Understanding Australia's Business and Consumer Environment: A Guide for Successful Business Down Under

Understanding Australia's Business and Consumer Environment

How will Australia's economy, business environment and consumer trends impact the success of your business? This e-book examines the fundamentals businesses must understand to successfully expand or operate in Australia.

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Heralded as the success story among advanced economies for weathering the global economic downturn of 2008-2009, Australia’s high income levels and steady growth offer good opportunities for consumer goods and services in a wide range of sectors.

Key Findings:

• At the height of the global slowdown, advanced economies as a whole contracted by 3.5% - contrasting with Australia’s 1.4% growth.
• Whereas incomes and consumer expenditure have stagnated across many advanced economies, Australia’s per capita disposable income and expenditure have expanded by 9.8% and 3.5% respectively in real terms since 2008.
• In 2012, Australia was ranked 15 out of 183 economies on the World Bank’s Ease of Doing Business Index, meaning it is the fifteenth easiest place in the world to start and operate a local firm.
• Australia has an educated population: 99.9% of adults (those aged 15+) were literate in 2011, but suffers from skills shortages.
• In 2011, the population aged 45-49 in Australia had the highest average gross income: A$77,810 (US$80,259).

Topics include:

• Ease of doing business rating
• Corruption index
• Literacy rate
• Future challenges
• Natural resources
• Media consumption
• Consumer trends
• More

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Ditch the Drawer Part I: Laundry Care Innovation Ditches the Drawer

Analyst Insight by Emily Potts, Contributing Analyst, Euromonitor International

When it comes to HE washing machines, which compartment does the detergent go in? What about fabric softener? Washing machine drawers bring confusion to many. While some consumers research this problem online – a quick search of ‘washing machine drawers’ brings up plenty of queries, hints and instructions – plenty will rely on guesswork, and more industrious souls might read the instructions that came with the machine, if they can find them. With many of the symbols used on washing machine draws having little consistency between brands and also the labels on detergent and softener brands themselves, it is little wonder consumers get confused.

This is also an indication of the lack of connection which still exists between the software (brand) and hardware (appliance) providers in this corner of the fmcg industry. In these days of convenience-driven innovation in both consumer appliances and laundry care, there is surely opportunity for detergent manufacturers in collaboration with machine manufacturers to simplify one of the most confusing parts of the laundry process, innovation that may also herald an opportunity to do away with the mysterious drawer all together.

New Global Briefing: Toilet Care Moving to Tipping Point

Toilet care remained a small but profitable area of the home care market in 2012. While developed markets such as North America and Western Europe appear to have reached saturation, developing markets are increasingly taking a lead in value generation. This trend is likely to accelerate further with increased flush toilet penetration and wider westernisation of cleaning culture.

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Leading International Spirits Companies Struggle to Maintain Global Share

Analyst Insight by Jeremy Cunnington, Senior Analyst - Alcoholic Drinks, Euromonitor International

Most of the leading international spirits companies struggled to achieve the same rate of growth (3.6%) as the wider spirits category in 2012 and consequently lost global share.

It is perhaps unreasonable to expect many of the international companies to match global growth, which has been driven primarily by local spirits categories or brands in Asia Pacific, such as Baijiu in China and other (Indian) whiskies in India. However, it does shed light on the performances and strategies of key international players.

Vodka's Broad-Based Growth

Vodka dominates white spirits, with 86% of volumes. Growth is held back by vodka’s largest market, Russia, which accounted for 38% of global vodka volumes in 2012. It declined by 3% CAGR between 2007-2012, a trend that is expected to continue between 2012-2017. Large volume growth in markets such as India and the US, barely counters this fall. Euromonitor International looks at the key factors driving vodka's growth in its latest briefing: White Sprits: Grey Prospects and Golden Opportunities.

 

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The Surge of Organic Dairy Products in Turkey

Sales of organic dairy products are rising in Turkey; benefiting from increased consumer awareness of health and wellness and rising disposable income. Private label companies, which make up a large section of the dairy industry in the country, are boosting organic sales as well. 

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Future Prospects in the Indian Dishwashing Market

Consumption in hand dishwashing in India has been growing rapidly over the last decade, thanks in part to increased usage of higher-end crockery and glassware. Indian consumers are turning to more upmarket cleaning products as a result, encouraged to switch from traditional bar soaps to more modern liquids. With task-specific products almost non-exist in India given its low per capital disposable income, products that offer multi-functionality with an accent on health and hygiene are prospering in this rapidly growing market.

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India to Become the Third Largest Computer and Related Services Provider in 2014

Analyst Insight by Mindaugas Starkus, Analyst - Industrial, Euromonitor International

India’s computer and related services industry is expected to surpass that of China in 2014 and double over 2013-2017, exceeding US$200 billion by the end of the period. This will firmly put India among the three largest IT service providers in the world, together with the US and Japan. Indian and foreign companies benefit from an abundance of well-educated, English-speaking IT professionals on relatively low wages, coupled with tax incentives provided by the government.

Some of the tax benefits given to companies in the country’s Software Technology Parks (STPs) expired in March 2011 and they now have to pay profit tax on export revenue. However, the industry remains highly profitable and the increase in taxation is unlikely to force a rethink among global IT giants as to the best location for their outsourcing operations. India’s computer and related services industry had a profit margin of 44% of turnover in 2011. This was significantly higher than 14% in the US, 21% in China or 22% in Germany.

Dettol – One for All and All for One

Analyst Insight by Serena Jian, Senior Analyst - Home Care, Tissue and Hygiene, Euromonitor International

Reckitt Benckiser launched Dettol Kitchen Gel in India in February 2013, extending the country’s leading brand in surface care into hand dishwashing liquids, a category which is seeing rapid growth. Positioned as a “complete kitchen cleaner”, Reckitt Benckiser expects to capture a significant share of the Indian dishwashing category by encouraging consumers to use one product for all cleaning tasks in the kitchen. Riding on its brand equity in household antiseptics/disinfectants, Dettol’s new launch implies the importance of adding value in product development while keeping costs down in order to expand in emerging markets where consumers’ disposable incomes are still low.

Unilever: Is Creating its Own Tea Pod Machine a Risk Worth Taking?

Analyst Insight by Hope Lee, Senior Analyst - Beverages, Euromonitor International

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As fresh coffee manufacturers look for growth opportunities from pod machines, tea giant Unilever can also consider creating its own branded system. In a Q1 2013 financial release, Unilever reported improved tea revenues, achieving mid-single digit growth. The company attributed its good results to “improved product quality, stronger mixes and improved in-market execution”. Analysts are asking if these factors are sufficient to maintain the long-term growth of its tea business. In a recent conference, Unilever’s Executive VP of Global Beverages was reported as saying that tea capsules and the out-of-home market offer a premium opportunity. Tea, a minor business for the fmcg giant, could make a positive contribution to its corporate financial objective of achieving revenues worth €80 billion by 2020 if this premium opportunity is seized at the right time.

Belarusian Grocer 'Fresh Market' to Enter Lithuania

Fresh Market, a grocery store owned by Ipsun in Belarus, is set to expand to Lithuania in 2013, expanding into residential areas and offering fresh items such as fruit, meat and fish. The grocery market in Lithuania is already highly concentrated, but Fresh Market hopes to gain a competitive advantage by tapping into a smaller, convenience store-type format. Fresh Market's long term performance will likely depend on product diversity.

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