AUS: Retail competition will hit food manufacturing sector - analyst
A leading food industry consultant has warned that more Australian food processors will be driven out of business as a result of competition between - and the commercial powers held by - major food retailers.
In a speech to the Crawford Fund Annual Conference, held this week in Parliament House, Canberra, food industry expert Dr David McKinna, founder of McKinna et al, said Australian food processors' margins are no longer sufficient to support the reinvestment needed for global competitiveness.
The comments follow recent plant closures or imminent closures of food processing plants around Australia. These have included HJ Heinz's Wagga Wagga and Girgarre factories closed in May, as well as Coca-Cola Amatil's announcement last week of the closure of the Mooroopna tomato and fruit processing factory of its subsidiary SPC Ardmona.
"The tension between major supermarkets is driving massive restructuring of the agrifood supply chain. The turning point in the power shift has been the dramatic weakening of producer brand power," Dr McKinna said.
"Food processors have been wounded by competition from private labels, the inability to reinvest in innovation and branding and being forced to de-engineer products to meet price points.
"Without doubt, global food companies must all be considering closing Australian processing facilities."
According to Australia's export promotional agency Austrade, trade in processed food products makes up 20% of Australia's manufacturing industry and accounts for around 18% of employment in the manufacturing sector.
Australian Food News is Australia's leading resource for the food industry, delivering daily news from the grocery, retail and hospitality sectors to 40,000 professionals each month.
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