In a recent Food & Drink Business podcast, editor Kim Berry spoke to CommBank’s industry lead for Manufacturing & Wholesale Trade, Maria Christina, and CEO of That’s Amore Cheese, Marco Alghisi, about the mood of Australia’s food and beverage sector.
As food and beverage manufacturers and distributors navigate an evolving commercial landscape, the Commonwealth Bank’s CommBank Food and Beverage Manufacturing Insights Report May 2024 shows an undercurrent of confidence across the sector.
This was one topic in the spotlight in the recent Food & Drink Business podcast, with host Kim Berry raising a salient question —what’s supporting signs of optimism amid tumultuous operating conditions?
Weighing in on this and the sector’s strategic priorities was That’s Amore Cheese CEO, Marco Alghisi, and CommBank’s industry lead for Manufacturing & Wholesale Trade, Maria Christina.
Charting a course
Discussing the report, Christina says while economic conditions are tough, businesses’ financial performance remains resilient.
Two in three food and beverage businesses reported revenue and profit growth in 2023, with a similar outlook for this year. Many are also seeking to expand workforce capacity and output. However, Christina points out most expect costs to remain elevated, and 72 per cent say inflation and energy prices will have an ongoing impact.
“Manufacturers are known to be a resilient bunch but the economic challenges are very real,” Christina says. This is prompting a focus on productivity and cost controls, alongside product innovations and pricing reviews. However, the latter can only go so far amid cost of living pressures.
Alghisi agrees, saying inflation has had a negative impact on consumption. But he adds, “As a company, we decided not to increase our price list in order to maintain, push and increase the sales volumes.
“Instead, we are undertaking initiatives to increase productivity and focusing on developing a new product line that will add to the 60 Italian-style specialty cheeses produced by That’s Amore.”
Investing in people, products, productivity
The CommBank research confirms that businesses are investing in driving productivity and streamlining operations. Alghisi says consumers aren’t willing to pay for the inefficiencies of the producer.
“We internally activated a path for a vision for our internal process and procedures,” Alghisi says. He notes That’s Amore has grown rapidly, and “we continue to increase productivity and production capacity to cater for today and tomorrow’s demand.”
Alghisi says continuous improvement and innovation in the offer is “a strategic part of the pattern”.
“The foody part of Australia that is a big part of consumers; they are looking for something new on the table.”
From an investment perspective, That’s Amore has key pillars for productivity investment: people, machinery, processes and procedures. Alghisi says people come first as the “best investment you can [make] to grow productivity and proudness to be part of a journey.”
Christina adds that from a broader industry perspective, businesses are investing in general and digital staff reskilling, reviewing production KPIs and optimising inventory management systems.
Impact and efficiency
The CommBank research also confirms that food and beverage businesses are turning to sustainability to capture efficiency benefits. Christina says that this year, cost efficiencies were the biggest driver, whereas last year, compliance took the top spot.
Alghisi says That’s Amore is looking beyond costs and implementing a range of green programs to reduce packaging waste, and water, chemicals, electricity and gas usage - and embedding them in management KPIs. It is also installing new solar panels to increase renewable generation.
Christina adds that businesses expect the upcoming change in the sustainability regulatory landscape to change how they operate.
“Some businesses are looking at ways to turn this into an opportunity and innovating their processes and systems.”
To learn more about CommBank’s Food and Beverage Manufacturing Insights go to CommBank.com.au/Manufacturing&WholesaleTrade
Things you should know
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