IN-PROGRESS REVIEW DRAFT - Agriculture and Food...Food Western Australia (DAFWA), with funding...
Transcript of IN-PROGRESS REVIEW DRAFT - Agriculture and Food...Food Western Australia (DAFWA), with funding...
TARGET MARKET OPPORTUNITIES IN ASIA FOR FRESH APPLES Part of Asia Market Success, April 2016
IN-PROGRESS REVIEW DRAFT Pre-release copy of significant commercial value to industry Document contains incomplete & in-progress research for comment For named reviewer/firm only; do not duplicate or distribute
RECIPIENT
FIRM
IINNHHEERREENNTT LLIIMMIITTAATTIIOONNSS This work was commissioned by the Department of Agriculture and Food Western Australia (DAFWA), with funding through the State Government’s Royalties for Regions program and prepared by Coriolis. This work is based on secondary market research, analysis of information available or provided to Coriolis by our client, and a range of interviews with industry participants and industry experts. Coriolis have not independently verified this information and make no representation or warranty, express or implied, that such information is accurate or complete. Projected market information, analyses and conclusions contained herein are based (unless sourced otherwise) on the information described above and on Coriolis’ judgement, and should not be construed as definitive forecasts or guarantees of future performance or results. Neither Coriolis nor its officers, directors, shareholders, employees or agents accept any responsibility or liability to readers or recipients of this report other than DAFWA or people other than DAFWA who rely upon it (described below as Recipients) with respect to this document. Coriolis wishes to draw Recipients’ attention to the following limitations of the Coriolis document “Target Market Opportunities in Asia for the Western Australian Premium Products” (the Coriolis Document) including any accompanying presentation, appendices and commentary (the Coriolis Commentary): a. Coriolis has not been asked to independently verify or audit the information or material provided to it by or on behalf of the Client or any of the parties involved in the project; b. the information contained in the Coriolis Document or any Coriolis Commentary has been compiled from information and material supplied by third party sources and publicly available information which may (in part) be inaccurate or incomplete; c. Coriolis makes no representation, warranty or guarantee to Recipients, whether express or implied, as to the quality, accuracy, reliability, currency or completeness of the information provided in the Coriolis Document and any Coriolis Commentary or that reasonable care has been taken in compiling or preparing them; d. the analysis contained in the Coriolis Document and any Coriolis Commentary are subject to the key assumptions, further
qualifications and limitations included in the Coriolis Document and Coriolis Commentary, and are subject to significant uncertainties and contingencies, some of which, if not all, are outside the control of Coriolis; and e. any Coriolis Commentary accompanying the Coriolis document is an integral part of interpreting the Coriolis document. Consideration of the Coriolis document will be incomplete if it is reviewed in the absence of the Coriolis Commentary and Coriolis conclusions may be misinterpreted if the Coriolis document is reviewed in absence of the Coriolis Commentary. Coriolis is not responsible or liable in any way for any loss or damage incurred by any person or entity other than DAFWA relying on the information in, and the Recipient unconditionally and irrevocably releases Coriolis from liability for loss or damage of any kind whatsoever arising from, the Coriolis document or Coriolis Commentary including without limitation judgements, opinions, hypothesis, views, forecasts or any other outputs therein and any interpretation, opinion or conclusion that the Recipient may form as a result of examining the Coriolis document or Coriolis Commentary. The Coriolis document and any Coriolis Commentary may not be relied upon by the Recipient, and any use of, or reliance on that material by the Recipient is entirely at their own risk. Coriolis shall have no liability for any loss or damage arising out of any such use. AACCCCEESSSSIIBBIILLIITTYY Coriolis seeks to support the widest possible audience for this research. This document has been designed to be as accessible to as many users as possible. Any person – with or without any form of disability – should feel free to call the authors if any of the material cannot be understood or accessed. We welcome the opportunities to discuss our research with our readers and users. All photos used in this discussion document were either (1) purchased by Coriolis from a range of stock photography providers as documented, (2) received written permission to use Southern
Forest Food Council photo or (3) are low resolution, complete product/brand for illustrative purposes used under fair dealing/fair use for both “research and study” and “review and criticism”. Our usage of them complies with Australian law or their various license agreements (© Dollar Photo Club). CCOOPPYYRRIIGGHHTT Copyright © Western Australian Agriculture Authority, 2016 IIMMPPOORRTTAANNTT DDAAFFWWAA DDIISSCCLLAAIIMMEERR The Chief Executive Officer of the Department of Agriculture and Food and the State of Western Australia and their employees and agents (collectively and individually referred to below as DAFWA) accept no liability whatsoever, by reason of negligence or otherwise, arising from any use or release of information in this report or any error, inaccuracy or omission in the information. DAFWA does not make any representations or warranties about its quality, accuracy, reliability, currency, completeness or suitability for any particular purpose. Before using the information, you should carefully evaluate these things. The information is general in nature, is not tailored to the circumstances of individuals or businesses, and does not constitute financial, taxation, legal, business or management advice. We recommend before making any significant financial or business decisions, you obtain such advice from appropriate professionals who have taken into account your individual circumstances and objectives. The information in this report should not be presumed to reflect or indicate any present or future policies or decisions by the Government of Western Australia.
