Latest figures from inventory management software provider, Unleashed, reveal Australian beverage manufacturers ended the year with a strong $2.93 profit margin on each dollar invested in Q4 CY23. Food producers’ margins weren’t quite so rosy, at $1.87 per dollar spent.
Latest figures from inventory management software provider Unleashed reveal Australian beverage manufacturers ended the year with a strong $2.93 profit margin on each dollar invested in Q4 CY23. Food producers’ margins weren’t quite so rosy, at $1.87 per dollar spent.
The beverage industry’s Q4 profit margins mark a significant resurgence from $1.75 in Q4 2022, reflecting an upwards trend for Australian manufacturing in a quarter where nine sectors saw their highest profit margins in two years.
The uptick came from a combination of lower lead teams – 12 days compared to the Australian average of 15 – and strong customer demand for local beverage products.
While things look brighter for the broader beverage industry, as Food & Drink has reported and as brewer Dereck Hales of Bad Shepherd says, a multitude of issues continue to pressure smaller operators.
“Competitive pressure from large retailers and large producers in the form of cheaper white label products, tap contracts and lower cost alternatives are all causing stress for the local manufacturer,” Hales said.
The Independent Brewers Association has called on the federal government to put a freeze on indexing the alcohol excise to the Consumer Price Index. Similar calls have also come from the Australian Distillers Association and Diageo’s Bundaberg Rum mounting a publicity campaign on the topic.
While beverage and food producers often index closely together, Australian food manufacturers didn’t enjoy similar profit margins to beverages during Q4 2023. Food producers had an average profit margin of $1.87 per dollar spent on inventory, more than $0.30 cents below the Australian average of $2.22. Lead times were down to an average of 14 days, just one day faster than the average.
Meanwhile, New Zealand counterparts had the best Q4 since 2021.
The main concern for the food manufacturing industry is the upward trend in overstock levels (the cost of stock over and above the optimum levels for a business), now at an average of $222,370, up from $135,970 in Q1 CY22.
Murray River Salt production manager, Brian Hermans, said transport and logistic issues are having knock on effects for many food producers.
“Getting stock in on time and delays with freight, especially exporting or importing, has been the one thing that has made things harder,” Hermans said.
Tucker’s Natural founder, Sam Tucker, said rising costs are affecting every element of the production process, and this was hurting small food producers.
“Rising costs are a significant threat; ongoing increases in raw materials, energy and labour can heavily impact profit margins. Inflationary pressures and higher operational costs are very challenging for food manufacturers,” Tucker said.
