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Food and beverage manufacturing has every opportunity for growth. The sector will need to be market driven, less risk averse, and responsive to consumer and global demand in order to keep pace with the opportunities presented by these changes. This road map recognises food and beverage manufacturers have been resilient throughout the COVID-19 pandemic with many pivoting their operations to supply retail products (for example fresh food and groceries) at short notice. Yet they still face economic and financial pressures due to rising costs, declining output prices and more international competition.

Broad growth opportunities for food and beverage manufacturing include:

  • Strengthening the supply chain and ensuring strong collaboration
  • Better understanding of consumer preferences and encouraging the purchase of Australian-made value added goods.
  • Implement Industry 4.0 opportunities to expand manufacturing capability and build economic gain.
  • Growth of a skilled workforce, ensuring skills are not lost to other sectors or overseas.
  • Continued growth of Australia’s attractiveness in the global market for investment, while maintaining the export of high value and premium products.
  • Sectorial opportunities to improve sustainability across the supply chain, including minimising food waste and adopting circular economy principles.
  • Reducing non-competitive cross-cutting costs, working to minimise blockers and regulations to build industry’s ability to compete and be efficient.
  • Allowing businesses to fail fast and reset, as well as improving agility and transformative R&D that can be commercialised onshore.

Key areas of opportunity

Three broad areas of opportunity have been identified for food and beverage manufacturers. Informed by industry consultations, these opportunities will address the barriers and enable Australian food and beverage manufacturers to scale and meet consumer and market demand over the next decade. They are not mutually exclusive and strategic growth opportunities exist for manufacturers under each.

Smart food and beverage manufacturing for consumer driven products

Responsive, fast and agile food and beverage processing and packaging to improve competitiveness and create distinctive value propositions for customers, such as:

  • automation of continuous and batch controls systems, inspection and line control systems
  • robotics, including high speed palletising machinery and soft robotic technology
  • monitoring systems for temperature, humidity and pressure, sanitisation verification.

Innovative foods and beverages

Develop innovative foods and beverages that incorporate diverse attributes to meet changing consumer needs and demands both domestically and overseas, such as:

  • food and beverages for improved health and wellbeing and enhanced nutritional value
  • products for convenience and premium offerings such as ready to eat, pre-portioned meals
  • high value add food and beverage products, such as new and enhanced proteins, including fortified breakfast cereals, antioxidant rich breads, soy and other food and beverage alternatives.

Food safety, origin and traceability systems to enhance quality and assurance required in domestic and international markets

Increasing Australia’s output of safe, healthy and sustainably produced foods by adopting new solutions to increase value differentiation of our food and beverage products in domestic and export markets, such as:

  • standardised digital labelling to provide customers (retailers and consumers) with instant information about origin of foods and production methods such as the use of QR codes on packed meat which can be read with smart technology to confirm traits such as certified organic free-range
  • blockchain technologies to securely capture and store information on origin and food safety (handling, preparation and storage) for high value add foods.

Smart food and beverage manufacturing for consumer-driven products

Australian food and beverage is produced through a complex supply chain, connecting agricultural producers, processors, manufacturers, distributors and retailers. While complex, the system works effectively to maintain the food supply, both domestically and to export markets. Australia’s food and beverage manufacturers have an opportunity to evolve the supply chain to be fast and agile in packaging and processing to improve competitiveness and create distinctive value propositions that are responsive to consumer and market demand.

For the purposes of this road map, smart manufacturing refers to the intensified application of advanced intelligence systems to enable rapid manufacturing of new products, dynamic response to product demand, and real-time optimisation of manufacturing production and supply-chain networks.[26]

Responsive, fast and agile food and beverage packaging and processing

Progressive food and beverage businesses are adopting new smart technologies, advanced business processes and cutting-edge business models to create distinctive value propositions for customer-driven products. These are increasing their productivity; competitiveness; and transforming how food and beverages are manufactured, distributed and sold.[27]

These improvements are enabling the production of more value added products, creating an imperative on the rest of the sector to do the same. Adoption of Industry 4.0 technologies will help to enable this transformative change across the sector. It will allow food and beverage manufacturers to better predict market trends, identify potential issues and create industry-specific solutions.