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FFIINNAALL vv110000;; AApprriill 22001166
SCREENING OVERVIEW In Phase One of the Target Market Opportunities in Asia for WA Premium Products Report (TMO Report), extensive import/export trade data was fed through a multi-stage screening process to “hone-in” on potential opportunities for Western Australia; stakeholder interviews also fed into this process
3
STRUCTURE OF MULTI-STAGE SCREENING PROCESS USED IN THIS PROJECT Model; 2016
INDIVIDUAL FIRM ROLE & RESPONSIBILITY STAGE I STAGE II STAGE III STAGE IV
PLATFORM PRODUCT POSITIONING TARGET MARKET
FIT WITH WA
WA INDUSTRY-GOOD RESEARCH
9 PLATFORMS
679 TRADE CODES
47 QUAL/QUANT
SCREENS
Project does not attempt to address firm-level operational or executional activities: - R&D
- Product development
- Sourcing & supply chain
- Production & operations
- Marketing & branding
- Sales & sales structure
- Capital structure
- Negotiation
- Distributor appointment
20 OPPORTUNITIES
YOU ARE
HERE
4 This project is focused on “market demand” from the following twenty-four Asian/Middle Eastern markets
Note: Complete list for analysis purposes, some countries excluded from list if no/limited trade data available (e.g. Iran)
24 COUNTRIES DEFINED AS HIGH POTENTIAL TARGET MARKETS FOR WESTERN AUSTRALIA Target markets; 2015
MIDDLE EAST
Bahrain Egypt Israel
Jordan Kuwait
Lebanon Oman Qatar
Saudi Arabia UAE
24 defined target markets for this project
4
SOUTH ASIA
India Pakistan Sri Lanka
Western Australia
SE ASIA
China Hong Kong
Japan South Korea
Taiwan Indonesia Malaysia
Philippines Singapore Thailand Vietnam
PRODUCT PROFILE
HS Code 080810
Product Apples, fresh
Out-of-scope Frozen, cooked, pureed, preserved apples, juices, baby foods, supplements, etc. as all are covered under other screened trade codes
Origin Central Asia, cultivated in Asia and Europe for thousands of years
Example ingredients
Apples
Forms/usage - Snack - Ingredient in cooking, baking, desserts - Preserves, jams and sauces - Juiced - Baby food - Gift giving
Drivers of consumer/market success
- Healthy snack
- Eaten across the world
- Versatile
- Convenient
WHAT IS THE PRODUCT? Fresh apples emerged in Phase I as one of twenty “high growth, high potential” opportunities for Western Australia; apples are tree fruit that are consumed fresh and used as an ingredient
5 Source: photo credit (Dollar Photo); Coriolis analysis
PRODUCT OVERVIEW Example; 2016
DOCUMENT STRUCTURE
What is the strategic situation in the market?
In this environment, what is the opportunity for Western Australia?
Who are the potential in-market partners?
Who are the key firms in Western Australia capable of delivering?
6
Western Australia can increase apple exports to Asia by focusing on select high value markets
7
- Asian apple imports are rising, with import value growth being driven by expanding tonnage and increasing average FOB (free-on-board) prices
- Asian & Middle Eastern apple imports come from three broad regions: Southern Hemisphere (Chile, NZ and South Africa), Western/Northern Hemisphere (USA, Italy, France, and other Europe) and China/other Asia
- China, the USA and Italy stand out for driving apple import value growth in Asia & the Middle East
- China and the USA lead in absolute volume growth, while Italy and “other Europe” lead in rate of growth
- Average FOB price to target Asian markets vary by supplier, with Japan and Australia standing out for achieving good premiums
- Apples go to a wide number of the target markets, with no single country predominating; China is a relatively small importer
- Growth in apple imports is broad based and coming from across multiple markets
- India, Egypt and Taiwan stand out for growth; a range of markets have declining volumes, but growing value, indicating a move to quality
- Average apple import prices vary by region, with East Asia paying more than SE Asia and the Middle East; Taiwan stands out as a large market that pays well
- Imported apple consumption and aggregate apple imports appear partially driven by income per capita; a number of markets appear to have long-run penetration upside
- Market share varies by country; European countries stronger in Middle East than E/SE Asia; China really only achieving penetration in poorer countries (e.g. Philippines, Indonesia, Pakistan, India)
- Opportunities for apple export growth in select Asian markets, as Australia has less than 1% share in the target markets
- Data supports new high value, premium apple opportunities being initially launched in (1) Singapore, (2) Hong Kong and (3) China
- As a “Straw Man” for discussion, we identify a export market roll-out plan
Asian apple imports are rising, with import value growth being driven by expanding tonnage and increasing average FOB (free-on-board) prices
0
200
400
600
800
1000
1200
1400
1600
1800
2000
200
4
200
5
200
6
200
7
200
8
200
9
2010
2011
2012
2013
2014
8 * Compound Annual Growth Rate; Source: UN Comtrade database; Coriolis analysis and classifications
VOLUME T; 000; 2004-2014
$-
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
200
4
200
5
200
6
200
7
200
8
200
9
2010
2011
2012
2013
2014
AVERAGE PRICE PER KILOGRAM US$; 2004-2014
$-
$500
$1,000
$1,500
$2,000
$2,500
200
4
200
5
200
6
200
7
200
8
200
9
2010
2011
2012
2013
2014
VALUE US$m; 2004-2014
CAGR* 5%
CAGR 8% CAGR
14%
