The Future of Food and Beverage Consumer Trends in Australia

Understanding the most important trends impacting Australian consumers requires a broader understanding of the macro environment forces that have affected Australia in recent years. This report outlines how these social drivers translate into distinct attitudinal and behavioral shifts among Australian consumers with respect to food and non-alcoholic beverage shopping and consumption. Features and benefits

• Identify the five most important consumer developments occurring in Australia, and understand how these affect consumers' food and beverage choices* Gain an in-depth understanding of the broader socio-demographic, economic and technological forces shaping Australian consumer behavior* Benefit from Australia-focused consumer insight, benchmarked against global sentiment, to cater for contextualized, region-specific information needs* Access multiple waves of primary research to increase the likelihood of being 'on-trend' with NPD and marketing in Australia* Identify the companies, brands and campaigns most likely to succeed in the Australian market in the near future, and adapt strategies accordingly Highlights

Nearly one-quarter of Australians will be over 65 by 2050. Addressing population aging requires rethinking of all aspects of a company's marketing strategy—from product design to promotion. Companies need to take a proactive approach to addressing this historically undervalued segment, in order to capitalize on rapidly shifting demographic trends.Over four-in-10 Australians find grocery shopping enjoyable, but almost the same proportion think there is too much product choice when shopping. Retailers can reconcile this paradox by competing on non-price characteristics such as customer service and in-store layout, to ensure the shopping experience is interesting and engaging for Australians.One-third of Australians are regularly buying food and drinks produced locally to where they live, a proportion that continues to increase each year. However, more companies are laying claim to the word 'local' without proper substantiation. Local claims must be accompanied by an authentic brand story that brings the value of local to life. Your key questions answered

• How do Australian consumers define 'value-for-money' and how have value orientations changed in recent years?* How are Australians using the internet to make food and beverage choices? What influence is improving connectivity exerting on Australian lifestyles?* How will private label food and drink products fare now that the economic downturn is effectively over? What do Australians think about private label?* What are the most influential ethical/environmental claims guiding Australians' food and beverage choices? How do these relate to other priorities?* What are the latest products and brands that are effectively addressing the needs of Australian consumers?

