Professional Documents
Culture Documents
Sector Stream – Processed Foods
Final Report
October 2011; v1.35
www.foodandbeverage.govt.nz
This information was prepared by Coriolis solely for the use of our client; it is not to be relied on by any third party without prior written consent.
Coriolis is a strategic management consulting and
market research firm
We work with organisations to help them grow. For corporations, that
often means developing strategies for revenue growth. For
governments, it means working on national economic development. For
non‐profits, it means helping to grow their social impact.
The coriolis force, named for French physicist Gaspard Coriolis (1792‐
1843), may be seen on a large scale in the movement of winds and
ocean currents on the rotating earth. It dominates weather patterns,
producing the counterclockwise flow observed around low‐pressure
zones in the Northern Hemisphere and the clockwise flow around such
zones in the Southern Hemisphere. To us it means understanding the
big picture before you get into the details.
‐ Investors (domestic or international)
‐ Industry participants (firms & individuals)
‐ Government (across all roles and responsibilities)
‐ Scientific researchers (academic, government & firm)
It draws conclusions on potential industry strategic directions
and highlights opportunities for further investment.
It forms a part of the wider Food & Beverage Information Project
and will be updated annually.
TABLE OF CONTENTS
Section Page
Contents 4
Glossary of terms 5
Methodology & data sources 6
F&B IP Overview 7
Summary & conclusions 12
‐ Grain‐based processed foods 18
‐ Non‐grain‐based processed foods and other foods 29
Appendices 59
GLOSSARY OF TERMS
This report uses the following acronyms and abbreviations
JV Joint venture Sources
m Million AR Annual report
n/a Not available/not applicable Ce Coriolis estimate
NA/ME/CA North Africa / Middle East / Central Asia Ci Coriolis interview
Nec/nes Not elsewhere classified/not elsewhere specified K Kompass
N.H Northern Hemisphere Ke Kompass estimate
PAGE 5
METHODOLOGY & DATA SOURCES
Data was from a variety of sources, and has a number of identified limitations
- This report uses a range of information sources, both qualitative - Coriolis makes no representation, warranty or guarantee,
and quantitative. whether express or implied, as to the quality, accuracy,
reliability, currency or completeness of the information
- The numbers in this report come from multiple sources. While we provided in the report.
believe the data are directionally correct, we recognise the
limitations in what information is available. - All trade data analysed in all sections of the F&B Information
- In many cases different data sources disagree (e.g. project are calculated and displayed in US$. This is done for a
Statistics New Zealand vs. FAO vs. UN Comtrade). range of reasons:
- Many data sources incorporate estimates of industry 1. It is the currency most used in international trade
experts. 2. It allows for cross country comparisons (e.g. vs. Denmark)
- As one example, in many cases, the value and/or volume 3. It removes the impact of NZD exchange rate variability
recorded as exported by one country does not match the 4. It is more comprehensible to non‐NZ audiences (e.g. foreign
amount recorded as being received as imports by the investors)
counterparty [for understood reasons]. 5. It is the currency in which the United Nations collects and
tabulates global trade data
- In addition, in some places, we have made our own clearly noted
estimates. - The opinions expressed in this report represent those of the
industry participants interviewed and the authors. These do not
- Coriolis has not been asked to independently verify or audit the necessarily represent those of Coriolis Limited or the New
information or material provided to it by or on behalf of the Zealand Government.
Client or any of the data sources used in the project.
- The information contained in the report and any - If you have any questions about the methodology, sources or
commentary has been compiled from information and accuracy of any part of this report, please contact Tim Morris, the
material supplied by third party sources and publicly report’s lead author at Coriolis, on +64 9 623 1848
available information which may (in part) be inaccurate or
incomplete.
PAGE 6
F&B INFORMATION PROJECT
The New Zealand Food & Beverage Information Project is designed to be the foundation of facts and figures on
which a range of audiences can build
Structure of the New Zealand Food & Beverage Information Project
(2011)
PAGE 7 Note: Every year two subsectors are completed in more detail. Seafood and Nutraceuticals in 2011
PROCESSED FOODS SECTOR ANALYSIS
This analysis of the New Zealand processed foods sector forms a part of the wider Food & Beverage Information
Project
Structure of the New Zealand Food & Beverage Information Project
(2011)
PAGE 8
WHAT ARE PROCESSED FOODS?
This report defines processed foods as foods made from a combination of ingredients, rather than one single or
predominant ingredient
EXAMPLES: Non‐processed foods vs. processed foods
(2011)
Non‐processed foods Processed Foods
Ingredients: Milk Chocolate (Contains Sugar; Cocoa Solids (Cocoa Mass &
Ingredients: Kiwifruit Cocoa Butter) (33%*); Milk Powder (30%*); An Emulsifier (Soya Lecithin);
Flavour); And Roasted Almonds (27%*) *Minimum Percentage.