CSIRO’s Data61 reports that Industry 4.0 has the potential to deliver $315 billion in gross economic value to the Australian economy over the next decade.[28] There are many aspects to Industry 4.0 smart technologies. These include automated and digital technologies; data analytics; and machine learning to improve productivity, innovation, speed to market, and to meet consumer expectations about product attributes. Manufacturing examples to support this opportunity could include:

  • installing sensors or equipment monitoring systems (for example temperature, humidity and pressure systems, sanitation verification systems) that indicate where productivity improvements can be made
  • advancing automation (for example automation of continuous and batch control systems, and inspection and line control systems) to reduce errors and increase production
  • installing virtual reality systems to visualise and test different options for business models and production processes
  • improving food sorting and handling (for example high speed palletising machinery and soft robotic technology) which help businesses make better decisions about processing of various foods
  • optimising supply chain management and product tracking to ensure transparency
  • enhancing products (for example, packaging and processing technologies to extend the shelf life of foods), and customising products based on consumer preferences
  • supporting changes to packaging formats and the need to install new packaging equipment or lines necessary to meet the National Packaging Targets
  • reducing food waste by better forecasting and predicting sales.

Industry 4.0 may also provide opportunities for increased onshore processing, particularly for agricultural produce for which limited or no onshore value adding is currently undertaken. This will not only assist the farming sector move produce up the value chain, but could also open up export opportunities for these value added goods.

Innovative foods and beverages

Increasingly, consumers are seeking diverse characteristics in their food. Some consumers have specific medical dietary requirements requiring the inclusion or exclusion of specific foods, while others are actively choosing healthier options. To capitalise on this opportunity, food and beverage manufacturers can pivot towards products which meet these changing consumer needs. There are a number of other benefits expected for consumers to support health and wellbeing, in addition to quality and stability such as convenience, safety, sustainability and shelf life.

Food and beverages for improved health and wellbeing, and enhanced nutritional value

Demand for health and wellbeing foods and beverages is expected to grow due to changing consumer preferences and dietary patterns. For example, consumers are looking for alternatives to traditional diets high in energy and fat, to more heart-healthy eating approaches. This is supported by FIAL research which identified health and wellness as a growth opportunity area offering value added potential of $45 billion by 2030.[29] This opportunity presents benefits for both the manufacturer and the consumer. The manufacturer can increase the breadth of consumers who can consume their products. The consumer will enjoy a more diverse range of food suited to their individual needs.

CSIRO Health and Wellness Opportunities

The CSIRO have identified 4 areas of opportunity under health and wellbeing.[30] These include:

  • ‘Free-from’ and natural foods: refers to products free from gluten, lactose, allergens etc. Natural foods encompass packaged foods and beverages produced, processed and marketed in accordance with international standards and certified such as ‘organic’ by appropriate authorities. Products include:
    • soy milk and milk alternatives
    • gluten-free bread
    • lactose free milk products.
  • Vitamins and supplements: describes manufactured pills, capsules, tablets and/or liquids designed to supplement an individual’s dietary or nutritional needs. Products include:
    • health and wellbeing products for eye, gut, mobility and joint health in the form of pills, oils, tablets and powdered mixes.
  • Fortified and functional foods: refers to packaged food and beverages that contain added health ingredients and/or nutrients, where enhancements are intended to produce a nutritional benefit. Products include:
    • functional milk formula
    • fortified breakfast cereals
    • antioxidant rich breads
    • probiotic yoghurt and milk
    • sports drinks.
  • Personalised nutrition: describes the provision of targeted nutrition related advice, products and services based on their personal characteristics. Emerging products and services include:
    • phenotype, genotype and related diagnostic testing to identify nutritional needs
    • personalised nutrition e-tools that draw on mobile methods and real time sensor technologies.

Examples of manufacturing to support this opportunity could include:

  • technologies to create textures and structures enhancing nutrients and bioavailability, such as development of grains fortified with vitamins and minerals
  • technologies to create fermented foods that could improve gastrointestinal tract function.

Products for convenience and premium offerings

In recent years, there has been a growing consumer demand for higher quality and more convenient food and beverage products. To meet this demand and maximise opportunities, the food and beverage sector must look to manufacture products which capture these premium attributes.

CSIRO’s Food and Agribusiness Roadmap highlights urbanised consumers are increasingly demanding quality convenient foods that require low preparation or can be eaten on-the-go. This is coupled with a move away from the traditional ‘3 square meals’ and towards a higher number of smaller meals or snacks throughout the day.[31] Examples of manufacturing which supports this opportunity could include:

  • installing virtual reality systems to test product reformulation and understand how to change the production process to achieve desired product qualities, such as taste and consistency
  • supporting innovation accelerators such as clusters or organisations that support collaboration and commercialisation of new innovations and technologies in manufacturing and packaging, such as a voucher system for SMEs to partner with research organisations, universities or large enterprises and use their facilities.

