regarding biosecurity
requirements.
• Available adjacent and appropriately zoned land, which directly impacts on
competing alternative locations.
• Increasing awareness by producers and wholesalers that some exposure to
the greengrocers and foodservice buyers is needed to diffuse the risk of total
dependence on the supermarkets. This is reflected in decisions by the top-tier
of wholesalers to maintain a presence in the central markets.
• Increasing wholesaler investment in production operations in order to secure
availability of quality product. This is strengthening the role of these
intermediaries who are core tenants for central markets.
Development agenda – key issues across other markets
The common features of the developments in other Australian central markets
include:
• The operation of weekend markets to utilise site facilities, which at times
has led to site-specific enhancements to accommodate this activity.
PMA share of wholesale fruit and vegetable market
Page 9 Commercial and in confidence for Perth Market Authority www.freshlogic.com.au Final
• Capacity to accommodate foodservice processing and capacity to
accommodate “retail ready” (often prepacked or portioned) processing of
product.
• Warehouse handling facilities where market purchases are consolidated
into retail- or foodservice store-based orders. These operations have
peaks in space requirements, which occur when customer orders are
compiled before they are loaded onto transport.
• The addition of storage facilities that are predominantly catering for
storage windows of 1 -3 days.
• The addition of ripening facilities, which are a higher value-adding service,
that generate a price premium and ideally need to be provided as close to
the buyers as possible to minimise handling damage.
• Investments in road entry and exits to make it easier and more attractive
to carriers. This has included consideration of freeway access that leads
to the market site.
• Covered areas where cover is not already in place to protect product
quality.
• What could be considered normal building replacement due to age and
deterioration, with these rebuilds typically involving improved cover and
cold storage facility.
• Marketing support programs for the greengrocer and/or fruiterers
serviced by central markets as these customer groups are viewed as long-
term supporters of fresh central markets.
• In other develop markets, some central markets facilities have evolved
into specialist suppliers to the foodservice sector. This evolution has seen
product ranges broaden beyond fruit and vegetables to other specialist
foods and the introduction of high levels of service.
Key implications for Perth Market Authority
→ The majority of investments in central market facilities are driven by tenants’
needs and involve aspects of the handling infrastructure. It appears that the
sum impact of these developments, on the central markets capacity to
compete as a wholesale option, has not been considered.
PMA share of wholesale fruit and vegetable market
Page 10 Commercial and in confidence for Perth Market Authority www.freshlogic.com.au Final
Fruit and vegetable supply chain pressure points
This section provides an analysis of pressure points, trends, and drivers of wholesale fruit and vegetable market share in the Perth region, including consumer purchasing
preferences. This perspective is used to profile all levels of pressure and in particular, to better understand their potential sum impact if and where they combine. It also
profiles the pressure being felt by stakeholders that are critical to the operation of facilities by the Perth Markets.
The diagram below outlines a series of pressure points applicable to the Western Australia fruit and vegetable supply chain. These issues are discussed further below and are
extended to include implications for PMA.
Production
Fresh Processing
Export
Import
Wholesale
QA and food safety
system requirements
Market dynamics
have changed Intense retail competition
Increasing influence
of production input
providers
Increased supply
volumes
Increased imports from
overseas and interstate
Retail trading
hours deregulationRetail
Foodservice
QSR
National buying
decisions
RPCs are used
Growth in new channels
The dining out foodservice
channels arresting decline
Demand for controlled
portion size
Challenges to
export sales
Source: Freshlogic analysis
PMA share of wholesale fruit and vegetable market
Page 11 Commercial and in confidence for Perth Market Authority www.freshlogic.com.au Final
Pressure points on the wholesale fruit and vegetable market Implications for Perth Market Authority and tenants
Market structures have changed, in particular with respect to the number of growers and the
level of consolidation in the retail channel. These factors have combined to change what many
sellers and buyers now require.