TOTAL IMPORTS TO ASIA/MIDDLE EAST TARGET REGION (24 COUNTRIES)
Asian & Middle Eastern apple imports come from three broad regions: Southern Hemisphere (Chile, NZ and South Africa), Western/Northern Hemisphere (USA, Italy, France, and other Europe) and China/other Asia
9 NA/ME/CA = North Africa/Middle East/Central Asia; Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications
EXPORT VALUE BY SUPPLIER TO TARGET REGION US$m; FOB; 2014
Europe USA E/SE Asia
Other
Australasia Other Key SH
$483
Chile $189
$387
Italy $188
USA $483
Australia $1
$842
New Zealand $173
China $686
Other $21
France $123
Japan $81
Other Europe $75
South Africa $81
$21 $270 $174
Other Asia $75
TOTAL = US$2,176m
China, the USA and Italy stand out for driving apple import value growth in Asia & the Middle East
10 Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications
EXPORT VALUE BY SUPPLIER TO TARGET REGION US$m; FOB; 2004-2014
2007 2011
Italy
2008 2010 2009 2014 2013
Other
Australia
Other Asia
New Zealand
Japan
USA
10y ABS
2012
France
2005
Chile
South Africa
China
Other Europe
2004 2006
$85
$686
+$67
+$55
$2,176
$81
$1,976
+$56
$83
$1,913
$86
$593 +$521
$29
+$101
+$330
$185
$704
+$182
$165 $226
$58 $66
$652
$42
+$42 $73
$48
$1,283
$450
$295
$81
+$137
$729
+$113
$67
$73
$49
-$2
$1,191
$70
$1,819
$580
$824
$424
$65 $75
-$5
$1,565
$27
$532
$41
$965
$21
$25
$189
$179
$36
$31
$25
$106
$132
$112
$176
$177
$166
$50
$109 $59
$22
$82
$83
$88
$67
$63
$55
$81
$107 $80
$4
$4
$5
$37
$1
$2
$3
$8
$6
$4
$3
$3
$38
$173
$168 $131
$100
$80
$76
$63
$49
$35
$104
$73
$74 $91
$95
$48
$26
$188
$69 $111
$11
$7
$123
$24
$18
$14
$152
$437 $470 $453
$29 $33
$483
$216
$198 $207
$347
$303
$240
$8
$5
$4
$22
$14
$9
$28 $28 $29
$7
$7
$21
$39
$69
$51
$52
$89 $98 $106
$22
$75
$55
$45
$34 $31
CAGR 14%
China and the USA lead in absolute volume growth, while Italy and “other Europe” lead in rate of growth
11 Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications
FIVE YEAR EXPORT GROWTH MATRIX: CHANGE IN VALUE VS. RATE OF GROWTH VS. ABSOLUTE VALUE US$m; 2009 vs. 2014
$0 $50
0%
$-50
20%
$-100
10%
$250 -30%
-20%
-10%
$100 $150 $200
60%
30%
50%
40%
New Zealand
$100m
Australia
Chile
Other Asia
Japan
Italy
USA China
Other
South Africa
France
Other Europe
5y absolute change in value
5y CAGR
Bubble scale: US$m; 2014 A bubble this size=
Average FOB price to target Asian markets vary by supplier, with Japan and Australia standing out for achieving good premiums
12 Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications
AVERAGE EXPORT VALUE COST CURVE BY SUPPLIER US$/kg; t; FOB; 2014
China
Australia
Other A
sia
New
Zealand
USA
South Africa
Other Europe
Other France Chile Italy
Japan
$0.90 $1.00
$0.70
$0.34
$1.02
$1.43
$3.38 $2.22
$1.53
$1.16
$1.38 $1.22
Volume imported by defined target market
Average FOB
value received
+82%
Apples go to a wide number of the target markets, with no single country predominating; China is a relatively small importer
13 Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications
IMPORT VALUE BY MARKET BY REGION US$m; FOB; 2014
NA/ME/CA East Asia Indian Sub SE Asia
China $62
$251 $853 $476
Other $41
Other $29
$596
Israel $31
Egypt $148
Singapore $75
India $222
Saudi Arabia $145
Bahrain $5
United Arab Emirates $200
Kuwait $14
Qatar $12
South Korea $0
Japan $5
Hong Kong SAR $127
Taiwan $282
Vietnam $187
Thailand $178
Malaysia $117
Indonesia $194
Philippines $101
TOTAL = US$2,176m
Growth in apple imports is broad based and coming from across multiple markets
14 Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications
IMPORT VALUE BY MARKET BY REGION US$m; FOB; 2004-2014
2012
Hong Kong SAR
2014 2013
South Korea
2011
Vietnam
2004 2005
Japan
Taiwan
Philippines
China
2009
Indonesia
2010
Thailand
2006 2007 2008
Qatar
Singapore
Other ME Israel
Egypt
Other Ind. Sub
Kuwait
Saudi Arabia
Malaysia
United Arab Emirates
India
Bahrain
$19
$172
$149
$14
$162
$13
$187
$17
$179
$17
$8
$10
$282
$39 $44
$12
$43
$11
$232
$14
$206
$15
$238
$15
$204
$145
$0
$0 $0
$154
$0
$155
$13
$59
$5
$75
$5
$24
$5
$77
$0
$86
$0
$98
$0
$111
$73
$81
$0
$140
$0
$153
$0
$124
$0
$113
$729
$4
$580
$824
$206
$965
$200
$4
$97
$4
$96
$4
$62
$4
$77
$1,191
$85
$1,976
$109
$2,176
$43
$52
$65
$1,913
$159
$1,283
$173
$1,565
$126
$1,819
$140
$10
$134
$8
$121
$2
$104
$7
$97
$10
$56
$12
$65
$7
$79
$7
$127
$6
$41
$5
$56
$4
$81
$7
$33 $27
$0
$4
$31
$5
$26
$5
$178
$9
$183
$9
$29
$26
$6
$13
$125
$19
$100
$17
$157
$12
$150
$222
$74 $87
$62
$56 $119
$55
$86
$118
$49
$205
$42
$217
$65
$194
$61
$49
$75
$53
$91
$44
$98
$43
$79
$75
$67
$57
$64
$60
$65
$66
$107
$30
$48
$29
$64
$27
$88
$33
$40
$32
$128
$34
$117
$30
$28
$29 $93
$11
$76
$5
$187 $3
$144
$11
$57
$17
$22
$18
$66
$13
$64
$3
$0
$70
$1
$92
$0
$86
$0
$100
$1
$0
$2
$148
$0
$82
$0
$31
$100
$29
$123
$37
$130
$25
$82
$28
$101
$34
$16
$41
$68
$68
$198
$25
$3
$19
$28
$22
$24
$31
$194
$30
$229
$37
$223
$21
$154 $23
CAGR 14%
Bubble scale: US$m; 2014 A bubble this size=
India, Egypt and Taiwan stand out for growth; a range of markets have declining volumes but growing value, indicating a move to quality
15 Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications
FIVE YEAR IMPORT GROWTH MATRIX: CHANGE IN VOLUME VS. RATE OF GROWTH VS. ABSOLUTE VALUE US$m; t; 2009 vs. 2014
0 20,000 120,000 -20,000 80,000 60,000 100,000 -40,000 40,000
10%
35%
5%
15%
30%
25%
20%
0%
-5%
South Korea
$200m
Jordan
Kuwait
Malaysia
Taiwan
Lebanon
