IBISWorld Market Research
Industry players have fought back against competition with heavy brand promotion and product development, to stimulate consumer interest in pasta
Melbourne, Australia (PRWEB) September 04, 2014
Pasta is a staple good found in many Australian pantries. Despite this, the Pasta Production industry in Australia has performed poorly over the past five years. Strong competition from private-label products has hurt producers of branded pasta. Furthermore, imports have continued to flood the market, to the detriment of local producers. According to IBISWorld industry analyst Brooke Tonkin, “industry players have fought back with heavy brand promotion and product development, in an attempt to stimulate consumer interest in pasta.” Over the five years through 2014-15, industry revenue is projected to post marginal annualised growth of 0.6%, to reach $773.4 million. Pasta is a relatively homogenous product. With numerous options on the market and little distinction between products, consumers tend to be quite price sensitive. This has made the industry vulnerable to private-label competition. The escalation of the price war between the supermarket giants in 2011 involved heavy promotion and discounting of many private-label products, including pasta. Furthermore, the improving quality of private-label products has helped drive a consumer shift towards private-label pasta. Private-label products are sold at a lower price, which flows through to the manufacturing level, reducing industry revenue.
Producers of branded products responded to competitive pressures by targeting niche consumer markets, moving towards premium products and heavily promoting their brands. For example, Vetta Pasta launched high-protein, low-carbohydrate products to target health-conscious consumers in 2013, and Latina Fresh launched their premium Deli-inspired Cappelletti pasta range in 2014 to target the premium end of the market. Such activity has driven the industry's recovery over the past three years, as these products attract higher prices and thus contribute to higher revenue. These products will contribute to the forecast 2.1% revenue growth in 2014-15. “Fierce competition will continue over the next five years,” says Tonkin. Private-label products have cemented their place in the industry and are likely to grow in popularity as they expand into the fresh pasta space. However, branded product producers will be better positioned to withstand competitive pressure. The launch of new products, such as egg-free pasta, will allow producers to target niche consumers, while ongoing premiumisation of products will contribute to continued growth.
The Pasta Production industry is characterised by a medium level of market share concentration. The top players in the industry are Clearlight Investments Pty Limited, General Mills Holding (Australia) Pty Ltd and Rinoldi Pasta Pty Ltd. While there are a number of large, prominent brands operating within the industry, the market remains highly fragmented. Increases in concentration have been limited, as major players have sought to increase revenue through diversification into different areas outside the purview of the industry.
For more information, visit IBISWorld’s Pasta Production industry in Australia report page.
The industry manufactures fresh perishable pasta dishes and dry pasta products after purchasing ingredients from other food manufacturers. The end products are then packaged and distributed to grocery wholesalers, supermarkets and other food outlets. The industry does not include the production of noodles.
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