Shifting consumption trends have warranted innovation and new product introductions to stimulate demand in a mature and stagnant market.
Melbourne, Australia (PRWEB) February 18, 2015
Operators in the Cereal, Pasta and Baking Mix Manufacturing industry in Australia have had to deal with some challenges over the past five years. While the industry has shown some positive signs over the period, volatile input prices, downstream retail pressures and changing consumer trends have posed challenges. According to IBISWorld industry analyst Brooke Tonkin, “These conditions have also contributed to falling profit margins over the past five years.” Industry revenue is forecast to fall by an annualised 0.5% over the five years through 2014-15, to reach $2.4 billion. Revenue is projected to rise 5.2% in 2014-15, due to improved export earnings and increased sales of higher priced value-added products.
Supermarket chains have solidified themselves as the primary sales channel for industry products. The battle between supermarket heavyweights Coles and Woolworths has shifted to aggressive price competition, which has negatively affected the margins of industry players. “This is being exacerbated by the growing popularity of private-label products, which compete with the industry's branded products,” says Tonkin. Favourable brand reputations and customer loyalty have mostly enabled major players to differentiate their products and limit competition based solely on price. Australians have become increasingly wary of their food intake and conscious of factors such as sugar and fat content and quality of ingredients when deciding whether to purchase a brand or product. The resulting shifting consumption trends have warranted innovation and new product introductions to stimulate demand in a mature and stagnant market. The industry displays a medium level of market share concentration. Major players include Kellogg Australia Holdings Pty Ltd, Australian Health & Nutrition Association Limited, General Mills Holding (Australia) Pty Ltd and Nestle Australia Ltd.
The future of the Cereal, Pasta and Baking Mix Manufacturing industry, modest as it may be, does present some niche growth opportunities. Product innovation, brand loyalty and aggressive marketing strategies are expected to drive growth in the industry. Breakfast products that can be consumed on the go will become increasingly popular, reflecting the rise in time-poor, health-conscious consumers. Furthermore, consumer demand for functional foods, such as nutrient-enriched products, is set to rise. This bodes well for revenue growth, as these products typically attract higher prices. Profit margins are forecast to stabilise over the next five years, with rising input costs mitigated by rising revenue earnings from high-value products.
For more information, visit IBISWorld’s Cereal, Pasta and Baking Mix Manufacturing industry in Australia report page.
The Cereal, Pasta and Baking Mix Manufacturing industry consists of establishments that manufacture prepared breakfast cereals, fresh and dried pasta and prepared baking mixes.
Follow IBISWorld on Twitter: http://twitter.com/#!/ibisworldau
IBISWorld industry Report Key Topics
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.