Ingredients: Selected Meat & Meat by‐products (Derived from Poultry, Lamb &
Beef), Flour, Vegetable Proteins, Gelling agents, Oils, Colours, Flavours, Vitamin
& Mineral Supplement
Ingredients: Lamb
Ingredients: Nonfat Milk Powder, Lactose, High OleicSafflower Oil, Soy Oil, Coconut
Oil, Whey Protein Concentrate. In addition, less than 2% of the following: Potassium
Citrate, Calcium Carbonate, Ascorbic Acid, Potassium Chloride, Magnesium Chloride,
Ferrous Sulfate, Choline Chloride, Choline Bitartrate, Ascorbyl Palmitate, Sodium
Chloride, Taurine, m‐Inositol, Zinc Sulfate, Mixed Tocopherols, Niacinamide, d‐Alpha‐
Tocopheryl Acetate, Calcium Pantothenate, L‐Carnitine, Cupric Sulfate, Vitamin A
Palmitate, Thiamine Chloride Hydrochloride, Riboflavin, Pyridoxine Hydrochloride,
Ingredients: Dried milk Beta‐Carotene, Folic Acid, Manganese Sulfate, Phylloquinone, Biotin, Sodium
Selenate, Vitamin D3, Cyanocobalamin, Calcium Phosphate, Potassium Phosphate,
Potassium Hydroxide, and Nucleotides (Adenosine 5’‐Monophosphate, Cytidine 5’‐
Monophosphate, Disodium Guanosine 5’‐Monophosphate, Disodium Uridine 5’‐
Monophosphate)
PAGE 9 Source: various online shopping websites; photo credit (fair use; low resolution; complete product/brand for illustrative purposes)
RELATIONSHIP WITH OTHER SECTORS
This report further splits processed foods into “grain‐based” and “all other”; it also captures a relatively minor
amount of other food not included in the other six Food & Beverage Information Project reports
Examples of categories not defined in
Categories defined in project scope Further split for clarity project scope that are included
Other than honey, not
major exports, so
Dairy Processed Grain‐based relatively insignificant in
‐ Honey data (most are primarily
Sector Foods Sector Processed ‐ Eggs imports)
Foods ‐ Coffee
‐ Tea
‐ Spices
Meat Beverages Non‐grain‐ ‐ Salt
Sector Sector based ‐ Grains, cereals & milled products
Processed ‐ Sugar
Includes…
Foods ‐ Cocoa
‐ Oils & fats
Seafood Nutraceuticals ‐ Other not elsewhere classified
Sector Sector
Produce
Sector
PAGE 10
BUILDING ON EXISTING WORK
Coriolis recently completed an in‐depth analysis of the growth of New Zealand’s processed foods exports to
Australia for the government; this report builds on this foundation
Available at: “http://www.med.govt.nz/upload/75946/Coriolis‐report.pdf”
PAGE 11
TABLE OF CONTENTS
Section Page
Contents 4
Glossary of terms 5
Methodology & data sources 6
F&B IP Overview 7
Summary & conclusions 12
‐ Grain‐based processed foods 18
‐ Non‐grain‐based foods and other foods nes 29
Appendices 59
PROCESSED FOODS – SITUATION
Processed foods have huge growth potential for New Zealand, however significant further growth will require
large capital investments, both by global multinationals and by domestic firms
New Zealand for the limited amount of shelf space available
- New Zealand has demonstrated capability in the production of - Therefore, while we may articulate competition at a
temperate‐climate food and beverages. It is the largest exporter country level, in practice competition in any given segment
in the world of dairy products and lamb and a major exporter of is occurring between a handful of major firms (e.g. Griffins
beef, kiwifruit, apples and seafood. The country is now turning vs. Campbell/Arnotts vs. Kraft/Nabisco)
more of this raw material into finished consumer‐ready foods - New Zealand also competes internally within multinationals as
- New Zealand has growing processed foods exports, particularly one of many potential investment destinations (e.g. for a plant
products with significant dairy‐derived ingredients upgrade)
- New Zealand is an attractive destination for foreign Direct
Investment; currently 43+ major global F&B manufacturers have
Consumers/Markets
invested in production in the country
- New Zealand also has a strong group of domestic firms growing - Processed foods provide busy consumers with convenient meal
and achieving success in processed foods and snack solutions; products are typically ready‐to‐eat, ready‐to‐
heat or require minimal preparation time
Competitors - About 1/3 of the sales of a typical supermarket are processed
foods (1/3 is fresh perishables; 1/3 is non‐foods); processed foods
- New Zealand competes in the first instance with the other major are also used throughout the foodservice sector to reduce labour
temperate climate exporters to Asia; key competitor countries requirements in food preparation
are: the United States, Australia, Canada, Germany, France and
other European nations - Processed foods are an area of constant low‐level innovation,
driven by product and packaging changes
- These are rich countries as processed food production is
highly capital intensive with defensive process or - Processed foods manufacturers constantly bring their products to
production technology the attention of consumers via advertising and in‐store
promotions
- Processed foods (unlike raw ingredients) are sold in a branded,
consumer‐ready form, typically on the shelf of a supermarket; as
such, packaged brands compete for shelf space with other brands
PAGE 13 Source: Interviews; Coriolis
PROCESSED FOODS – QUANTITATIVE SCORECARD
New Zealand processed foods exports are achieving double digit growth driven by Australia and Asia
Infant formula/foods $476 34% 1% $4 Fonterra 20,000 $16,726 Nestle Assoc. British Foods
Pet food $186 9% ‐2% $3 Goodman Fielder 3,000 A$441* Kraft Foods H.J. Heinz
Oils and fats2 $125 6% 27% $27 Heinz Watties 1,900 $783 PepsiCo Ajinomoto
Soups/Condiments $123 10% 10% $12 Griffins 800+ $259** Mars McCain Foods
Biscuits $106 18% 10% $10 Cadbury 550 $259** Unilever Grupo Bimbo
Other proc. F&V3 $93 11% 31% $22 GWF 500+ $273 Danone Barilla
Honey $70 30% 18% $11 Tip Top 400 $226 General Mills Mead Johnson
Frozen french fries $60 18% 23% $11 McCain 500 $211 ConAgra Abbott
Chelsea 160 $241 Kellogg … many more
