Australia Capitalizes on Asia's Hankering for Processsed Food

AS Asian countries increasingly gain more discretionary income, and as TV beams Western eating habits into the region, Western processed foods are being gobbled up.

Jams, ice cream, juices, snack foods, processed milk, cheese, and condensed soups are all popular with Asians. And Australian companies want to put their money where the mouths are.

In two years, the export of minimally processed and highly processed foods out of Australia has grown from $7.3 billion (Australian; US$5.1 billion) to $9 billion (US$6.3 billion.)

Much interest was spawned by a report that came out two years ago by management consultants McKinsey & Co. It said that by 2000, Asia will be home to 230 million affluent consumers, a market roughly equal in size to those of the US or Western Europe. It also showed the disparity in growth between the local markets and the Asian ones. ``The report said that by the year 2000, Australia and New Zealand food industries will have grown by US$6 billion to $36 billion; Asian food markets are estimated to grow by US$200 billion to US$685 billion,'' says Simon Holloway, an Australian Trade Commission official.

``In general terms there is no doubt that there are significant opportunities in added-value food products throughout Asia as local tastes change and disposable income increases,'' says Graeme Thomson, a manager with Goodman Fielder, which sells Meadow Lea margarine in Asia.

Meadow Lea margarine is the top-selling brand in Indonesia, Thailand, Singapore, and Hong Kong. Goodman Fielder's Vetta pasta is the top-selling brand in Singapore, Malaysia, and Indonesia. The company also has interests in the manufacture of fresh and frozen cakes in Malaysia and ice cream in Thailand. Last year it had $50 million (US$35.5 million) of exports out of Australia and New Zealand to Asia plus contributions from baking operations in Singapore and Malaysia.

SMALL companies also are biting into the Asian market. Six of South Australia's leading specialist food producers 18 months ago launched a marketing joint venture in Japan under the Australia's Best Foods Label. The family-owned companies are offering products such as jams, salami, and chocolates for the Japanese gift market.

``Diets in Asia are increasingly Western,'' says Michael Lawson, chairman of Australia's Best Foods. ``And people are increasingly eating away from home, which means they snack more - which means they'll buy these types of products.''

Unraveling the mystery of what kinds of food will appeal to Asians falls to Project Asia at the Commonwealth Science and Industry Research Organization (CSIRO). Since 1989, they've been directing their expertise toward boosting food exports into the Asia-Pacific region.

Companies pay CSIRO to find out if their products will appeal to Asian tastes, especially to the Japanese, whose food market is worth US$355 billion a year.

Multinationals are looking at Australia as a good jumping-off place into this dynamic region. Campbell Soup Company's takeover in 1993 of Australian biscuit company, Arnotts Ltd., was motivated by plans to supply Asia. So was the purchase by HJ Heinz of Wattie's frozen food companies in New Zealand. Both companies plan to invest in production in New Zealand and Australia to further ambitions in Asia.

Campbell's will soon be making duck gizzard soup in Australia to sell in China. And in July, Campbell's will offer a line of new products especially designed for Asian markets, using Australian products and ingredients.

``The new line,'' says David Wells, regional vice president of Campbell Soup Asia, ``... reflects increasing affluence in the region and diversification of packaged food that Asian consumers are looking for. And clearly Australian food manufacturing is now becoming world-class from a quality and cost perspective.''

But exporting into Asian countries is complex. Each country has different tastes, language and cultural hurdles, and regulations. In some countries, the governments not only are encouraging self-sufficiency in food, but they're also trying to develop their own food industries as well.

``Australian industry is going to have to look at creative ways of getting into those markets and developing a critical mass to enter and sustain a presence,'' Mr. Holloway says.