High value-add food and beverage products such as new and enhanced proteins

As consumer demand for a diverse range of sustainably produced food products grows, the market opportunity for food and beverage manufacturers is for the creation of high value add products. These innovations can come through novel applications of existing manufacturing processes, or adoption of new production technologies.

Another example of the novel application of food processing technologies is the new and enhanced proteins market. The global population is estimated to reach 9.8 billion by 2050, driving the demand for protein.[32] While traditional animal protein will continue to be a significant source, alternative sources may be needed to keep up with demand. Protein is an important requirement for a healthy diet, and there is room to create a diverse protein industry if manufacturers take a unified market approach.[33] As a major producer and exporter of protein, Australia’s food industry is well placed to tap into this opportunity. It can develop novel, differentiated protein products derived from animal, plant and non-traditional sources.

Global meat consumption has increased by 58% over the 20 years to 2018, reaching 380 million tonnes. Population growth accounted for 54% of this increase, and per person consumption growth accounted for the remainder.[34] Global meat consumption between 2019 and 2024 is expected to rise, largely driven by population growth and rising incomes in developing countries.[35] This will present significant opportunities for Australia’s primary producers and food manufacturers to meet this demand by selling premium products to new and existing export markets.

Types of proteins [36]

Animal-sourced:

  • Meat: beef, lamb, mutton, chicken, pork, goat
  • Dairy: milk, yoghurt and cheese
  • Eggs
  • Fisheries: wild catch

Plant-sourced:

  • Grains and pulses: wheat, rice, chickpeas, lupins
  • Nuts
  • Fruit and vegetables
  • Plant-sourced meat, dairy and egg substitutes

Non-traditional:

  • Insects
  • Algae and seaweed
  • Cultured meat

In October 2020, FIAL identified traditional and alternative proteins as a major opportunity for the economic growth of Australia’s Food and Agribusiness sector.[37] Economic modelling suggests that under a moderate growth scenario, by 2030 Australia’s plant-based protein market will generate an additional $2.9 billion in domestic sales and create 6,000 manufacturing jobs.[38] This will also increase demand for the horticultural products and crops that are used to make these products.

Examples of manufacturing which supports this opportunity could include:

  • supporting onshore processing facilities for alternative proteins—such as soy protein concentration plants—or supporting traditional industries to adopt more sustainable manufacturing practices
  • supporting processing technologies to enable products with novel properties, such as 3D printing, high pressure processing, sonication, shockwave technology and pulsed electric fields
  • supporting innovative projects and pilots that re-use or valorise food and beverage manufacturing by-products to create more value add products, including new packaging and processing technologies.

Food safety, origin and traceability systems to enhance quality and assurance required in domestic and international markets

As Australia’s food production supply chain becomes increasingly complex and interconnected, there is growing consumer demand for transparency about the origin of ingredients and products, and their environmental impact. The sector has broader digital potential to better meet consumer expectations if it can adopt new solutions to improve value differentiation of food and beverage products in domestic and export markets.

Adopting new solutions to increase value differentiation of our food and beverage products

Product quality, trust and security is critical to Australia’s reputation as a supplier of clean, green and safe products, particularly in international markets. At the same time, there is growing consumer demand to know where products are sourced and their environmental impact. The adoption of new data-driven solutions can enable the sector to:

  • validate sourcing and provenance claims
  • meet consumer demand for transparency
  • efficiently combat food fraud[39]
  • support smarter value chains.

Australia falls in the middle of OECD rankings on food traceability due to having a high quality or mandatory system for specific commodities such as livestock identification. CSIRO’s Food and Agribusiness Roadmap also highlights the need to invest in both virtual and physical technologies that provide greater transparency around:

  • product origin
  • production inputs
  • suppliers
  • processing materials
  • transport
  • distribution.

Increased consumer interest in the origins of their food and beverages means ingredient provenance is becoming a key element in product storytelling from paddock to plate. For manufacturers this means using automation, the IoT and AI to access real-time tools and technologies such as blockchain which can gather and integrate information in an efficient way while maintaining security and privacy for the consumer. For the customer, this means being able to track a product across the entire supply chain in real-time and enable them to make informed purchasing decisions.