Table of contents

OVERVIEW
Catalyst
Summary

THE FUTURE DECODED
TREND: The socio-demographic profile of Australia is rapidly changing
The over 30 (million) crowd: Australia’s growing and graying population holds greater "cultural capital"
Australia’s household composition is a microcosm of wider demographic changes taking place in the country
Stirring the "melting pot": Australian views on multiculturalism are polarizedImmigration has played a central role in Australia's population growth and economic development. As Australia's society and economy evolves, so too does the approach and prevailing opinion on migrant intake.
Key take-outs and implications: understanding Australia’s changing socio-demographic profile is imperative in addressing and anticipating key consumer needs
TREND: Major challenges still confront post-downturn Australia
Australia leads the developed world in emerging from the downturn
Australian consumer confidence has rebounded compared to one year ago, but underlying caution remains
Mortgage envy: home ownership is becoming more elusive for young Australians
Australians are particularly sensitive to rising grocery pricesThere are several drivers of rising grocery costs that are universally applicable. Weather conditions (particularly climate change), rising petrol prices, global commodity price restrictions, and improved food standards have seen food prices soar in most major developed countries. This has particularly been the case in Australia, where OECD data (reported in The Age, November 2009) revealed that Australia’s food prices have increased by more than 40% in the past decade – one quarter faster than the UK, twice as fast as France, and nearly three times the rate of German grocery prices.
Australia’s labor market has fared comparatively well amid the downturn but needs to address the aging population and gender wage disparityFor many people, one of the most direct impacts of an economic downturn is the effect it has on their opportunities in the labor market. Fortunately, in Australia, this effect was milder compared to other industrialized nations, for whom unemployment remains a serious concern. The most pressing issue facing Australia’s labor market in years to come is arguably the decline in labor force participation as the population ages and the proportion of median working age people decreases. Another concern is the prevailing wage gap between males and females, the extent of which has even attracted international scrutiny.
Key take-outs and implications: Australians are cautiously optimistic about their economic prospects for the future
TREND: Many issues of global relevance are influencing Australian values
Australians exhibit a great deal of pride in their country
The institution of family is a defining characteristic of Australian cultureDespite changing household types and family structures, the notion of family is an enduring one, and Australians continue to look to their families for stability, values, emotional and financial support, and a sense of belonging. This was particularly the case during the economic downturn, as consumers sought comfort in their personal relationships, prompting Australians to re-prioritize this aspect of their lives. Family is as important as ever in Australian life, not only for comfort and financial support, but also for advice on everyday decisions, particularly as consumers become increasingly cynical about corporations’ marketing efforts. Acknowledging the importance of family to Australians helps elucidate the strong influence that family and friends have on consumers’ purchase choices.
Australians are tackling numerous health issues with varying degrees of urgency
Australians are making greater efforts to reduce their impact on the environment Australia’s natural environment is a unique and defining aspect of the country, and is integral to quality of life and the sustainability of society. Growing awareness – fuelled by individuals, the government, media and interest groups alike – of the need to take action to end (or at least mitigate) environmental degradation has driven Australians to undertake change in their own lives. Still, Australia’s carbon footprint is disproportional to the country’s comparatively sparse population.
Key take-outs and implications: it is important to understand how Australians’ values are changing in order to effectively resonate with consumers
TREND: Australians will rely more on the internet as mainstream media loses credibility and relevance
Australians are demonstrating growing distrust of mainstream media and advertisingConsumers are overloaded with advertising messages each day, with the degree of marketing saturation negatively affecting consumers’ attitudes toward the advertising industry. In 2010, three-quarters (75%) of Australians said they "tend to agree" or "strongly agree" that there is too much advertising today. The proportion was slightly lower compared to 2008 (79%) but a considerable majority nonetheless. The broad appeal of judging and criticizing the advertising industry has even been turned into a successful Australian television show, The Gruen Transfer, which aims to deconstruct various advertising campaigns and assess them on their merits (or lack of).
The internet will continue to facilitate Australian lifestyles
Key take-outs and implications: Australians are increasingly cynical of the media and advertising, and will rely more on connective technologies to influence their consumption choices
INSIGHT: The Australian retail sector is being shaped by shifting consumer expectations
New retail players have made little headway in dissolving the Coles and Woolworths duopoly
Australian grocery shoppers are becoming increasingly demanding of supermarketsAustralian shoppers exhibit a paradoxical attitude toward grocery shopping, whereby they perceive supermarkets to offer too much choice, yet value product assortment as one of the most important factors in deciding where to shop. Similarly, consumers expect grocery retailers to demonstrate greater action toward demonstrating ethical and environmental responsibility; however, the influence attached to these attributes in determining where to shop is comparatively low. In essence, Australian grocery shoppers demand a lot from their supermarkets, and to retailers’ credit, they are generally satisfied with the level of grocery retailing in the country. However, as the number of players and the breadth of their offerings increase, the seemingly minor considerations that are perceived as having little impact on consumers’ grocery choices may indeed become necessary differentiators.