Hong Kong SAR
Sri Lanka
China
Indonesia
Bahrain
Japan
Israel
UAE
Egypt
Thailand
Singapore
India
Vietnam
Pakistan
Philippines
Oman
Qatar
Saudi Arabia
5y absolute change in volume
5y CAGR
Shift to quality Growing volume & value
Average apple import prices vary by region, with East Asia paying more than SE Asia and the Middle East; Taiwan stands out as a large market that pays well
16 Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications
AVERAGE IMPORT VALUE COST CURVE BY MARKET/REGION US$/kg; t; FOB; 2014
Saudi Arabia
Qatar
Vietnam
China
Bahrain
Malaysia
Singapore
Om
an
Indonesia
Jordan Pakistan
Taiw
an
Lebanon
Sri Lanka
UA
E
India
Hong K
ong SAR
South Korea
Thailand
Japan
Egypt
Israel
Philippines
Kuw
ait
$1.54
$1.56
$0.68
$1.38 $1.27
$0.88
$1.11
$1.12
$1.08
$1.65
$0.87
$1.03
$1.38
$1.42
$1.44
$0.92
$1.14
$1.20
$1.34
$1.43
$1.05
$1.15
$1.33
This is driven predominantly by biosecurity & variety mix
Volume imported
Average import
value
Imported apple consumption and aggregate apple imports appear partially driven by income per capita; a number of markets appear to have long-run penetration upside
17 Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Wikipedia (GDP/capita); Coriolis analysis and classifications
MARKET SIZE DRIVERS: GDP PER CAPITA VS. IMPORTS PER CAPITA VS. MARKET SIZE Kg; US$; t; 2014
$50,000
20.0
$20,000
15.0
5.0
$40,000 $30,000 $60,000
10.0
0.0 $0 $10,000
Vietnam Egypt 100,000 Thailand
United Arab Emirates
Singapore
Jordan
Japan
Israel
Kuwait
South Korea China
Sri Lanka
Bahrain
Indonesia
Hong Kong SAR
Lebanon
Qatar
Philippines
India
Saudi Arabia
Pakistan
Taiwan
Malaysia Oman
GDP per capita
Imports per capita
Bubble scale: tonnes; 2014 A bubble this size=
Market share vary by country; European countries stronger in Middle East than E/SE Asia; China really only achieving penetration in poorer countries (e.g. Philippines, Indonesia, Pakistan, India)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Japan
Om
an
Malaysia
Bahrain
China
Taiw
an
Singapore
India
Saudi Arabia
UA
E
Kuw
ait
Hong K
ong SAR
Pakistan
Thailand
Sri Lanka
Qatar
Vietnam
Indonesia
Philippines
Egypt
Jordan
Israel
South Korea
Lebanon
China
Japan
Other Asia
USA
Italy
France
Other Europe
Other
South Africa
Chile
New Zealand
Australia
18 Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications
IMPORT VALUE MARKET SHARE BY MARKET BY KEY SUPPLIER % of value in US$m; FOB; 2014
Opportunities for apple export growth in select Asian markets as Australia has less than 1% share in the target markets
19 Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications
AUSTRALIAN IMPORT VALUE MARKET VS. MARKET VALUE US$; FOB; 2014
Singapore
Pakistan O
man
Hong K
ong SAR
Bahrain
Jordan
Malaysia
Taiw
an
Indonesia
Egypt
South Korea
Saudi Arabia
Thailand
UA
E
Japan
Kuw
ait
Philippines
China
India
Lebanon
Vietnam
Israel
Sri Lanka
Qatar
$0
$0 $0
$63,699
$8,282 $0
$0
$0
$0
$0
$0
$32,052
$195,671
$0
$0
$0
$106,882
$0
$645
$15,693
$0
$219,086
$218,013
Total value of imports
Australian total value
Size of bubble = value A bubble this size=
Data supports new high value, premium apple opportunities being initially launched in (1) Singapore, (2) Hong Kong and (3) China
20 Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications
WHERE TO FOCUS FOR NEW HIGH VALUE, PREMIUM PRODUCTS: AU SHARE VS. AVERAGE VALUE VS. MARKET SIZE % of value; US$; US$m; 2014
0.25% 0.05% 0.00% 0.10% 0.20% 0.15%
$1.20
$1.00
$0.80
$1.80
$1.60
$1.40
$0.00 0.30%
$0.20
$0.60
$0.40
Thailand Indonesia
Saudi Arabia Bahrain
Vietnam
Qatar
Oman
Singapore
Malaysia UAE
Kuwait
Israel
Egypt
Taiwan
South Korea
Hong Kong SAR
$100
Philippines
Japan
India
China
Sri Lanka
Pakistan
Lebanon
Jordan
AU share of total import value
VALUE Average
FOB $/kg 2014
1
2 3
4?
As a “Straw Man” for discussion, we identify a export market roll-out plan
21
PRELIMINARY “STRAW MAN” DEVELOPMENT & ROLLOUT PLAN FOR APPLE OPPORTUNITY Model; 2016
1 Export market launch in Singapore
2 Export launch in Hong Kong
3 Export launch in China
0 Product development and testing
Potential in-market partners identified later in this document
- High income, sophisticated market and consumers
- Manageable sized test bed - WA already has a market
position
DOCUMENT STRUCTURE
What is the strategic situation in the market?
In this environment, what is the opportunity for Western Australia?
Who are the potential in-market partners?
Who are the key firms in Western Australia capable of delivering?
22
Western Australia has an opportunity to make a strong apple offer to Asia, however innovation will be required
23
IS THE MARKET DEVELOPED & COMPETITIVE?
- The flow of apples from the farm through to the consumer is relatively straight forward and simple
- In Asia, apple prices are related to variety, and generally higher than in Australia
- Asian markets generally have a much less developed apple range and offer than western countries
- “Leading indicator” Western markets strongly suggest depth of range in Asian apple markets will increase going forward
- While retailers pursue different ranging strategies, most appear to target 5-8 loose apples, with range increases beyond this coming from prepack options; more prepack in “leading indicator” markets
- “Leading indicator” Western markets also strongly suggest Asian apple markets will carry more varieties in the future
WHAT IS WA CAPABLE OF DELIVERING?