Strengths Weaknesses
Opportunities Issues/Threats/Risk
‐ Growth of Asian middle class; increasing wealth in Asia ‐ Competitors with lower costs and larger economies of scale
‐ Changing global weather patterns (also a threat) ‐ Adoption of genetically modified animals or feed by poor countries changing
international competitive dynamics
‐ Rich countries of Europe pricing themselves “out of the game”
‐ The boom/bust economic cycle expresses itself in China
‐ Large number of alternative channels for processed foods
‐ Leverage success of New Zealand food industry, build on awareness of New Zealand
in processed foods
‐ Growth of convenience foods
‐ Medium‐sized NZ firms coordinate marketing and sales in new markets
PAGE 15 Source: Interviews; Coriolis
PROCESSED FOODS – POTENTIAL STRATEGIC DIRECTIONS
Three potential strategic directions are suggested to drive the strong growth of the New Zealand processed foods
sector
Situation creating opportunity Resulting potential strategic Opportunity Challenges
direction
‐ New Zealand exports transport friendly 1. Replace in‐market production ‐ “Made in NZ’ a strong positioning ‐ Does not work for highly perishable
ingredients (e.g. milk powder) to with New Zealand statement in some markets short shelf life products (e.g. non‐UHT
corporate consumer‐focused companies manufacturing ‐ Manufacturing capability already in NZ fluid milk, yoghurt)
in other countries in many cases ‐ Tariffs and trade barriers remain on
‐ These companies then transform many products into many countries
ingredients into consumer ready ‐ Significant capital required for
products adding up to 10x value to raw investment in plant & equipment
ingredients in the process
‐ Free trade deals removing punitive
tariffs improving economics of NZ
production (vs. in market)
‐ New Zealand is largest producer and 2. Manufacture more infant ‐ Targeted program to attract new ‐ Fonterra unwilling to compete with its
exporter of milk powder in the world formula in New Zealand3 greenfields investments by infant own customers
‐ Significant percent of New Zealand’s formula manufacturers ‐ Remaining tariffs on many products
milk powder exports are made into ‐ Grow and nurture existing smaller
infant formula in other countries producers
‐ NZ has free trade agreements with a
number of key Asia Pacific markets
‐ Retail private label/store brands are 3. Produce store brands for ‐ Additional volume through existing ‐ Can dilute ability to enter market with
growing globally1 international retailers plant and equipment own brand(s)
‐ Major global manufacturers often ‐ Volume to enable further capital ‐ Business only there as long as contract
refuse to produce them investment is in place; retailers can be capricious2
‐ Many New Zealand manufacturers are ‐ Access retailers that sell almost
succeeding in producing store brands exclusively private label (e.g. Aldi)
for domestic and international retailers
PAGE 16 1. See http://www.coriolisresearch.com/?page_id=240 for a number of reports on the subject; 2. “Given to sudden and unaccountable changes of mood or behaviour.”; 3. Coriolis
have done non‐public research in this space that we are happy to discuss; Source: Interviews; Coriolis
PROCESSED FOODS – POTENTIAL AREAS FOR INVESTMENT
Wide range of opportunities for investors in the New Zealand processed food sector; preliminary focus should be
on products that leverage existing high quality/low cost New Zealand ingredients (e.g. dairy)
Products Markets
- Current success occurring in a handful of key segments which use - Domestic market is small and relatively low growth
low cost New Zealand inputs as ingredients
- Infant formula (dairy) - Investors should focus on opportunities to drive strong export
- Chocolate/confectionery (dairy) growth
- Frozen meals & sides (meat & vegetables)
- Pet food (meat & vegetables) - East & South‐East Asia are ideal markets given location and
- Soups & condiments (vegetables) awareness of NZ as a safe/secure producer of wholesome foods
- Biscuits/baked goods (dairy)1
Acquisition targets
- Investors with strong leveragable capabilities in these or related
areas should investigate greenfields investment - Limited pool of acquisition targets
- For example, Germany is the second largest exporter of - Many key firms already foreign‐owned by multinationals
processed foods in the world but no German firms in NZ - NZ‐owned firms often have committed family ownership
- Many would welcome investment
- Opportunities in many small/mid‐size segments ignored by the
slow moving farmer‐cooperatives - As above, greenfields a sensible option for firms with existing
capabilities
- Following the value chain for New Zealand raw materials - Greenfields plant construction relatively straightforward
suggests where the opportunities are in market (e.g. - Resource Management Act is only major hurdle in most
consumers don’t buy milk powder; where does it go…) cases
PAGE 17 1. There is more butter in a frozen croissant than grain; Source: Interviews; Coriolis
TABLE OF CONTENTS
Section Page
Contents 4
Glossary of terms 5
Methodology & data sources 6
F&B IP Overview 7
Summary & conclusions 12
‐ Grain‐based processed foods 18
‐ Non‐grain‐based foods and other foods nes 29
Appendices 59
PROCESSED FOODS – GRAIN BASED – SUPPLY CHAIN
New Zealand grain based processed foods use a range of ingredients (including, obviously, grain)
Simplified model of New Zealand grain‐based processed foods supply chain
(model; ANZSIC codes as available))
Manufacturing
Major inputs sectors
International
Supermarkets
Grain markets
(Various A014)
Grain mill Convenience
Dairy1
products
(C113)
(C116‐100)
Bread
Oil & fat
(C117‐100)
manufacturing
(C115) Grocery Distributor Supermarkets
Cake & pastry wholesale wholesaler
Foods not elsewhere (F360‐400)
classified [NEC] (e.g. (C117‐200)
honey, eggs)
Convenience
Biscuit
Imports (e.g.
