23 Jul

'Bringing British FMCG products to Australian mainstream retailers, FMCG post COVID19, and the new era of Free Trade between nations.'

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Due to COVID19, expenditure in FMCG grew by >12% in the QTR to late April 2020 with an average increase of 7% in basket size per shopper1. With Australians expecting to continue to spend more across groceries and in at-home entertainment for the second half of 20202, the FMCG market opportunity for UK brands is booming, but it requires the right management to cater for the changes seen in consumer spending and shopping habits due to COVID19.

Retailers Woolworths, Coles and Aldi were among the fastest in responding to the impact of COVID19 – in both consumer demand, and adjustments in shopping habits. Working quickly and directly with government and other bodies to implement immediate responses unprecedented speed, they implemented improved options for consumer purchasing behaviour and reduced risk for shopping.

For online, purchasing limitations were introduced to avoid out of stocks, along with extended delivery options and times. In-store, they extended opening times for elderly, social distancing signage, added security to avoid overcrowding, installation of protective screens for self-check-out, and increased hand sanitisation dispensers for customers and staff.

The impact of the rapid growth from panic buying and the continued trend towards home cooking has resulted in some businesses struggling with the challenge of maintaining supply and unable to keep up with demand.

British brands entering the market should be mindful of whether they have steady source of supply that can be met if they are at risk of being part of a panic buying category.

British born brand FUEL10K has been disrupting the Breakfast Drink Category in Woolworths despite changes in consumer habits in shopping, work, and the daily commute.

In the UK, FUEL10K has some of the best sellers in the breakfast drinks category in Sainsbury’s, and strong performance across additional retailer touchpoints, such as Tesco, Waitrose, Asda, WH Smith, Morrisons, Nisa and Coop.

Its desire to disrupt the market and create incremental growth made it a good brand to launch to retail giant Woolworths in over 900 stores nationwide.

Maurice Melis, COO, Brands and Marks, the Australian FMCG distributor, explained the main reason for the partnership “We saw an opportunity to disrupt the liquid breakfast aisle in the major retailers and FUEL10K appealed to us because of its combination of exceptionally strong branding and differentiated brand proposition – convenience with screw cap and no straw, functionality including high protein, low sugar, high fibre, vitamins and the fact it has a fantastic taste”.

While brands like PG Tips, Lyle’s, Paxo and Alpen have managed to make it to core grocery aisles, other brands are only accessed from the international food aisle, with independent retailers or online specialists. Therefore, the key to successful entry into market is to drive product to mainstream channels and aisles.

“Introducing FUEL10K into the market via major retailers, such as Woolworths, delivers visibility and brand exposure required to build presence in a highly competitive category. This strategy ensures brand owners achieve volume and economies of scale allowing them to subsequently branch out into other channels such as petrol, convenience, and pharmacy etc” said Maurice Melis, COO, Brands and Marks.

Free Trade agreement is likely to create more opportunities for entry into the Australian market for FMCG and retail.

Benefits of a Free Trade Agreement extends to all members of the value chain, from the consumer, to retailers, logistics companies and manufacturers. “The upcoming Free Trade Agreement is expected to drive a steady increase in retail in Australia for the right brands to enter the market, removing friction points in margins and allowing consumers more choice in their local supermarket” Maurice Melis, COO, Brands and Marks

By May 2020, 55% of employed Australians claimed their employment and income have been impacted by COVID19. This impact on price has meant there will be a 6% estimated drop in Australian’s willing to pay a price premium for better quality3. Factors to drive the premium offering remains more important than ever – quality ingredients, processes, brand trust and functional and sensory appeal are vital to shift from both private label and existing brand affinity.

Maurice Melis suggested some of the key desirable traits for retailers to accept new brands to market “Brands with a strong and innovative approach to their products and brand identity are the most appealing and memorable to both retailers and consumers. This combination, with a good business model, delivers the best opportunity for successful introduction to the Australian market.”

About Brands and Marks

Brands and Marks began three years ago, when the founders saw an opportunity to develop a small, agile marketing and distribution business to help bring unique and differentiated international brands to market in Australia & New Zealand. Now the company represents brands across a variety of channels in retail, petrol and convenience, pharmacy, and hospitality. As the company approaches its fourth anniversary in 2020, it looks forward to the continued expansion of distribution and ranging expansion for its UK partners.

 

Sources:

1 IRI Australia Industry Insights, FMCG in the COVID-Quarter & preparing for recession Part 1, June 5, 2020.

2 IRI Australia Industry Insights, FMCG in the COVID-Quarter & preparing for recession Part 2, June 5, 2020.

3 IRI Australia Industry Insights, FMCG in the COVID-Quarter & preparing for recession Part 2, June 5, 2020.

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