Private label momentum will continue to strengthen the position of grocery chains
Key take-outs and implications: grocery retailers need to keep up with increasingly demanding Australian shoppers The dominance of Coles and Woolworths in Australia shows little sign of abating. Yet, a survey by the Australian Consumers' Association (also known as CHOICE) found that 19% of consumers citied "better supermarket competition" as one of the most important issues for the new government to address. New players in the grocery retail sector can be heartened by this sentiment, as consumers have expressed concern over the duopoly’s power across the food retailing sector, as well as petrol and alcohol. New retail offerings need to position themselves as a truly unique alternative that challenges the power of the supermarket duopoly. Foreign discounters Aldi and Wal-Mart, for example, have effectively executed value-based propositions, while "boutique" grocers such as Harris Farm and Fratelli Fresh have banked on more distinctive charm and history to carve out niches for themselves.
INSIGHT: Eating for health: Australians are weaving health considerations into all aspects of food and beverage consumption
Australians are adopting a more disciplined approach to eatingGiven the inherent and widely understood relationship between health and diet, Australians are paying closer attention to the food and drinks they consume in an effort to realize their health goals. While there are several ways in which dietary discipline can be exercised, Australians are demonstrating a clear preference for eating smaller portions over strict diet plans and calorie counting.
Australians prefer to think positive when it comes to good nutritionAustralians' preference for embracing portion control over more formal diet plans and calorie counting is indicative of a shift in mentality, whereby consumers are more concerned about the inclusion of a wide range of foods in their diet, as opposed to more stringent diet regimens based on restrictions and the denial of certain "forbidden" foods. Indeed, portion control is perceived as a more flexible approach to disciplined eating, allowing consumers to choose from a variety of foods, while managing portion sizes. Clearly, Australians have become fatigued by dreary and often predictable health messages telling consumers to steer clear of certain foods, and are demonstrating a desire for positive health advice.
Growing reliance on product labeling reflects heightened interest in nutritional specifics
Australians' weight management goals are hampered by cynicism and information barriers
Key take-outs and implications: food and drink manufacturers need to help Australians take more responsibility for their health Australians are willing to adopt a more disciplined approach to eating, but are being selective in how they are exercising this discipline. Less than a quarter (24%) are adopting specific diet plans, but nearly half (46%) are exercising greater control over their portion sizes. While this certainly has implications for industry players with respect to assisting consumers with manageable meal sizes through portioned packs for example, it has deeper implications with respect to how Australians are approaching responsible eating. The appeal of prescribed diets is low among consumers, suggesting that the idea of a controlled eating plan is negatively perceived. However, marked growth in the proportion of Australians exercising greater portion control indicates that consumers are more willing to curb the volume of food as opposed to the type of food they consume. This "quality over quantity" mentality is an important consideration for marketers, as it reveals in which aspects Australians are prepared to make sacrifices. Communicating "portioned indulgence" or "treat" size portions conveys to consumers that quality and sensory benefits have not been forgone for the sake of health, while also enhancing the permissibility of the indulgence.
INSIGHT: Eating for the planet: Australians are increasingly considering the ethical and environmental implications of the food and beverages they purchase
The organic food and drink market in Australia continues to gather momentum
Ethically minded Australians are increasingly buying into fairly traded food and drinks
For Australians, good things come in less packaging
Locally made food and drinks resonate strongly with Australian consumers
Australians want to hold companies more accountable for their environmental impact
Key take-outs and implications: Australians are holding food and drink manufacturers to higher scrutiny with respect to ethical and environmental responsibility
INSIGHT: Eating for convenience: growing demands on time are impacting Australians' food and drink consumption occasions
Time scarcity continues to impact main meal consumption
Busy Australian lifestyles often necessitate eating on the move
Time scarcity is turning Australia into a snacking societyAustralians' propensity to snack at various times during the day has increased markedly compared to two years ago. While afternoon snacking remains the most common, consumers' inclination to snack in the morning has shown the biggest increase. One explanation of this is the widely held belief that eating smaller and more frequent meals throughout the day is actually healthier than eating three large meals a day. However, the prevalence of main meal skipping has decreased over the same period, suggesting that snacks are not necessarily substituting main meal consumption in an effort to eat healthier. In fact, a significant proportion of Australians associate snacking with guilt. An increase in snacking behavior also implies a shift in consumers' definition of snacking, from a prescribed consumption occasion and food type, to a more unregulated activity that encompasses anything outside of a "main meal". Growth in snacking also suggests that Australians are simply eating more, but not necessarily more "bad" food. The ubiquity of snacks in Australia has led to a new and highly important category of healthy or "better for you" snacks that address consumers' hunger pangs without significantly compromising their health. The adoption of such foods has also boosted snacking occasions in Australia.
Time-poor Australians are seeking a more efficient shopping experienceConsumers' busy schedules not only influence food consumption but also impact their shopping trips by limiting the time available to shop. Such an activity can prove all the more time-consuming given the surplus of choice available at today's supermarkets, which can turn the simple act of buying milk into an arduous task of navigating competing brands and health claims. As a result, more consumers are opting instead to buy groceries as and when they are needed, to avoid the forward-planning and investment of time that big shopping trips require. A study conducted by Reimers and Clulow in June 2008 exploring the influence of time convenience on shopping behavior in Australia concluded:
Key take-outs and implications: Australian consumers are looking for products and services that take the time and effort out of food shopping and meal preparation
INSIGHT: Eating for less: staunch value consciousness will continue to endure post-downturn
The thrill (and necessity) of the bargain-hunt continues to entice Australian consumers
Private label products continue to grow "share of wallet" from value conscious AustraliansAs Australians ruthlessly reassessed their spending priorities during the economic downturn, factors such as brand loyalty and habit gave way to more tangible benefits such as price and convenience. Consequently, many consumers began to forgo their preferred brands in favor of private label products that offered similar quality but at lower price points. Despite an improved economic outlook in Australia – and the fact that the country never fell into a recession – the private label trend continues to gather momentum as product ranges expand and the quality of such offerings improves.
Australians are going online to find the best dealsAs technology becomes evermore entrenched in Australians' lives, even everyday shopping decisions are subject to some degree of online research or scrutiny. Consumers have access to a wealth of brand and product information, which empowers and encourages them to draw on this information to make better informed purchase decisions. This, coupled with a growing number of websites that offer consumers exclusive "online only" deals (albeit typically outside FMCG), has resulted in consumers being conditioned to believe that every great deal begins online.
A return to scratch cooking at home was borne out of value considerations
Key take-outs and implications: industry players must enhance their value proposition, and in doing so, acknowledge that value is an individually defined concept that extends beyond low prices
INSIGHT: Eating for pleasure: Australians often make food and beverage choices on the basis of pure indulgence and enjoyment
Australians value experimentation and variety in food and beverage consumptionToday, Australia's supermarket aisles are becoming increasingly diverse. The international array of food and drink products on offer not only reflects the desire among different ethnic groups to enjoy their traditional dishes, but also consumers' growing interest in cuisines they are less familiar with. Such an interest was given a considerable boost following the phenomenal success of Channel Ten's cooking reality show, MasterChef. Australians' increasing propensity to experiment with food reflects a renewed interest, not only in food consumption but also in food preparation.
The growing desire for healthy indulgences is indicative of the competing desires of health and hedonismAustralians are becoming more demanding when it comes to selecting food and drinks; not only must products taste good, but they should also offer health benefits. Indeed, consumers believe that a heightened sensory experience should not come at the expense of their nutrition. To the credit of manufacturers, the sensory credentials of healthy foods have improved over the past year, as more players have tried to capitalize on this lucrative space. Still, not all are convinced that healthy foods can actually be enjoyable, a disconnect that needs to be addressed for today's uncompromising consumers.
Australians are inclined to treat themselves with premium food and drinksThe enjoyment gained from consuming food and drinks traditionally stems from the actual taste and flavor of the product. However, as the "experiential" aspect of consumption grows in importance (to both consumers and marketers), less tangible product attributes can contribute just as effectively to food enjoyment. In fact, more Australians are buying premium food and drinks as a treat, reflecting the inherently indulgent nature of such products, which can enhance the consumption experience considerably. While a "premium" positioning can explicitly be communicated through marketing communications, it is important to note that other cues can prove just as valuable in conveying such an image.
Key take-outs and implications: ensuring that food enjoyment is at the heart of food and beverage propositions is crucial to success Amid intensifying concerns surrounding health, heightened ethical consciousness and time scarcity, consumers ultimately want their food and drink products to taste good. Indeed, 81% of Australians cite taste/flavor as being highly influential in their food and drink choices. This fundamental criterion must not be overlooked in favor of other, seemingly more contemporary trends, but rather must be factored into product development, from ideation to marketing communications. Essentially, the pleasure derived from food must remain at the forefront of any food and drink offering if it is to be at least considered by consumers. This must be reflected in the relative emphasis of any given marketing campaign.
ACTION: Adopt a progressive but pragmatic approach to capitalizing on these trendsThe insights presented in this report denote some of the most important consumer developments occurring in Australia. However, when evaluating them against a company's own product portfolio and brand mission, it is essential to keep in mind the following:
Brands to watch: Ben & Jerry's
Brands to watch: Kraft liveactive Kraft has recently launched a cholesterol-lowering cheese in the Australian market. Following the success of margarine spreads offering the same benefits, Kraft's new offering is likely to rejuvenate the cheese category.
Brands to watch: V energy drinksEnergy drinks are a growing category in Australia, as time-pressed consumers, particularly in younger generations, seek a quick energy fix throughout the day. Frucor's V brand has implemented a vigorous rollout of brand extensions to expand consumption occasions for its already-successful V energy drink, in order to remain top-of-mind in an increasingly cluttered category.
Brands to watch: Coles Organic
Brands to watch: Sanitarium

APPENDIX
Report methodology
Further reading and references
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Datamonitor consulting
Disclaimer

Related research categories

By sector: Trends, Consumer (in Trends), General drinks

By market: Australia (in Oceania)