As food and beverage manufacturers start to automate their data collection and link their production processes through smart tools such as barcoding and image recognition technologies; more data will come online enabling greater connectivity with the end-customer. This will allow the manufacturer to gain access to data, insights and information they need to stay in compliance with regulatory requirements in real-time; and create a unique and personalised experience for the customer. Examples of manufacturing which supports this opportunity could include:

  • implementing digital product information management systems, including the Electronic Product Information Form, to help transfer standardised digital information along supply chains
  • implementing digitalised paddock-to-plate traceability systems, for example, blockchain technologies to securely capture and store information on origin and food safety (handling, preparation and storage) for high value add foods
  • implementing digital labelling solutions to provide domestic and overseas customers (retailers and consumers) with instant information about origin of foods and production methods, for example, the use of QR codes on packed meat which can be read with smart technology to confirm traits such as certified organic and free-range.

The opportunities to employ digital labelling solutions for food have been considered in the recent past, through a report the Australian Government commissioned in 2017 that looked into that issue. The report found that at that stage, digitisation of food labelling was still emerging, and identified specific ways in which digital food labelling could, in the future, be leveraged to greatest effect for the benefit of consumers and industry.

A more digitalised food system will build on the National Traceability Framework. This is a tool used to guide Australian agricultural industries and food producers, governments and related businesses in enhancing our traceability systems and promoting ‘brand Australia’ in our international markets. Modern, accurate and timely traceability systems can assist in providing additional assurances to customers of Australian agricultural products and our trading partners, while also producing a range of other benefits such as increasing our market share in international markets. In addition, adopting smart tech solutions to digitalise consumer information and product labelling could reduce manufacturing costs. Savings could then be reinvested back into the business.

The Australian Government also recognises the importance of providing Australian consumers with information about the country of origin of products offered for sale in Australia. Government reforms made to the Country of Origin Labelling (CoOL) scheme in 2016 now require all ‘priority’ food labels to clearly indicate whether a product was grown, produced or made in Australia or overseas, and the percentage of Australian ingredients it contains (unless wholly imported). Food grown, produced or made in Australia must also carry the standard mark consisting of the kangaroo in a triangle logo, bar chart and explanatory text statement, whilst non-priority foods require a country of origin text statement.

There are also a number of industry-led initiatives underway. For example, Mission Food for Life, through the Food Agility Cooperative Research Centre (CRC) is working with industry and research to co-invest in R&D. It aims to deliver new data-driven tools to support resilient businesses and communities, and build trusted supply chains via data and digital.

Building on the Australian Government’s priorities

The Government has a number of existing policies and programs interacting and supporting the food and beverage manufacturing sector. This road map aligns with these initiatives and will help food and beverage manufacturers to lift capability, build scale and improve competitiveness.

Links with Australian agriculture

A strong food and beverage manufacturing sector cannot be achieved in isolation. Australia will need to leverage its strength in agricultural production to enable food and beverage manufacturing to grow. The Australian Government seeks to grow the domestic agricultural sector through its National Agricultural Innovation Agenda.

The Agenda seeks to improve the sector’s readiness to adopt new technologies, build a digitally capable and equipped agriculture workforce and improve the use of data for decision making. This would include looking at opportunities to work with R&D corporations and other key players, as is being pursued through the Agenda. The Agenda also supports the delivery of Ag2030 under 5 reform pillars:

  • strengthen ecosystem leadership
  • improve the balance of funding and investment
  • embed world-class industry-led innovation practices
  • strengthen the regions
  • create the next generation innovation platform.

Through Ag2030, the Australian Government is setting the foundations for agricultural growth. It will ensure Australian agricultural producers receive maximum returns for their hard work and are supported by vibrant rural and regional communities. Key Government actions relevant to the Food and Beverage road map include but are not limited to:

  • delivery of a National Agricultural Innovation Agenda in 2021
  • developing a National Agricultural Innovation Policy Statement and mission-oriented agricultural innovation priorities by mid-2021
  • providing $1.3 million to Agricultural Innovation Australia to drive a new cross-industry approach to agricultural innovation
  • providing $86 million over 4 years to deliver 8 Agricultural Adoption and Innovation Hubs (focused on local drought resilience research), through the Future Drought Fund by mid-2021
  • developing a Digital Foundations for Agriculture Strategy that will set the foundations for widespread uptake of digital technologies across agriculture sectors by mid-2021
  • working with the Rural Research and Development Corporations (RDCs) to deliver digital platforms that support uptake of innovation and commercialisation outcomes
  • providing approximately $300 million annually in government-matching contributions, to support eligible research and development activities for the agriculture industry
  • delivering a National Agricultural Workforce Strategy for future workforce development and availability
  • $328 million to modernise Australia’s export systems over 4 years, as part of the Government’s deregulation agenda, which will help food and beverage manufacturers, particularly in dairy, with direct and indirect business costs.

