International discount retailers are being drawn to the Australian market where their cut-price proposition is gaining traction with consumers, Business Monitor International research has suggested.
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The Australian mass grocery retail sector is proving an attractive proposition for discount retailers, BMI claimed in its latest report on the country, Australia Food and Drink Report.
German discounter Aldi has witnessed continued success in the country, expanding its presence as it differentiates itself from Australia’s dominant grocers – Woolworths and Coles.
Meanwhile, US club store Costco also recently announced plans to enter the market, where it sees potential for growth.
However, a number of factors – including Australia’s low and widely spread population and increased production costs – have prompted international food manufacturers to scale back their operations in the market.
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By GlobalDataUK confectioner Cadbury has cut jobs in Australia and New Zealand as part of its drive to increase efficiency across its global operations, while Coca-Cola Amatil subsidiary SPC Ardmona has revealed plans to reduce capacity at its Australian canned fruit manufacturing facilities.
BMI sees greatest potential for international food companies to grow their returns in Australia by taking advantages of trends such as health and wellness.
“Subsectors, such as premium alcoholic beverages… and healthy foods will continue to perform strongly, stimulated by innovation and changing customer demands,” the report predicts.