- A wide range of premium, value-adding product attributes emerged from our cross-country retailer survey
- Western Australian apple producers need to continue to move forward and improve through new products
- Multiple potential positions exist to develop a premium apple offer for Asia
- Products from other processors in other markets demonstrate what is possible in terms of developing a premium Western Australian apple offer
- There are a wide range of potential product positions or claims available for a premium apple product from Western Australia targeting Asia
- As a “Straw Man” for discussion, we identify an opportunity for a high value, premium apple product with select characteristics for export market launch
HOW IS THE MARKET STRUCTURED? The flow of apples from the farm through to the consumer is relatively straight forward and simple
24 Source: Coriolis
SIMPLIFIED MODEL OF SUPPLY CHAIN: APPLES Model; 2016
Retailers
Foodservice & Institutional
Exports
Wholesalers
Distributor(s) (multi-layered in large markets)
Domestic Packer/Processor
Agent/Broker/ Distributor
Packer/Processor Sales/Marketing
In-Market Farmer
Logistics Providers
(Airfreight, Seafreight, Trucking)
WA Apple Packer/Processor
Other Australian Packer/Processor
WA Farmer
New Zealand Packer/Processor
Chile/Argentinean Packer/Processor
USA Packer/Processor
Chinese Packer/Processor
Other Packer/Processor
European Packer/Processor
South African Packer/Processor
This stage branches and adds multiple layers in large markets
WHO IS THE COMPETITION? PRICING In Asia, apple prices are related to variety, and generally higher than in Australia
$0.96 $0.96 $0.96 $0.96
$1.43
$0.49
$0.63 $0.63 $0.69
$0.83 $0.87
$1.01
$1.70
$0.36 $0.36
$0.54 $0.54 $0.60
Fuji, large, loose
Granny Sm
ith, large, loose
Gala, large, loose
Red, large, loose
Envy, large, loose
Diva (N
Z)
Granny Sm
ith, 8 bag (U
SA)
Royal Gala, 8 bag
(USA
)
Granny Sm
ith
Diva, 5 pack tube
(NZ
)
Royal Gala (N
Z)
Fuji (CN
)
Envy (NZ
)
Pink Lady
Granny Sm
ith
Red Delicious
Sundowner
Royal Gala
25 Source: Coriolis from store checks
SHELF PRICE PER APPLE ACROSS SELECT SE ASIAN MARKETS AND AUSTRALIA: APPLES US$/item; Feb 2016
SELECT SE ASIAN RETAILERS AUSTRALIA
AU AU AU AU
Thailand Singapore
WHAT IS ON THE SHELF? RANGE IN MARKET Asian markets generally have a much less developed apple range and offer than western countries
26 Source: Coriolis from store checks; photo credit (fair use/fair dealing; low resolution; complete product/brand for illustrative purposes); Coriolis analysis
EXAMPLE: ACTUAL PREPACK APPLE RANGE ON SHELF Feb 2016
New York: GDP/Capita US$53,067 Singapore: GDP/Capita $83,100
IS THE MARKET DEVELOPED & COMPETITIVE? RANGE “Leading indicator” Western markets strongly suggest depth of range in Asian apple markets will increase going forward
51
38
33
29
21
12 9
14
8 8 7 6 3
Wegmans (NY)
Waitrose (UK)
Tesco (UK)
Sainsbury (UK)
Safeway (CA)
Woolworths (AU)
Coles (AU)
Tesco (TH)
Park'N Shop (HK)
Cold Storage (Sing)
Tesco (MY)
Wellcome (HK)
Fairprice (Sing)
27 Source: Coriolis from store checks
NUMBER OF LINES ON SHELF: SELECT RETAILERS FROM ACROSS MULTIPLE MARKETS SKU; actual; Feb 2016
SE Asia Anglo-American
Average 7.7 sku/store
Average 27.6 sku/store
3.5x
IS THE MARKET DEVELOPED & COMPETITIVE? SEGMENTATION While retailers pursue different ranging strategies, most appear to target 5-8 loose apples, with range increases beyond this coming from prepack options; more prepack in “leading indicator” markets
26
4 8 8
16
5 4 5 6 5 1
5
25
34 25 21 5
7 5
9 2 3
6 3
Wegmans (NY)
Waitrose (UK)
Tesco (UK)
Sainsbury (UK)
Safeway (CA)
Woolworths (AU)
Coles (AU)
Tesco (TH) Park'N Shop (HK)
Cold Storage (Sing)
Tesco (MY)
Wellcome (HK)
Fairprice (Sing)
Prepack
Loose
28 Source: Coriolis from store checks
NUMBER OF LINES ON SHELF BY PACK FORM: SELECT RETAILERS FROM ACROSS MULTIPLE MARKETS SKU; actual; Feb 2016
SE Asia Anglo-American
Average 5 loose
/store
Average 8 loose
/store
IS THE MARKET DEVELOPED & COMPETITIVE? SEGMENTATION “Leading indicator” Western markets also strongly suggest Asian apple markets will carry more varieties in the future
19 18
14
10 9
5 4
8
6 5 5
3 3
Waitrose (UK)
Wegmans (NY)
Tesco (UK)
Safeway (CA)
Sainsbury (UK)
Woolworths (AU)
Coles (AU)
Tesco (TH)
Park'N Shop (HK)
Cold Storage (SG)
Wellcome (HK)
Tesco (MY)
Fairprice (SG)
29 Source: Coriolis from store checks
NUMBER OF DIFFERENT VARIETIES OF APPLE ON SHELF: SELECT RETAILERS FROM ACROSS MULTIPLE MARKETS # of varieties; actual; Feb 2016
Average 5 varieties/store
Average 11 varieties/store 2.2x
SE ASIA ANGLO-AMERICAN
IS THE MARKET DEVELOPED & COMPETITIVE? PRODUCT ATTRIBUTES A wide range of premium, value-adding product attributes emerged from our cross-country retailer survey
85%
39%
22%
15%
12%
2%
2%
Named variety
Taste description
1 of 5
Named origin
Organic
Kids pack
Size
30 Source: Coriolis from store checks
PERCENT OF OBSERVED PRODUCTS ON SHELF MAKING THE CLAIM ON PACK % of SKU; N=239; Feb 2016
- This provide very clear instruction on what product attributes are succeeding the most across markets
- Western Australian apple producers looking to grow value and share should focus in these areas
- Specifying the variety stands out, with 85% observed product SKU naming the apple variety
- Survey universe is all products in all listed retailers (across multiple countries)
TAKEAWAYS
WHAT IS WA CAPABLE OF DELIVERING? STRATEGIC DIRECTION Western Australian apple producers need to continue to move forward and improve through new products
31
SUGGESTED STRATEGIC DIRECTION: WESTERN AUSTRALIAN APPLES Model; 2016
Loose, bulk, non-varietal apples
Loose, variety specific apples
Organic apples
Named gourmet varieties
Apple slices in bag
Chinese & WA suppliers
are here in Asia
High growth, high potential opportunities
are here
USA & UK suppliers are here
Everyday prepack apples
Prepacked gourmet varieties
WHAT IS WA CAPABLE OF DELIVERING? CLAIMS Multiple potential positions exist to develop a premium apple offer for Asia