Of significance is the fact that larger buyers can now deal with larger growers, and there is less
need for numerous growers to have a venue to interface with numerous buyers.
• Market structures have evolved to reduce the core needs of the
central market to (a) facilitate the meeting of large numbers sellers
and buyers and (b) provide a logistical hub for product assessment and
the physical transfer of product.
• A reduction in the number of sellers and buyers has reduced the value
that PMA can add to this supply chain.
Increased supply volumes as investments in R&D have flowed on to deliver incremental
growth in production output. In a market that sets prices based on volumes, this has created
increased pressure on prices and returns to all enterprises in the supply chain.
• If production volumes continue to increase, grower returns are likely
to be lower and there will be at least a short-term need for a facility
that can find buyers for that product.
Increased imports from overseas and interstate look set to continue and biosecurity
restrictions are lifted. This will provide quantities of consistent quality product and some
opportunities and threats for wholesalers. These supply lines will be easier for the major
buyers to link in with; conversely these same buyers have shown a tendency to use wholesalers
as brokers, to source these products, and in doing so take responsible for product quality.
• Increases in imported volumes will increase the scope for larger buyers
to deal direct. It will create opportunities for wholesalers to provide
brokerage services.
• This will be disruptive and challenging for local growers production
schedules as some interstate trading is dependent on eastern states
supply availability and prices.
Challenges to export sales, due to the high $AUD, cost factors, and seasonal window
limitations as storage technologies extend seasons.
• Pressure on international export sales could result in more products
flowing into the domestic market.
QA and food safety system requirements from major supermarket buyers have evolved into
standard practice. This has tightened and narrowed product grade standards as supermarkets
screen harder to reduce waste and has increased servicing costs and created barriers for those
without the required accreditation and facilities.
• These practices have locked in the use of wholesalers as intermediaries
in some products, where their screening function is required.
• It has also created a need for ways to sell product that is not up to the
grade the supermarkets specify. The wholesale market venue is the
only viable option for this grade of product.
Increased influence by production input providers such as seed suppliers and other input
providers have set out to support their investments in R&D by becoming increasingly involved
in how their end product is marketed.
• This has led to higher levels of more organised product management,
reflected in planned production volumes and defined distribution
plans.
• Where this influence is applied, it is creating greater alignment in
supply chains and typically, involves engagement with selected
wholesalers and larger buyers.
PMA share of wholesale fruit and vegetable market
Page 12 Commercial and in confidence for Perth Market Authority www.freshlogic.com.au Final
Pressure points on the wholesale fruit and vegetable market Implications for Perth Market Authority and tenants
National buying decisions, typically executed as part of supermarket national category plans,
are removing the autonomy of some local state buyers.
• This trend can draw volumes away from PMA trading floors and/or
channel through the national wholesaler networks which have market
representation.
• It also leaves the national category managers exposed in that they may
be unable to take advantage of local flushes of the product.
RPCs are used in WA and this locks in the need for a system to manage returns. • The return depot function for the RPCs is a natural central market
function.
Retail trading hours deregulation for specialty retailers who have previously had sole access to
7-day trading hours in some regions.
• The expansion of Sunday trading will see speciality retailers face
increased competition. It will also see major retailers seeking increased
volumes to cover the additional trading hours.
Intense retail competition between the major supermarkets. • The role of greengrocer/fruiterer, who will source 100% of the product
they require, is under pressure as a result of intense “price”
competition between the two supermarkets.
The growth of new channels including home delivery/internet offers, e.g. Aussie Farmers
Direct, Fruit Box, as well as meals offers like Jenny Craig and Lite ‘N Easy, has strengthened,
challenging growth opportunities for existing retailers.
• There are opportunities to improve market share by establishing links
with these evolving alternative channels.
Demand for controlled portion size is a key priority for some consumers who are shopping
more often and less inclined to plan ahead. Fruit and vegetable products need to be in a form
that suits the smaller top-up shops and that same quantity needs to be used before it turns
into home waste.