Innovation drives productivity growth, sustainability and resilience. By moving towards a more advanced, innovative agricultural sector, Australia will set the foundations to help build a more technologically enabled food and beverage manufacturing sector.

Links with the Deregulation Agenda

The Australian Government is committed to a Deregulation Agenda where regulation is fit-for-purpose. Australia’s food regulatory system must continue to be robust and agile into the future to support a strong food and beverage manufacturing sector. To ensure this, the Government is undertaking a comprehensive review of the Food Standards Australia New Zealand Act 1991 (FSANZ Act) and the associated operations and responsibilities of Food Standards Australia New Zealand (FSANZ). The review considers the economic efficiency of regulation, recognising the food industry’s importance to regional communities and Australia and New Zealand economies. The review has been operational since July 2020, with industry consultation on a Draft Regulatory Impact Statement due in mid-2021.

Links with food and packaging waste

The world’s population is growing exponentially. With this growth, resources are expected to become scarcer. At the same time, consumer expectations on environmental and social license issues are becoming more demanding. Transitioning the food and beverage sector to a more environmentally and socially responsible manufacturing system will be key to meeting these challenges. FIAL has identified food loss and waste, and sustainable packaging as growth opportunity areas offering value added potential of $18 billion and $3 billion respectively by 2030.[40]

Australia’s food and beverage manufacturing sector can pursue growth, ensure sustainable resource use, and minimise environmental impacts by building on existing work including:

Links to business investment attraction and exporting

There are a number of initiatives focused on assisting food and beverage manufacturers to grow their business. For example the Australian Trade Commission (Austrade) provides services for export development and to attract investment to Australia.

The Australian Government is committed to making sure Australian manufacturers have access to both existing and new markets through Free Trade Agreement negotiations, technical bilateral market access negotiations, addressing non-tariff measures and building long-term strategic partnerships with key trading partners.

Within Ag2030, the Government has also committed to providing $7 million over 4 years to support better traceability outcomes, through the Modernising Agricultural Trade initiative. Initiatives such as these support the key growth opportunities outlined in this road map.

As this road map is implemented, experts from across departments and agencies including CSIRO, the Department of Agriculture, Water and the Environment, Austrade, FSANZ and AusIndustry will assist government and industry. They will provide expert advice to grow the local food and beverage manufacturing sector and to identify opportunities to access export markets and supply chains.

Funding available

The Modern Manufacturing Initiative is now open for food and beverage manufacturing projects that meet eligibility under its Translation and Integration streams.

Footnotes

26 Smart Manufacturing Leadership Coalition 2011, Implementing 21st Century Smart Manufacturing Workshop Summary Report, Control Global, June.

27 NSW Government 2019, NSW food and beverage manufacturing industry development strategy, Department of Industry

28 AlphaBeta 2018, Digital Innovation: Australia’s $315B Opportunity, CSIRO Data61, September

29 FIAL 2020, Capturing the Prize: The A$200 billion opportunity in 2030 for the Australian food and agribusiness sector, October

30 CSIRO 2019, Growth opportunities for Australian food and agribusiness: Economic analysis and market sizing

31 Food and Agribusiness—A Roadmap for unlocking value-adding growth and opportunities for Australia, July

32 FIAL 2020, Sector Competitiveness Plan 2020.

33 Admassu S et. al, 2020, Landscape of Protein Production: Opportunities and challenges for Australian Agriculture, Australian Farm Institute, February

34 ABARES 2019, ABARES Agricultural Commodities: Global trends in meat consumption, March

35 ABARES 2019, ABARES Agricultural Commodities: Global trends in meat consumption, March

36 CSIRO 2019, Growth opportunities for Australian food and agribusiness: Economic analysis and market sizing

37 Food Innovation Australia Limited (FIAL) 2020, Capturing the Prize: The A$200 billion opportunity in 2030 for the Australian food and agribusiness sector, October

38 Lawrence, S. & King, T. 2019, Meat the Alternative: Australia’s $3 Billion Dollar Opportunity, Melbourne, Food Frontier

39 Defined as the sale of an inferior product represented as a more valuable one.

40 FIAL 2020, Capturing the Prize: The A$200 billion opportunity in 2030 for the Australian food and agribusiness sector, October

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