32 Source: Coriolis; photo credit (Dollar Photo and Southern Forests Food Council Inc.)
IDENTIFIED POTENTIAL PREMIUM POSITIONS Model; 2016
Organic Lunchbox packs Heart healthy
Identified source region
Gourmet varieties
Kid sized apples High in antioxidants
Specialty variety
Gift packs
Sliced in bag Aids production of saliva
Track & trace
Kid friendly characters
Brain health
High in flavonoids
Promotes dental health
Reduces risk of cancer
High in fibre
Digestive health
Prewashed
HEALTH PROVENANCE INDULGENCE CONVENIENCE
WHAT IS WA CAPABLE OF DELIVERING? GLOBAL PEERS Products from other processors in other markets demonstrate what is possible in terms of developing a premium Western Australian apple offer
33 Source: photo credit (fair use/fair dealing; low resolution; complete product/brand for illustrative purposes); Coriolis analysis
EXAMPLES OF PREMIUM PRODUCTS FROM OTHER MARKETS Select; 2016
Product of Japan Cleaned & cut IP protected variety Organic
Distinctive packaging Snack Pack Product of NZ Pink Lady
Contrasting colours Nutrition panel “Sweet desire” Fizzy & Sweet
Named varieties Convenient Striking packaging
Healthy Convenient packaging
“Bite & believe ”
Love Life
Backed by marketing campaign
1 of 5 a day
Donation to charity from sales 1 of 5 a day
Deep red colour
WHAT IS A POTENTIAL WA OFFER? There are a wide range of potential product positions or claims available for a premium apple product from Western Australia targeting Asia
34 Source: Coriolis; photo credit (Dollar Photo and Southern Forests Food Council Inc.)
HYPOTHETICAL EXAMPLE OF POTENTIAL PREMIUM PRODUCT FROM WA Model; 2016
High in antioxidants High in fibre
From Western Australia
Organic Australian
Flag
Unique variety
Sliced snack pack
Good for digestive health
Attractive packaging
HEALTH
PROVENANCE
INDULGENCE
CONVENIENCE
WHAT IS THE IDENTIFIED OPPORTUNITY? As a “Straw Man” for discussion, we identify an opportunity for a high value, premium apple product with select characteristics for export market launch
35
PRELIMINARY “STRAW MAN” DEVELOPMENT & ROLLOUT PLAN FOR APPLE OPPORTUNITY Model; 2016
CURRENT WA POSITIONING IN ASIA
IDENTIFIED HIGH GROWTH, HIGH VALUE OPPORTUNITY FOR WA
High in antioxidants
High in fibre
From Western Australia
Organic
Australian Flag
Unique variety
1 of 5 a day
Attractive packaging From
Australia Prepack
POTENTIAL FUTURE PRODUCT LINE EXTENSION
Deep red colour
Gift pack
DOCUMENT STRUCTURE
What is the strategic situation in the market?
In this environment, what is the opportunity for Western Australia?
Who are the potential in-market partners?
Who are the key firms in Western Australia capable of delivering?
36
FOCUS MARKET – 1 – SINGAPORE Singapore has a robust and well-developed food retailing and foodservice sector
$5.6
$3.9
$6.3
$1.9
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Turnover Purchases
37 Source: Coriolis from a wide range of sources
TURNOVER & PURCHASES US$b; 2014
ESTIMATED WHOLESALE FOOD & FMCG PURCHASES US$b; 2014
Foodservice Retail
$1.9 $3.9
Online $0.1
Traditional grocery $0.3
Supermarket $2.2
Convenience $0.4
Wet markets, etc. $0.7
Foodservice $1.9
Department stores $0.3
Petrol stations $0.1
Foodservice
Retail 6,500 restaurants,
hawker stalls, hotels, vending machines,
institutions (schools, hospitals, airline caterers,
prisons, etc.)