(C117‐300)
ingredients)
Foodservice
Domestic
market
PAGE 19 1. There is more butter in a frozen croissant than flour; 2. may be one or more layers of wholesaling, depending on product or market; some wholesale functions maybe captive inside
retailers or foodservice operators; Source: Coriolis
PROCESSED FOODS – GRAIN BASED – # OF ENTERPRISES
The number of enterprises involved in grain‐based processed foods sector was increasing slowly; however there
has been a reduction in 2010 (primarily in bread)
Number of enterprise units in the grain‐based processed foods industry in New Zealand Comments
(enterprises; 2000‐2010)
CAGR ‐ Current hypothesis is a GFC‐related
(00‐10) (09‐10)
consolidation
269 269
265
261 1% ‐3%
257
252 253 23
247 25
25 22 Biscuits
240 20 4% ‐12%
237 22 Notes/Definitions
15 230 24
17 21 ‐ Excludes ANSIC‐06 117‐400 (non factory
16
based cake and pastry manufacturing [i.e.
cake shops, etc.])
139 133
130 133 138 Cake & pastry
126 129 (factory) 0% 4%
140
127 124
128
Number of persons employed in the grain‐based processed foods industry in New Zealand1 Comments
(people; 2000‐2010)
‐ Current hypothesis is a GFC‐related
consolidation
CAGR
10,070 10,160 ‐ Question: Do shifts correspond to investment?
9,775 (00‐10) (09‐10)
9,250 2% ‐5%
9,015 1,440 1,640
1,420
8,555 8,555 8,505 8,490
1,310 Biscuits 1% ‐8% Notes/Definitions
1,340
7,705 7,605 1,230 1,310 ‐ Excludes ANZSIC‐06 117‐400 (non factory
1,560 1,510 based cake and pastry manufacturing [i.e.
2,120 2,040
1,920 cake shops, etc.])
1,130 1,180 1,840 Cake & pastry
0% ‐4%
1,770 (factory)
1,590 1,600
1,800 1,840
1,930 1,590
Cereal, pasta 2% 7%
630 630 620 640 630 660 680 680 690 740 790 & baking mix
85 75 65 65 65 65 100 110 90 65 70 Grain ‐2% 8%
milling
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
PAGE 21 1. Uses persons employed by enterprise unit; Source: SNZ business demographics (detailed industry for enterprise units); Coriolis analysis
PROCESSED FOODS – GRAIN BASED – EMPLOYMENT BY REGION
Grain‐based processed foods manufacturing is concentrated in Auckland (42%) and Canterbury (25%)
Number of persons employed in the grain based industry in New Zealand by region Comments/Notes
(people; 2010)
‐ In the largest city (Auckland) or near the area
of grain production (Canterbury)
Northland Otago/Southland
21 1% ‐ Excludes employees classified elsewhere
437 7%
Notes/Definitions
‐ Statistics New Zealand calculates its statistics
based on the predominant business activity of
the enterprise
‐ For example, a firm (e.g. GWF) that is defined
Canterbury 1,665
Auckland 2,790 as “bread manufacturing” at the enterprise
25%
42% level may have a subsidiary at the geographic
level that is classified as “grocery wholesaling”
‐ Data here is “geographic” units not
“enterprise” units (pages prior)
‐ Nel/Tas/Marl/WC = Nelson/Tasman/
Nelson/Tas/ Marlborough/West Coast
Marl/WC 135
2% ‐ Manawatu/
Wellington 330 5%
Bay of
Plenty
Man/Wan 215 3%
405 6%
Waikato 213 3% Taranaki 285 4%
Hawke's Bay/
Gisborne 132 2%
Total = 6,628
PAGE 22 Source: SNZ business demographics detailed industry by region‐(ANZSIC 06) for geographic units; Coriolis analysis
PROCESSED FOODS – GRAIN BASED – EMPLOYMENT BY REGION
Grain‐based processed foods manufacturing is only creating significant number of new jobs in the South Island;
industry in the North Island is consolidating
Number of persons employed in the grain based industry in New Zealand Comments
(people; 2000‐2010)
‐ Wellington shift 08‐09 is primarily closure of
Griffins plant
7,820 7,970
7,710 7,640 24
7,570 130 10 year
7,370 7,410 110 27
140 Absolute
7,230
7,040 7,080 125 130 Change Notes/Definitions
27
115 (00‐10)
165
6,640 ‐400 ‐ Statistics New Zealand calculates its statistics
21 Northland ‐144 based on predominant business activity; firms
2,990 are classified by their predominant activity.
