Wholesale bypass has been propelled by the vertical integration of many large food manufacturing companies.
Melbourne, Australia (PRWEB) August 30, 2013
The fortunes of the Soft Drink and Pre-Packaged Food Wholesaling industry in Australia are inextricably tied to the trends prevalent in its upstream and downstream industries. Over the five years through 2013-14, growth is expected to be constrained by the increasing incidence of wholesale bypass, whereby supermarkets have been able to purchase their products directly from manufacturers. This has substantially constrained revenue growth and reduced the importance of wholesalers in the overall supply chain. Wholesale bypass has also been propelled further by the vertical integration of many large food manufacturing companies, such as Coca Cola Amatil, which has increased their ability to bargain and supply retailers, becoming both wholesalers and manufacturers themselves. According to IBISWorld industry analyst Lauren Magner, “profitability has also declined for wholesalers due to the negative impact of rising input costs and volatile oil prices”. All of these factors combined are expected to cause revenue to fall at an annualised 0.4% over the five years through 2013-14 to reach $7.7 billion. The industry is also expected to contract in 2013-14 with revenue forecast to fall by 2.9%.
The long-term rise in health consciousness among Australian consumers has also added extra pressure on the industry. As concerns over health and nutrition have increased, consumption has declined for some of the industry's biggest product segments such as soft drinks, confectionery and salty snack foods. “This has prompted a wave of product innovation in upstream manufacturing industries with companies producing healthier alternatives such as low-fat potato chips and zero-sugar versions of popular soft drinks,” says Magner. The high degree of fragmentation between products within the industry means that it has a low level of market share concentration, with no major players holding a significant market share.
The Soft Drink and Pre-Packaged Food Wholesaling industry is expected to continue struggling with wholesale bypass, the rise of private labels and the increasing dominance of Australia's major supermarkets over the supply chain. However, the overall fall in revenue and profitability are likely to be offset partly by further product innovation and technological advances in warehousing, inventory management and distribution systems.
For more information, visit IBISWorld’s Soft Drink and Pre-Packaged Food Wholesaling in Australia industry report page.
Follow IBISWorld on Twitter: http://twitter.com/#!/ibisworldau.
IBISWorld industry Report Key Topics
The industry wholesales confectionery, snack foods, beverages, canned food and cooking oil. Wholesalers generally operate as an intermediary along the supply chain by purchasing a range of goods from manufacturers, which they on-sell to downstream buyers such as supermarkets, convenience stores and food service establishments. This industry does not include operators who wholesale three or more grocery lines, or manufacturers that are vertically integrated.
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
About IBISWorld Inc.
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.