3.0%
5.0%
Retail
Foodservice
TURNOVER GROWTH RATE % Y-O-Y; S$; 2013v2014
FOCUS MARKET – 1 – SINGAPORE Four potential in-market partners are identified for Western Australian firms in Singapore
Firm NTUC Fairprice Cold Storage Sheng Siong Prime Supermarkets
Ownership National Trade Union Council (Singapore)
Dairy Farm International (Hong Kong)
Listed; Singapore Private; Singapore
Website www.fairprice.com.sg www.ntuc.org.sg
www.coldstorage.com.sg www.dairyfarmgroup.com
www.shengsiong.com.sg www.allforyou.sg
www.primesupermarket.com
Annual sales US$1.83b US$1.55b US$0.55b US$0.2b
Store formats Supermarket Hypermarket Convenience (Cheers; 139) Online
Supermarket (Cold Storage, Marketplace) Hypermarket Convenience (7-Eleven; 502) Online
Supermarkets Online
Supermarkets
# of stores 285 848 38 19
Store fascia
38 Source: Coriolis from a wide range of sources
POTENTIAL IN-MARKET PARTNERS – SINGAPORE 2015 or as available
FOCUS MARKET – 2 – HONG KONG Hong Kong has a robust and well-developed food retailing and foodservice sector
$11.5
$8.0
$12.8
$3.9
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Turnover Purchases
39 Source: Coriolis from a wide range of sources
TURNOVER & PURCHASES US$b; 2014
ESTIMATED WHOLESALE FOOD & FMCG PURCHASES US$b; 2014
Retail Foodservice
$3.9 $8.0
Foodservice $3.9
CRA $0.3 CRE
$0.2
Wellcome $1.2
AEON $0.6
Drug stores $0.6
Wet markets, etc. $3.0
ParknShop $1.5
Other retail $0.6
Foodservice
Retail 14,000+ restaurants 1,000+ bars & clubs
1,050+ hotels Vending machines
Institutions (1,088 schools, 42 hospitals, 3 main airline
caterers, prisons, etc.)
6.7%
3.5%
Retail
Foodservice
TURNOVER GROWTH RATE % Y-O-Y; HK$; 2013v2014
FOCUS MARKET – 2 – HONG KONG Seven potential in-market partners are identified for Western Australian firms in Hong Kong
Firm Wellcome Park’N Shop CR Vanguard Dah Chong Hong 759 Stores AEON Stores Convenience Retail Asia
Ownership Dairy Farm International/Jardine Matheson
A.S. Watson/ Hutchison Whampoa
CRE/China Resources (SOE; China)
Dah Chong Hong/ CITIC Pacific/CITIC (SOE; China)
Private; Hong Kong (Lam Wai Chun)
AEON (Japan) Fung Group
Website www.wellcome.com.hk www.parknshop.com www.crvanguard.com.hk www.crc.com.cn
www.dch.com.hk
www.759store.com www.aeonstores.com.hk www.aeon.info
www.circlek.hk/en www.cr-asia.com
Annual sales (in HK)
$2.2b+ $2.8b ~$0.8b (food/FMCG) N/A N/A $0.8b $0.4b
Food store formats
Supermarkets 318 Convenience 921 Health & Beauty 369 Restaurants 676
Supermarkets 260+ Convenience
Supermarkets Convenience
Supermarkets Grocery 247+ Dept. stores (w/food) 8 Supermarkets 5
Convenience 600+ Bakery
# of stores Wellcome 280+ Marketplace 31 7-Eleven 900+ Olivers the Delicatessen ThreeSixty
ParknShop 175 PnS Superstore 50+ PnS Taste 10 PnS Fusion 14
CR Vanguard 100+ VanGo 79
DCH Food Mart 80+ DCH Food Mart Deluxe
759 Stores 247+ AEON 13 Circle K Saint Honore Cake
Store fascia
40 Source: Coriolis from a wide range of sources
POTENTIAL IN-MARKET PARTNERS – HONG KONG 2015 or as available
FOCUS MARKET – 3 – CHINA China has a robust and well-developed food retailing and foodservice sector
$601
$421
$450
$135
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Turnover Purchases
41 Source: Coriolis from a wide range of sources
TURNOVER & PURCHASES US$b; 2014
ESTIMATED WHOLESALE FOOD & FMCG PURCHASES US$b; 2014
Foodservice Retail
Supermarkets $126
$135
Traditional $71
Online $8
Foodservice $135
Wet markets $143
$421
Hypermarkets $63
Convenience $8
Foodservice
Retail 7m+ restaurants plus bars & clubs,
hotels/motels/etc., vending machines,
institutions (schools, hospitals, airline
caterers, prisons, etc.)
6.0%
7.0%
Retail
Foodservice
TURNOVER GROWTH RATE % Y-O-Y; CNY; 2013v2014
PRELIMINARY
PRELIMINARY
PRELIMINARY
FOCUS MARKET – 3 – CHINA Eighteen potential in-market partners are identified for Western Australian firms in China…
42 Source: Coriolis from a wide range of sources
POTENTIAL IN-MARKET PARTNERS – CHINA 2015 or as available
Firm CR Vanguard Sun Art Retail Group Wal-Mart China Lianhua Carrefour China Yonghui Superstores Nonggongshang
Ownership China Resources (SOE; China)
Listed; HK; Auchan and Ruentex group
Listed; USA Listed; HK; Bailian Group Co.
