IBISWorld Market Research
Competition from the major supermarket chains has created operating difficulties for some players.
Melbourne, Australia (PRWEB) December 24, 2014
Downstream industries have strongly influenced the fortunes of the operators in the General Line Grocery Wholesaling industry in Australia over the past five years. Competition from the major supermarket chains has created operating difficulties for some players. According to IBISWorld industry analyst Brooke Tonkin, “demand from accommodation and food-service industries has assisted industry growth.” Industry revenue is projected to post annualised growth of 1.4% over the five years through 2014-15, to reach $20.4 billion. This includes forecast revenue growth of 1.5% in 2014-15.
Heavy discounting by major supermarket chains has taken its toll on wholesalers that cater to food retailers. Players such as Metcash have suffered weak revenue growth, as independent supermarkets have lobbied for lower prices so they can compete with discounted prices at Coles, Woolworths and ALDI. Furthermore, wholesale bypass has hampered growth among wholesalers, as Coles and Woolworths have their own supply chains and ALDI has increased its vertical integration, reducing its reliance on wholesalers. “Consequently, food retailer-focused wholesalers have suffered slow revenue growth and falling profit margins over the past five years,” says Tonkin. The industry's growth has been supported by general line grocery wholesalers that cater to accommodation and food-service industries. Players such as Bidvest and PFD Food Services, whose major clients include Hungry Jacks, KFC and Boost Juice, have enjoyed modest revenue growth over the past five years. These players have remained isolated from supermarket-driven competition, and have capitalised on growing demand from accommodation and food-service industries. Profit margins among these players have remained steady over the past five years. The industry displays a medium level of market share concentration. Major players include Metcash Limited, Bidvest Australia Limited and PFD Food Services Pty Ltd.
The future remains bright for the General Line Grocery Wholesaling industry. Over the next five years, more players are anticipated to shift their focus towards accommodation and food-service industries to make the most of growing demand and stronger profit margins in this market. Increasingly busy consumer lifestyles will contribute to growth in demand from convenience stores, which will present an opportunity for some wholesalers. There will be some room for medium-size wholesalers to enter the industry with niche products, such as organic produce, but this will be distributed within a smaller geographical area.
For more information, visit IBISWorld’s General Line Grocery Wholesaling industry in Australia report page.
Operators in this industry wholesale a wide range of general groceries to a variety of markets, including supermarkets, convenience stores and food-service establishments. To be included in the industry, a firm must wholesale at least three of the following grocery lines: meat, poultry and smallgoods; dairy produce; fish and seafood; fruit and vegetables; liquor or tobacco; and confectionery or soft drinks.
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