Innovation is the key to profitability in competitive world food markets. The real opportunities for Australia in a global market, and bigger financial returns, come from value adding along the food supply chain.

Since 1980 international trade in processed consumer goods has increased rapidly while the proportion of bulk agricultural commodity trade has declined. Today trade in processed food products is growing at twice the rate of bulk commodities.

By developing new food processing, separation and packaging technologies and innovations, Australia is staying at the forefront of the food industry worldwide. Combine these strengths with a reliable supply of high quality raw materials, clear food safety regime through Food Standards Australia New Zealand (FSANZ), an environment that encourages creativity, innovation and collaboration, and Australia is an ideal location for investment all along the chain.

International companies recognise this, which is why most of the world's leading food companies, including Nestle, Unilever, Associated British Foods, DSM, Danisco, Parmalat, Mars, McCains, Simplot, and Hakubaku have a presence in Australia.

Opportunity

Industry and Government working collaboratively to encourage innovation and more value-add in Australia to compete more effectively with lower costs producers overseas – through introducing technology changes which will help drive down costs and increase processing scale.

Australia has significant R&D capabilities in food processing including at Food Science Australia (FSA); the dairy industry through the Dairy Cooperative Research Centre and the wine industry through the Australian Wine Research Institute (AWRI). These capabilities are reinforced by successful spin-offs from universities. R&D in food processing is also being conducted by companies and through private research organisations.

Companies providing value added products in food processing are supported by Australia’s strong, export focused, agricultural industry, particularly in areas such as:

• the dairy industry (e.g innovative companies focusing on extraction and purification of proteins, peptides and colostrum from milk);
• wine (a sector that has demonstrated both strong leadership with its 2020 Strategy and an ability to take up innovative technology);
• the brewing industry (which also has a strong focus on innovation);
• the sugar industry, through the Cooperative Research Centre for Sugar Innovation through Biotechnology (developing new wellness foods products including healthy fibres from bagasse); and
• the meat industry through work supported by Meat and Livestock Australia.

Food packaging

In its simplest form, packaging plays an important role in keeping the food supply safe. Packaging maintains the quality of food after processing is completed, enabling it to be sent long distances from its point of origin. The design and construction of packaging also plays an important role influencing shelf life as well as aesthetic appeal.

Traditional materials used in packaging include glass, metals, paper and paperboards, plastics. A wider variety of plastics are now available both in rigid and flexible forms and today's food packaging often combine several materials.

In balancing today's heightened social and environmental consciousness and stricter regulations on pollutants and disposal of solid waste, many companies are turning towards more biodegradable options that have less impact on the environment. 

Wellness and functional foods

Wellness and Functional Foods are any foods that provide inherent health benefits as well as those fortified with concentrated ingredients, modified in a way that aims to promote health and wellbeing, grown chemical-free, improve performance or reduce the risk of disease.

The market for intrinsically healthy foods has experienced remarkable growth and consumer interest in recent years. Companies are increasingly focusing on everyday foodstuffs, particularly whole fruit and fruit juices, which carry the “naturally healthy” message. Berries (high antioxidant content), oats, whole grains, almonds, peanuts (all heart health), herbs/spices and orange juice (reduced risk of stroke) are examples of foods that have been successfully marketed for their intrinsic healthfulness.
 

(Source: The Centre for Food & Health Studies, 2006, The Key Emerging Functional Food Trends and Technologies in the International Market)

Wellness and Functional Foods are improved foods consumed from a health, convenience and enjoyment perspective. The growing demand for novel and healthy food ingredients makes this an important part of the food industry in Australia. Australia is also the perfect location in which to source key high quality horticultural products – with good land-availability, available water sources and expertise.

Moreover, Australia has an abundance of agricultural waste streams many of which remain largely untapped for nutritional and bioactive extraction.

Australia is very active in the development of designer formulations for food to reduce obesity and improve cardiovascular health; including probiotics, prebiotics, low glycemic-index foods, increased dietary fibre and antioxidants. Valuable compounds from dairy, plant, animal and marine sources are being developed with emphasis on identification, acquisition, preservation and enhancement of their functional properties. To isolate and use these valuable compounds, Australia also has well-established food technology in fortification, extraction and microencapsulation.

With Australia’s profile of food production, processing and export, the opportunities for sourcing healthy foods, nutritional components and functional food development are extensive. Primary products such as grains, dairy, fruit, vegetables, meat and fish all have the potential to capitalise on their intrinsic nutritional value in the functional food market – and this in addition to their known value as core foods.

Wholefoods/organics

The global organic industry is the fastest growing food category, with demand outstripping supply in most developed economies. This presents significant export opportunities for Australia. Organic is practiced in over 120 countries of which Australia has the largest area of certified organic land with over 12.3 million hectares available. The next largest is China with 3.5 million hectares of organic land.

Since 2000, the Australian organic industry has more than doubled in value, recording over A$400 million in retail sales in 2006. From 2002 to 2006 the number of certified organic processors increased by 19%; currently there are over 2500 organic operators representing all levels of the supply chain.

The Australian organic industry comprises a diverse range of products which is expanding due to increasing consumer demand. The most important sectors are beef and horticulture which experienced significant growth in 2006 (25 per cent and 30 per cent respectively). Australian organic vegetable production includes asparagus, beans, broccoli, carrots, garlic, ginger, lettuce, onions, potatoes, pumpkin, squash, zucchini, and herbs and spices. Organic fruit production includes apples, avocadoes, bananas, grapefruit, lemons, watermelon, olives, oranges and paw-paw.

The market for intrinsically healthy foods has experienced remarkable growth and consumer interest in recent years. Companies are increasingly focusing on everyday foodstuffs, particularly whole fruit and fruit juices, which carry the “naturally healthy” message. Berries (high antioxidant content), oats, whole grains, almonds, peanuts (all heart health), and orange juice (reduced risk of stroke) are examples of foods that have been successfully marketed for their intrinsic healthfulness.

(Source: The Key Emerging Functional Food Trends and Technologies in the International Market, Julian Mellentin, The Centre for Food & Health Studies, 2006