Trading conditions are set to improve with greater stability for industry operators
Melbourne, Australia (PRWEB) March 28, 2013
Operators in the Fruit and Vegetable Wholesaling industry in Australia have contended with a range of challenges of the five years through 2012-13. The challenges included “supply shortages due to adverse weather conditions, rising input costs, the growing dominance of supermarket retailers over the supply chain and the increasing incidence of wholesaler bypass”, according to IBISWorld industry analyst Suzannah Rowley. These factors have led to a decline in enterprise numbers over the past five years by pushing less efficient operators out of the industry as they buckle under increasing pressure to meet the high quantity and quality specifications of the industry's largest buyers. Revenue growth has also been restricted by the fall in discretionary spending due to the global economic downturn and increased regulatory burdens with the introduction of the Horticulture Code in 2007.
The major wholesale operators only control a small percentage of the total Fruit and Vegetable Wholesaling industry. The four largest major players account for a very small amount of industry revenue. Due to this low concentration, “the industry is extremely price competitive, with low profit margins made on the industry's products”, says Rowley. Like the farmers that produce the crops, the wholesale industry is highly fragmented. The past few years have seen a number of takeovers that have tended to increase concentration levels. However, this trend has been partly offset by the entry of new players, including niche operators, and by the expansion of already existing players. Continued consolidation is expected over the coming years in order to enjoy improved economies of scale and market power with retailers.
Trading conditions look set to improve for operators in the Fruit and Vegetable Wholesaling industry over the five years through 2017-18. Increased overall consumption of fresh produce, rising health consciousness, increasing vegetable prices and more certain trading should create greater stability for industry operators. These factors could be offset to some extent by the growing dominance and vertical integration of Australia's leading supermarkets. The increasing dominance of supermarkets over the food supply chain is also expected to depress profitability slightly over the next five years.
For more information, visit IBISWorld’s Fruit and Vegetable Wholesaling report in Australia industry page.
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IBISWorld Industry Report Key Topics
Businesses in this industry wholesale, wash or pack a variety of fresh fruit or vegetables.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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