3,030 2,810 2,815
2,930
2,790 2,860 ‐ See note prior page
2,630 2,970
2,820
2,790 Auckland ‐30
368
435 478 ‐903
393
413 515
440 490 460
440 465 478 333
370 480 143
485 450 180 183 178 290 213 Waikato ‐157
505 260 494
193 270 300
510 210 185 375 405 Bay of Plenty ‐105
210 261 117
255 378 395 345
215 245 340 132 Hawkes Bay/Gisborne ‐83
295 388
368 380 285 Taranaki +27
258 255 345
934 215 Manawatu/Wanganui ‐55
270 999 922 942
779 370 330 Wellington ‐356
748 799 764 127
686 118 135 Nel/Tas/Marl/WC +49
85 93
112 85
123 105 102
86
378 508 410 402 359 337 374 412 415 437 Otago/Southland +59
314
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
PAGE 23 Source: SNZ business demographics detailed industry by region‐(ANZSIC 06) for geographic units; Coriolis analysis
PROCESSED FOODS – GRAIN BASED – KEY FIRMS
There are six major ($100m+) grain‐based processed foods firms in New Zealand
Key firms in the New Zealand processed foods sector
(2010 or as available)
Year
Turnover % Export Employees Ownership founded Notes
Key firms in the New Zealand processed foods sector
(2010 or as available)
Year
Turnover % Export Employees Ownership founded Notes
Key firms in the New Zealand processed foods sector
(2010 or as available)
Year
Turnover % Export Employees Ownership founded Notes
Key firms in the New Zealand processed foods sector
(2010 or as available)
Year
Turnover % Export Employees Ownership founded Notes
PAGE 27 1. NZ only; Source: various company annual reports (AR); various company websites (WS) ; Kompass (Ke); interviews (Ci); Coriolis analysis and estimates (Ce)
PROCESSED FOODS – GRAIN BASED – KEY FIRMS
There are also a number of firms that only wholesale in New Zealand (including some big grain‐based brands)
Key firms in the New Zealand processed foods sector
(2010 or as available)
Year
Turnover % Export Employees Ownership founded Notes
Major importer/wholesalers that do not manufacture in New Zealand
Section Page
Contents 4
Glossary of terms 5
Methodology & data sources 6
F&B IP Overview 7
Summary & conclusions 12
‐ Grain‐based processed foods 18
‐ Non‐grain‐based foods and other foods nes 29
Appendices 59
NON‐GRAIN‐BASED FOODS/OTHER FOODS– SUPPLY CHAIN
Non‐grain based processed foods use a wide range of ingredients to produce all the other food items in a
supermarket
Simplified model of New Zealand non‐grain‐based foods/other foods supply chain
(model; ANZSIC codes as available))
International
Manufacturing Supermarkets
Major inputs markets
sectors
Meat & seafood
Oil & fat mnfg.
(C111‐C112)
(C115) Convenience
Pet food
Dairy1 (C119‐200)
(C113)
Infant formula Seafreight Grocery Foodservice
(no code) Airfreight wholesale2
Produce (e.g. (in‐market)
Ice cream
potatoes)
(C113‐200)
(A012‐A013)
Sugar
(C118‐100) Grocery Distributor Supermarkets
wholesale wholesaler
Grain
Confectionery (F360‐400)
(Various A014)
(C118‐200)
Convenience
Snack crisps
Foods not elsewhere
(C119‐100)
classified [NEC] (e.g.
honey, eggs)
Honey
(no code) Foodservice
Imported Domestic
Eggs/egg prod. market
ingredients (e.g.
(no code)
cocoa beans)
“Other Food Product
Manufacturing n.e.c.”
(C119‐900)
656 4% 3% ‐ Firms that do not fit in existing categories are
630 636 classified as “other”; from past research we
614 believe this represents innovation and new
602
10 years 585 products in new categories
+200
544 ‐ In other words, “other” is industries too
new to be classified by the last ANZSIC
505 revision
41 45 40 43 45 53 49 41 43 40 43 Oil & fat 0% 8%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
PAGE 31 Source: SNZ business demographics (detailed industry for enterprise units); Coriolis analysis
NON‐GRAIN‐BASED FOODS/OTHER FOODS– EMPLOYMENT
Sector employment growth, which was growing until 2008, has had a correction over the past two years
Number of persons employed in the non‐grain‐based foods/other foods industry in New Zealand1 Comments
(people; 2000‐2010)
‐ Drive to efficiency and consolidation last few
CAGR years; current hypothesis is a GFC‐related
10,290 10,330 (00‐10) (09‐10) consolidation
9,850 9,930 9,830
9,680 1% ‐2% ‐ Decline in confectionery employment primarily
9,107
Cadbury moving some production to Australia
9,036
8,460 8,450 8,478
Notes/Definitions
‐ Remember that enterprises are classified at
5,730 5,930 the point they pay GST and by their primary
5,220 5,260 Other Food
5,660 5,620 Product 5% 3% activity; for example, the potato crisp firm
4,650 4,840 Manufacturing here is Bluebird while ETA crisps are
4,360 4,370 4,500 n.e.c. captured under Griffins (biscuits)
Number of persons employed in the non‐grain‐based foods/other foods industry in New Zealand by Comments/Notes
region ‐ Auckland clearly has a strong position in the
(people; 2010) production of processed foods
Otago/Southland 801
Northland 59 1% 8%
Notes/Definitions
‐ Statistics New Zealand calculates its statistics
based on the predominant business activity of
Canterbury 747 the enterprise
Nelson/Tas/ Marl/WC
8%
231 2% ‐ A firm that is defined as “beverage
manufacturing” at the enterprise level may
have a subsidiary at the geographic level that is
classified as “grape growing”
Wellington 827 9% ‐ Data here is “geographic” units not
“enterprise” units (pages prior)
Auckland 4,955 52%
Man/Wan/Tar ‐ “Unallocated” is the difference between
627 7% geographic unit employees and enterprise unit
employees; it represents firm subsidiaries not
involved in “beverage manufacturing,” for
example those classified as “grape growing” or
“beverage wholesaling”
Hawke's Bay/
Gisborne 204 2%
Bay of Plenty 553 6% ‐ Excludes employees classified elsewhere
Waikato 440 5%
Total = 9,444
PAGE 33 Source: SNZ business demographics detailed industry by region‐(ANZSIC 06) for geographic units; Coriolis analysis
NON‐GRAIN‐BASED FOODS/OTHER FOODS – EMPLOYMENT BY REGION
Most regions have seen a flattening to decline in recent years
Number of persons employed in the non‐grain‐based foods/other foods industry in New Zealand Comments
(people; 2000‐2010)
10 year ‐ Has the GFC impacted processed foods in
Absolute Auckland or is this just consolidation?