• There may be opportunities for PMA to enable some minimal
processing on the PMA site to meet the demand for smaller portions.
The dining-out foodservice channels are arresting a declining sales trend after losing market
share as consumers switched to retail food and traded down in the food outlets they
supported when eating out. These buyers, with their typical requirements for high servicing
and “by piece” purchasing, need the flexibility of the market to source their varied stock
requirements.
• Foodservice buyers are core customers as they purchase a wide range
of products in varied quantities that require the coordination of an
intermediary.
� Key Implication: There are a range of pressures on the WA fresh fruit and vegetable supply chain that span from changing structure to sharp tactical trading pressure
on PMA users. Most pressures have the momentum to evolve on their own and some combine to put sharp pressure on some market segments. All indications are
that PMA can take some actions to complement how fruit and vegetable market stakeholders deal with these pressures and/or exploit the apparent opportunities.
PMA share of wholesale fruit and vegetable market
Page 13 Commercial and in confidence for Perth Market Authority www.freshlogic.com.au Final – Apr 12
Consumption and shopping trends
This section covers some of the key consumer trends that can impact the food
market and are of higher relevance to the PMA.
Channel share under pressure
Strong retail competition has seen greengrocers/fruiterers lose market share over
the past year. This is true for purchases of fruit and vegetables. While there are
differences between trends occurring nationally and in WA, the key message is
that greengrocers and fruiterers are under increasing pressure as a result of the
price-based competitive intensity driven by the two large supermarkets.
While value remains a key driver of consumer behaviour, shoppers still appreciate
many of the benefits offered by greengrocers and fruiterers. In particular,
specialist retailers remain popular with shoppers who are less sensitive to cost.
The chart below highlights some of the competitive advantages held by specialists,
which include better range and quality, lower regular prices, and handy location.
These are a strong and defendable set of advantages.
Shopping behaviour
Households are shopping an average of 3-4 times a week. Over the last year, there
has been growth in the number of trips made per week – meaning many shoppers
are undertaking smaller, but more frequent shopping trips. This reflects lifestyle
patterns and changes in the way households plan and prepare meals, with fewer
households planning out the week’s meals in advance.
Source: Mealpulse™ Food panel
Source: Mealpulse™ Food panel
PMA share of wholesale fruit and vegetable market
Page 14 Commercial and in confidence for Perth Market Authority www.freshlogic.com.au Final – Apr 12
At present 65% of all shopping trips are “top-up” shops. These trips typically
involve a basket, which amount to an average of $45 in value and include 9-12
items.
The other 35% of shops are the “main” shop. Here a trolley is used and they
amount typically an average of $175 in value and include 42-50 items.
The simple, yet critical, issue that impacts fruit and vegetables is the suitability of
the product for purchase in a top-up shop. If a product is not suitable, because it is
too large or heavy, then it is restricted to being purchased on the less frequent
main shop. Products that are of a convenient portion size and lend themselves to
easy preparation are more likely to be purchased during a top-up shop.
Premiums for convenience
Freshlogic research indicates that customers are willing to pay a premium for
convenience – this may include products that offer meal-ready attributes, are
part-processed, or packed in a portion size that suite their household.
Further, many foodservice operators are also looking for convenience where it
helps reduce time and costs associated with onsite preparation and enables them
to provide consistent and timely food to the consumer.
The demand for convenience represents an opportunity for growers and
processors to incorporate greater convenience attributes into their products.
Weekly food spend
Over the past 2-3 years, there has been a change in shopper behaviour, which
reflects the difficult economic conditions (GFC) and has led to a desire by many
households to cut back on discretionary spending in favour of increased savings.
As a proportion of total food spending over a week, take home (retail) food
purchases have made up an increasing share as households cut back on eating
out. However, this trend stabilised in mid-2011, possibly a reflection that shoppers
are comfortable with the level of value they are currently receiving and that
eating out from time-to-time is considered an affordable treat for many