The Prime Minister’s Manufacturing Taskforce has recommended that a government-funded Australian food industry innovation hub and network be created in order to take advantages of opportunities in the Asian market. It also recommended that food industry regulations are reviewed to ensure they don’t undermine competitiveness.
The taskforce’s report Smarter Manufacturing for a Smarter Australia said establishing a centre to capture Asian consumer insights and develop capabilities to innovate and commercialise products in line with these would help Australia to realise the benefits of ‘the Asian century’. It said the innovation hub needed to drive innovation among both multinational enterprises (MNEs) and small-to-medium-sized enterprises (SMEs), with a national food innovation network to support engagement.
“If Australia can strengthen its position as an integrated supplier into Asian markets, it would be well placed to secure major investment and innovation opportunities in the region,” said the report. “Australia’s strategy needs to focus on leveraging existing comparative advantage, in areas such as beef, dairy, sugar and grains, as well as developing areas that have high export potential in Asian markets. This strategy would involve developing a deep understanding of Asian consumers and their tastes.”
The envisaged innovation hub would provide a focal point for government, industry and research collaboration, connecting CSIRO and university laboratories and facilities, as well as international centres of excellence, providing access to technology and equipment that’s not readily accessible, particularly to SMEs.
The AFGC applauded the recommendation, saying the hub would be a key to Australia capturing a share of growing food export markets in Asia.
“In this environment it is critical that we identify and capitalise on our comparative advantages in areas such as R&D, proximity to raw material inputs, marketing and design,” said Gary Dawson, chief executive of the AFGC. “By bringing together leading companies and research bodies, including the CSIRO, in a commercially focused initiative, the proposed food industry innovation hub would be a catalyst for investment, improved productivity, export sales and growth.
“It would send a clear message to food companies, both multinational and local, that Australia is serious about driving innovation and growth in this important sector.”
Case study: Kraft’s success in China
To illustrate its proposal, the Smarter Manufacturing for Smarter Australia report pointed to Kraft’s success in China with its Oreo cookies. When Kraft first launched the product in Asia, it was not an immediate hit and was almost pulled out of China. However, following research, Kraft discovered that Chinese consumers found the cookie to be a little bit too sweet and the flavour didn’t deliver an emotional attachment with Chinese families. New products were developed with flavoured fillings such as green tea and orange which were more familiar to the local demographic, which resulted in sales of Oreos in China doubling in 2009, and again in 2010, and again in 2011.
“It’s now the best-selling cookie in China,” the report said. “With the help of those sales, Oreo revenue topped $1 billion, with China becoming the second largest Oreo market globally.
“A key objective of the National Food Innovation Hub and Network is to replicate this success...”