10,143 10,175 Change
9,775 9,855 79 81 (00‐10)
9,750
9,474 93 94 79 9,444 ‐400
9,417
9,097 75 85 59 Northland +19 Notes/Definitions
8,875 8,794 76
40 64 ‐ Varies from pages earlier as this is geographic
unit data (not enterprise unit data)
‐ Statistics New Zealand calculates its statistics
5,285 5,320
based on predominant business activity; firms
5,145 5,230 are classified by their predominant activity.
5,235
5,020 5,120 4,955 Auckland ‐205
4,980 ‐ See note prior page
5,160 4,890
455 409
402 378 363
319 440 Waikato +440
357 518 616
317 418 501 517 550
262 341 146 202 553 Bay of Plenty +180
284 401 103 129 156 140
368 628 206 204 Hawkes Bay/Gisborne +99
373 104 105 625 672 621
651 712
105 514 641 627 Mana/Wanga/Tara +249
468
378 770
585 575 595 625 860
605 580
580 181 219 830 827 Wellington +247
155 187 210 240
143 161 221
191 231 Nel/Tas/Marl/WC +88
1,012 1,040 940 952 958 970
930 975 854
737 747 Canterbury ‐183
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
PAGE 34 Source: SNZ business demographics detailed industry by region‐(ANZSIC 06) for geographic units; Coriolis analysis
NON‐GRAIN‐BASED FOODS/OTHER FOODS – KEY FIRMS
There are a handful of firms in oils and fats at any scale; potato chips is effectively a duopoly of two firms and
sugar has a single large manufacturer1
Key firms in the New Zealand non‐grain‐based foods/other foods sector
(2010 or as available)
Year
Turnover % Export Employees Ownership founded Notes
Oils/fats
NZ Non‐dairy 3000 Australia; listed 1968 www.goodmanfielder.com.au
A$441.3m2 (K) (ASX/NZX: GFF) ~1986 Spreads: MeadowLea, OliveGrove, Logicol; Oils
(2010)
Potato chips/crisps
$148.9m ~nil 700 USA; listed 1947 (NZ) www.bluebird.co.nz; www.pepsico.com
(2009) (K) (NYSE: PEP) Was GF; sold to Pepsico/Frito‐Lay (global #1 potato chips)
Sugar
$241m 160 75% Singapore; listed 1884 (NZ) www.chelsea.co.nz; www.csrsugar.com.au
(2010) (K) (SGX: F34; ASX: SGT) www.sucrogen.com; www.wilmar‐international.com
25% Australia; co‐operative http://new.mkysugar.com.au
(Mackay Sugar) CSR (Australia) recently sold sugar business to Wilmar (Sing.)
Wilmar is world’s largest producer of palm oil
PAGE 35 1. Refined sugar imports also occur, so this shouldn’t be read as a monopoly; 2. Includes non‐oil activities; Source: various company annual reports (AR); various company websites
(WS) ; Kompass (Ke); interviews (Ci); Coriolis analysis and estimates (Ce)Coriolis analysis and estimates
ICE CREAM – FIRMS
New Zealand has a handful of ice cream firms that combine together dairy products, sugar, chocolate and other
flavourings
Key firms in the New Zealand ice cream sector
(2010 or as available)
Year
Turnover % Export Employees Ownership founded Notes
Ice Cream
$226m 400 Subsidiary of Fonterra (Co‐ 1936 www.tiptop.co.nz
(Ke) (K) operative)
Pet food/animal feed
Total NZ 55% 1,900 USA; listed 1934 www.nutriplus.co.nz; www.catspreferchef.co.nz
$782.7m (WS) (NYSE: HNZ) Founded in 1934 as coop; acquired 92 by Heinz from GFW
(2010) Key brands: Champ; Chef; PurePet; Nutri‐Plus, Bruno
Major pet food importer/broker/wholesalers that do not manufacture in New Zealand
$139m 200 New Zealand; mixed 1954 www.masterpet.com; www.masterpet.co.nz
(Ke) (K) (29% PGC; Wootton family; Wholesaler broker for: Iams, Eukanuba, other brands
others)
Confectionery
$259m 550 USA; listed NZ 1868 www.cadbury.co.nz; www.kraftfoodscompany.com
(2009) (K) (NYSE: KFT) Parent recently acquired by Kraft
Entered market 1930 via acquisition of Dunedin chocolate
maker R Hudson (founded 1868)
Key firms in the New Zealand confectionery sector
(2010 or as available)
Year
Turnover % Export Employees Ownership founded Notes
Confectionery
$3m 18 New Zealand; private 1978 www.carousel.co.nz
(Ke) (K) (Hardie family)
Major confectionery food importer/broker/wholesalers that do not manufacture confectionery in New Zealand
Total NZ 680 Swiss; listed NZ 1926 www.nestle.co.nz
$447m (K) (Nestle) Key brands: Kit Kat; Aero; Life Savers; Rolo; Smarties; others
(2010)
Key firms in the New Zealand infant formula sector
(2010 or as available)
Year
Turnover % Export Employees Ownership founded Notes
Infant Formula
$16,726m 95% 20,000 NZ; co‐operative 2001 www.fonterra.com
(2010) (AR) (K) (11,000 farmers) Formed in industry mega‐merger in 2001
Contract packs infant formula and base formula for others
Key firms in the New Zealand infant formula sector
(2010 or as available)
Year