Listed; France Listed; Shanghai; Dairy Farm 20%; JD.com 10%;
China
Website www.crvanguard.com.hk www.crc.com.cn
www.sunartretail.com www.rt-mart.com.tw
www.wal-martchina.com www.samsclub.cn
lianhua.todayir.com
www.carrefour.cn www.carrefour.com.cn www.carrefour.com
www.yonghui.com.cn www.ngs1685.com
Annual sales Total/Food
US$15.2b (13) US$14.0b (14) US$11.0b (13) US$10.5b (13) US$7.1b (13) US$5.3b US$4.6b
Food store formats
Hypermarket Supermarket Convenience
Hypermarket Online
Hypermarket Warehouse Club Compact HM Supermarket
Hypermarkets Supermarket 4,600 Convenience 1,905
Hypermarket 236 Convenience 3 Online
Supermarket Supermarkets 2,644 Convenience 1,700
# of stores 4,637 264 423 6,900+ 239 351 2,644
Store fascia
- Alldays - Kedi
FOCUS MARKET – 3 – CHINA … continued
43 Source: Coriolis from a wide range of sources
POTENTIAL IN-MARKET PARTNERS – CHINA 2015 or as available
Firm HNA Group Wumart Stores Better-Life Jiajiayue Group A. Best Supermarket Metro Cash & Carry Lotte Mart
Ownership Private; China Public; China Public; China Public; China Public; China Listed; Germany Listed; Korea
Website www.hnagroup.com/ www.wumart.com www.bbg.com.cn
www.jiajiayue.com.cn www.abest-xyj.com www.metro.com.cn www.metrogroup.de
www.lotte.co.kr
Annual sales Total/Food
US$4.0b (13) US$3.3b (13) US$3.2b (13) US$2.9b US$2.7b US$2.7b (13) US$2.4b (13)
Food store formats
Hypermarkets Supermarkets Convenience
Hypermarkets Convenience
Hypermarkets Department stores Online
Hypermarket Supermarket Department store Convenience
Hypermarket Supermarket
Cash & Carry Hypermarkets Supermarkets
# of stores 482 547 445 601 116 75 110
Store fascia
Le Wan Jia Supermarket Jiangsu Chaoyue Supermarket Hunan Joindoor Supermarket
FOCUS MARKET – 3 – CHINA … continued
44 Source: Coriolis from a wide range of sources
POTENTIAL IN-MARKET PARTNERS – CHINA 2015 or as available
Firm Sinopec Group PetroChina Co. Dongguan Sugar & Liquor Group
Seven & I Holdings
Ownership Chinese government (SOE)
Chinese government (SOE)
Japan; listed
Website english.sinopec.com www.meiyijia.com.cn www.7-11.cn www.7andi.com www.sej.co.jp www.itoyokado.co.jp
Annual sales Total/Food
US$455b (14) US$49.1b US$17.5b
Food store formats
Easy Joy uSmile Meiyijia Seven&I 301 Area licensees 1,763 - DairyFarm 740 - Others ~1,063
# of stores 23,300 14,000 5,580 2,064
Store fascia
DOCUMENT STRUCTURE
What is the strategic situation in the market?
In this environment, what is the opportunity for Western Australia?
Who are the potential in-market partners?
Who are the key firms in Western Australia capable of delivering?
45
IDENTIFIED WA COMPANIES
FARAWAY HILL ORCHARD
High Vale Orchard
KARINTHA ORCHARDS
ADDRESS: Bremer Lane, Donnybrook, WA 6239 ADDRESS: 35 Merrivale Rd, Pickering Brook, WA 6076 ADDRESS: Mitchell Rd, Donnybrook, WA 6239
PHONE: 08 9731 2452 PHONE: 08 9293 8217 PHONE: 08 9731 0106
WEBSITE: www.westernaustralianapples.com.au WEBSITE: www.highvale.com WEBSITE: www.karinthaorchards.com
46 Sources: Coriolis from a wide range of sources
KARRAGULLEN COOL STORAGE
LYSTER ORCHARDS
Newton Brothers Orchards
ADDRESS: 42 Rokewood Way, Karagullen, WA 6111 ADDRESS: South Western Hwy, Manjimup, WA 6258 ADDRESS: 62-66 Franklin Street, Manjimup, WA 6258
PHONE: 08 9397 5905 PHONE: 0417 438 806 PHONE: 08 9771 1135
WEBSITE: www.karragullencoolstorage.com.au WEBSITE: www.lysterorchards.com.au WEBSITE: www.newtonorchards.com.au
Prime Organics/ Twin Apple Pack House
RAEBURN ORCHARDS
ADDRESS: 206 Goldfields Rd, Upper Capel, WA 6239 ADDRESS: 4 Raeburn Rd, Roleystone, WA 6111
PHONE: 08 9731 1363 PHONE: 08 9397 5325
WEBSITE: www.primeorganics.com.au WEBSITE: www.raeburnorchards.com
AUSTRALIA Coriolis Australia Pty Ltd
PO Box 5831 St Georges Terrace
Perth, WA 6831 Australia
+61 8 9468 4691
NEW ZEALAND Coriolis (New Zealand) Limited
PO Box 90-509 Victoria Street West
Auckland, 1142 New Zealand
+64 9 623 1848
www.coriolisresearch.com
Coriolis is the leading Australasian management consulting firm specialising in the wider food value chain. We work on projects in agriculture, food and beverages, consumer packaged goods, retailing & foodservice. In other words, things you put in your mouth and places that sell them. WHERE WE WORK We focus on the Asia Pacific region, but look at problems with a global point-of-view. We have strong understanding of, and experience in, markets and systems in Australia, China, Japan, Malaysia, New Zealand, Singapore, South Korea, Thailand, the United Kingdom and the U.S. We regularly conduct international market evaluations and benchmarking. WHAT WE DO We help our clients assemble the facts needed to guide their big decisions. We develop practical, fact-based insights grounded in the real world that guide our clients decisions and actions. We make practical recommendations. We work with clients to make change happen. We assume leadership positions to implement change as necessary. HOW WE DO IT All of our team have worked across one-or-more parts of the wider food value chain, from farm-to-plate. As a result, our recommendations are grounded in the real world. Our style is practical and down-to-earth. We try to put ourselves in our clients’ shoes and focus on actions. We listen hard, but we are suspicious of the consensus. We provide an external, objective perspective. We are happy to link our fees to results. WHO WE WORK WITH We only work with a select group of clients we trust. We build long term relationships with our clients and more than 80% of our work comes from existing clients. Our clients trust our experience, advice and integrity.
Coriolis advises clients on growth strategy, mergers and acquisitions, operational improvement and organisational change. Typical assignments for clients include… FIRM STRATEGY & OPERATIONS We help clients develop their own strategy for growing sales and profits. We have a strong bias towards growth driven by new products, new channels and new markets. MARKET ENTRY We help clients identify which countries are the most attractive – from a consumer, a competition and a channel point-of-view. Following this we assist in developing a plan for market entry and growth. VALUE CREATION We help clients create value through revenue growth and cost reduction. TARGET IDENTIFICATION We help clients identify high potential acquisition targets by profiling industries, screening companies and devising a plan to approach targets. DUE DILIGENCE We help organisations make better decisions by performing consumer and market-focused due diligence and assessing performance improvement opportunities. EXPERT WITNESS We provide expert witness support to clients in legal cases and insurance claims. We assist with applications under competition/fair trade laws and regulations.