Turnover % Export Employees Ownership founded Notes
Infant Formula
$30m ~90% 125 New Zealand; private 2002 www.gmp.com.au
(K; 09) (Ce) (K) (Ye family) Factory in NZ and AU; offices in HK and Beijing
Mnfg. range of products; “One‐stop OEM service”
PAGE 41 GMP and Homecare also in the Nutraceuticals document; Source: various company annual reports (AR); various company websites (WS) ; Kompass (Ke); interviews (Ci); Coriolis
analysis and estimates (Ce)
FRENCH FRIES – KEY FIRMS
The three largest french fry manufacturers in the world produce in New Zealand
Key firms in the New Zealand french fries/frozen foods sector
(2010 or as available)
Year
Turnover % Export Employees Ownership founded Notes
Frozen french fries/frozen foods
Total NZ 55% 1,900 USA; listed NZ www.nutriplus.co.nz; www.heinz.com
$712.4m (WS) (NYSE: HNZ) 1934 Founded in 1934 as coop; acquired 92 by Heinz from GFW
(09) Wide range of processed/other food products
Key firms in the New Zealand Meat based foods sector
(2010 or as available)
Key Key Year
Turnover categories brands Employees Ownership found Notes
Meat‐based processed foods
Group NZ Frozen meals Watties 1,900 USA; listed 1934 ‐ www.watties.co.nz
$782.7m (2010) Frozen meats Weight Watchers (NYSE) ‐ Strong across total frozen foods section
Key firms in the New Zealand Meat based foods sector
(2010 or as available)
Key Key Year
Turnover categories brands Employees Ownership found Notes
Meat‐based processed foods
$113m Beef jerky Jack Link’s 200 USA; private NZ www.jacklinks.co.nz; www.jacklinks.com
(Ke) (Link family) 2002 ‐ 3,000m2 factory built in 2002
‐ Exports to Asia, Europe, elsewhere
Key firms in the New Zealand honey sector
(2010 or as available)
Year
Turnover % Export Employees Ownership founded Notes
Honey/Bee products
$85m 110 New Zealand; Listed 1974 www.comvita.com
(2010) (K) (NZX: CVT) Manuka honey; wide range of other products
Key firms in the New Zealand eggs sector
(2010 or as available)
Year
Turnover % Export Employees Ownership founded Notes
Eggs/egg products
$37.5m 250 New Zealand; private TBD www.zeagold.co.nz; www.farmerbrown.co.nz
(Ke) (K) (Guthrie family; Valentine www.glenpark.co.nz
family; others) Parent is Mainland Poultry
Brands include Farmer Brown,
Key firms in the New Zealand other foods nes sector
(2010 or as available)
Year
Turnover % Export Employees Ownership founded Notes
Other food products
Total NZ 55% 1,900 USA; listed 1934 www.nutriplus.co.nz; www.heinz.com
$782.7m (WS) (NYSE: HNZ) Founded in 1934 as coop; acquired 92 by Heinz from GFW
(2010) Wide range of processed/other food products
Owns La Bonne Cuisine/Good Taste
Key firms in the New Zealand other foods nes sector
(2010 or as available)
Year
Turnover % Export Employees Ownership founded Notes
Other food products
Mount Erin $85m 150 New Zealand; private 1963 No website; canning factory (fruit, berries, vegetable)
Pacific (Ke) (K) (Kelly family) Operates a factory at Whakatu, Hastings; USFDA registered
Recent major processed foods industry transactions
(2008‐2010)
Date Acquirer Target Price Details
PAGE 49 Source: various companies annual financial statements (as filed with NZ Companies Office or available company website); various press releases and news articles; Coriolis analysis
PROCESSED – TRANSACTIONS
… continued
Recent major processed foods industry transactions
(2007‐2008)
Date Acquirer Target Price Details
PAGE 50 Source: various companies annual financial statements (as filed with NZ Companies Office or available company website); various press releases and news articles; Coriolis analysis
PROCESSED – TRANSACTIONS
… continued
Recent major processed foods industry transactions
(1992‐2006)
Date Acquirer Target Price Details
PAGE 51 Source: various companies annual financial statements (as filed with NZ Companies Office or available company website); various press releases and news articles; Coriolis analysis
PROCESSED – ACTIVITY
There have been a number of significant investments in processed foods, primarily by large multinationals
Recent major processed foods investments
(2006‐2011)
"Our decision to consolidate manufacturing is a crucial step in our plan to become more competitive in a challenging
environment, and to accelerate future growth in both markets," Nigel Comer, CEO Heinz Australia, 2011
PAGE 52 Source: various companies annual financial statements (as filed with NZ Companies Office or available company website); various press releases and news articles; Coriolis analysis
PROCESSED – ACTIVITY
There have also been a range of closures and divestments leading to job losses
Recent major processed foods closures/divestments
(2008‐2009)
PAGE 53 Source: various companies annual financial statements (as filed with NZ Companies Office or available company website); various press releases and news articles; Coriolis analysis
GRAIN‐BASED – EXPORTS BY TYPE
New Zealand grain‐based exports have shown strong growth driven by biscuits/museli bars and breakfast cereal
$20
$103
$96 $98
$19 Biscuits &
$97 $106 18% +$86m 10% +$10m
$20 $22 muesli bars
$97
$73
$85
$18
$53
$66
$41 $43 $14 $58 $57
$9 $12
$43 $15
$19 $20 B. Cereal 16% +$15m 3% +$1m
$21 $31
$22 $10 $14
$12 $14 $11 $9 Milling prod. 9% +$6m ‐11% ‐$1m
$5 $7 $12 $10
$4 $4 $4 $10
$4 $3 $3 $5 $4 $4 $5 $7 Grains 8% +$4m 42% +$2m
$3 $1 $1 $1 $1 $1 $2 $2
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
PAGE 54 Source: UN Comtrade database; Coriolis analysis
GRAIN‐BASED – EXPORTS BY REGION
Almost all New Zealand grain‐based exports go to Australia/Pacific Islands
$10
$4
$1
$103
$96 $98
$8
$9 $9 $1
$1
$0 $1
$449
$867 $416 $40
$476 Infant formula/ 34% +$449m 1% +$4m
$442
other
$472
$658 $285 $27
$25 $366
$26 $31 Ice cream 7% +$14m 23% +$6m
$530 $19 $266 F. French fries 18% +$48m 23% +$11m
$215 $227 $49
$25
$60
$473 $74 Other proc.
$24 $28 $65 $49 $93 11% +$59m 31% +$22m
$397 $147 $16 $37 $28 $51 $71 F&V
$130 $22
$21 $62 $38
$26 $120 Soups/
$9 $32 $50 $64 $123 10% +$77m 10% +$12m
$109 $8 $27
$17 $61 $112 condiments
$21
$15 $24 $51 $55 $103
$5 $22 $40 $140
$26 $36 $125 $102 $201
$16
$12 $109 Pet food 9% +$107m ‐2% ‐$3m
$34 $83 $99 $186
$47 $149 $189
$103 $129
$90 $92 $120 $124
$79
$105 $147 $125 Oils & fats 6% +$55m 27% +$27m
$70 $69 $74 $89 $97 $72 $73 $98
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
PAGE 56 Source: UN Comtrade database; Coriolis analysis
NON GRAIN‐BASED FOODS/OTHER FOODS – EXPORTS BY REGION
New Zealand processed foods exports have shown strong growth across a range of regions
$371
$340 $238 SE Asia 19% +$197m 15% +$31m
$867
$257 $276 $208
$109 Other 31% +$102m 24% +$21m
$658 $292 $180 $88
$89 $101
$200
$530 $59
$234 $49
$473 $109
$397 $199 $22 $427 $589 Australia/ 17% +$467m 26% +$123m
$451 $466
$184 $59 $350 Pacific I.
$11 $337
$171 $54 $295
$48 $6
$8 $234
$42
$8 $149 $180
$172 $162 $110 $134
$121 $153 $73 N. America 7% +$35m ‐46% ‐$62m
$95 $121
$37 $68 $77 $60 $67 $61 Europe 13% +$44m 10% +$6m
$17 $16 $14 $23 $24 $31 $37 $56
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
PAGE 57 Note: data does not sum due to data anomalies at source; Source: UN Comtrade database; Coriolis analysis
TURNOVER OF KEY FIRMS
These select processed foods companies are all showing growth, but one
Turnover of select large processed foods industry firms Comments
(NZ$m; 2005‐2010 as available)
‐ Large companies are in multiple food
Last 5 yr
categories
CAGR
$1,200 (05‐10) ‐ Goodman Fielder leap in 2007 driven by dairy
purchases
24.1%
$1,000
Notes/Definitions
‐ Uses consolidated revenues
$800 4.9%
$600
3.1%
$400
9.7%
1.4%
7.6%
$200 ‐3.1%
4.5%
11.7%
$0
2005 2006 2007 2008 2009 2010
Section Page
Contents 4
Glossary of terms 5
Methodology & data sources 6
F&B IP Overview 7
Summary & conclusions 12
‐ Grain‐based processed foods 18
‐ Non‐grain‐based foods and other foods nes 29
Appendices 59
PROCESSED FOODS – INDUSTRY SCIENTIFIC RESEARCH
A number of research institutes are researching in the processed foods sector
Key scientific research organisations involved in processed foods research in New Zealand
(2010)
Total Total
Income Staff Focus & activities
$117.5m 900+ ‐ Food innovation – foods with functionalities
(2010) ‐ www.plantandfood.co.nz
PAGE 60 Source: Company websites; annual reports; Coriolis
PROCESSED FOODS – INDUSTRY ORGANISATIONS
There are four key industry organisations representing the New Zealand processed foods industry
Key industry organisations involved in processed foods in New Zealand
(2010)
# of website
members Details
NZFGC ‐ New Zealand Food and Grocery Council www.fgc.org.nz
177 ‐ Represents the manufacturers and suppliers behind New Zealand's food,
beverage and grocery brands
grain 9 ‐ Baking Industry Association of NZ www.bianz.co.nz/
‐ Supports and promotes the baking industry (e.g. Bakery owners)
PAGE 61 Source: Company websites; annual reports; Coriolis