How can food ingredients producers ensure food safety and high product quality while reducing waste and energy? Read more
Synergex is the first US-EPA recognised sanitiser that’s been proven to kill biofilms on food contact surfaces, improving food safety. Food & Beverage Industry News investigates. Read more
Coles Liquor is supporting food rescue charity SecondBite to help provide a little festive cheer to Aussies doing it tough this Christmas, collecting customer donations at more than 900 stores across Australia from November 22 to December 12.
While the food and beverage industry might not be under the same pressures as other sectors, such as that of power generation or oil and gas, the industry has unique challenges that must be overcome.
GS1 is helping tackle the recall issues faced by the beverage and brewing sector across Australia. Read more
A sustainable, cost-effective, and fast hand drying solution engineered by Dyson has already proven its worth at a New Zealand based meat manufacturer. Read more
Flooring specialists, Allied Finishes, have spent the past two years working on a new product which sterilises production floors without creating a slip hazard – SteriFloor. Read more
Google Trends reported a 62.5 per cent increase for the brand search term “Hello Fresh” since July last year. But with burgeoning consumer concerns for health and safety due to the pandemic, food safety specialists at Navitas Safety say it’s important these companies stay hot on health with the rise of home-ordering. Read more
SKF has come up with a solution that not only stops bearings from potentially contaminating production lines, while still offering great performance. Food & Beverage Industry News explains.
Steven Sischy likes a challenge. The automation and drives business manager for APS Industrial joined the company three months ago with the brief to work together with one of its manufacturing partners – Siemens – to make them the leading automation brand in the country. Siemens already has a great reputation in Europe and Australia, but Sischy is keen to take them one step further.
“My aim is to increase Siemens market share in Australia. Currently, they don’t hold the position of number one. They are definitely a mainstream player in a lot of the sectors where they are active, but they don’t have the dominance they have in Europe.
“My challenge is to see how quickly we can get them up there with Europe and help local industry experience these world-class products and technology. In the short amount of time I’ve been with APS we’ve started to see some returns with having a big focus in particular areas.”
This includes the food and beverage market where over the past two years, the Internet of Things (IoT), Artificial Intelligence (AI) and Industry 4.0 have started to take hold in the processing and manufacturing of goods.
“We also see the packaging industry as a very big market within the Australian and New Zealand markets,” he said. “What we have seen, with COVID, is a lot of people are more interested in knowing where their food is coming from.”
And this is one core principles of how Siemens does business – helping make sure that the food supply is secure, especially when it comes to traceability.
“What is important is cyber security,” he said. “If you look at the food and beverage sector, you will see that Siemens has a cyber security policy within its entire range. When they talk about traceability – especially when you start looking into food and beverage, as well as pharmaceutical – you want to know who has actually put what ingredients where, but they want to now go down to even the operator who packed the product.
“This is part of Siemens core DNA. This technology is already in place and gives manufacturers the capability to say ‘I can show whatever is going into a product has been made with a particular recipe and we will track the entire process from start to finish. We will also note when an operator has changed anything, down to the time and date when it occurred.’”
But there is also a component of the security protocols that is sometimes not taken into consideration, especially when it comes to bespoke manufacturing processes.
“The other side, with the technology – is the intellectual property, which is a massive component,” said Sischy. “Cyber security – because the products are already in place – protects the companies that are investing in these technologies to make sure their knowhow does not fall into foreign hands or any of their competitors’ hands.
“Siemens cyber security is very robust. A lot of the exposure that Siemens has to essential services – whether it be water, wastewater, electricity generation, transport – needs to have robust communication protocols secured end-to-end, so nobody can get in there and potentially harm those processes in any way.”
Sischy said it is also critical to note that Siemens has got a cyber security team that constantly looks at any of these issues that may arise. In the event of a breach, or a potential attack, they can get in contact with the security division who will act on their behalf to ensure that the processes are still intact. Sischy said it is important to protect your assets and if a company already has the necessary security steps in place at a high level, it is easy to integrate these types of measures down to individual processes.
“When it comes to starting your digital journey, we have already got it down to the Siemens LOGO!, which is a very small micro-based controller for home automation, as well as small pump stations,” he said. “It has already got cloud connectivity, so you can put it to the local cloud, or you can send it something like mindsphere if you choose to do that. But the point is you do have that capability.
“Like AI, as well as vison-based systems, we’ll start seeing the evolution of what we call edge-based processors where you are going to have a fair amount of processing sitting very close to the action and then sending that information, or digitalised image, back to some central-based cloud solution, which will then give you the ability to interrogate the information even further.”
Digital twins are also part of the Siemens’ portfolio. Digital twins have come to the fore over the past 12 months, whereby it is possible to create a virtual twin of a physical item. This gives companies the ability to start developing a process, have a look at what they want to do with the process, how they want to improve it, and put in the diagnostics before they connect any physical device to the network.
“Also, through a process that we call Team Centre, you’ve got the ability to also then work out from a manufacturing side, ‘How do I increase the movability? Do I have the right product for the solution? How do I reduce costs and how do I improve the quality of the system?’” said Sischy.
The end game to all these processes is giving processors and manufacturers the ability to achieve the productivity outputs they want, and streamline global processes.
“If you look at it – it doesn’t matter where you look – where any food and beverage company have global location, how do we see whether or not a certain geographical area is more deficient or even profitable versus other areas?” said Sischy.
“What we find, if you have a progressive company, is that they are always looking to be at the forefront of their competitors, or always be ahead of their competitors, which means the uptake of technology is relatively easy. It is where you have companies that may not have the capacities internally, that it becomes more challenging. Sometimes in those instances it can sometimes be harder.”
He said that APS’s philosophy, and therefore something that they are also trying to bring with the Siemens’ suite of products – and Team Centre in particular – is trying to improve the overall quality but also try and lower costs.
“A big part of this going forward, in the Australian market, is to try and reduce your energy consumption and CO2 emissions,” said Sischy. “It is going to be a massive focus going forward, so we need to look at the end goal and determine the true cost of its implementation. With Team Centre, because of the development and also looking at efficiencies, you can also look at the process flows, and that improves it – the actual physical prototyping reduces the development costs and improves the quality.”
He said that Siemens and APS can provide a complete solution including all the Siemens componentry – the PLCs, the drives, the switchgear, the power supplies, the networking devices, as well as panels and cabling.
“Through the company’s system integration program, end users will have the ability to get an end-solution product for the customer,” said Sischy. “It is not only providing product with the inclusion of the APS system program, but it also gives the customer the ability to understand and deliver their needs.
“To make manufacturers locally more cost effective, they need to adopt these technologies. If they are going to try and do this with their standard ways – ‘this is how we have done it over the years etcetera’ – they might not succeed. They need to adapt to the latest technologies.”
Overall, Sischy is excited about the future of the APS/Siemens relationship. It has been a mutually beneficial relationship for both companies – and of course, Australian industry who is better placed than ever to access these products.
A new training initiative based on the thermometer is about to be introduced to the Australian cold chain industry. It is seen as a practical move to help combat the country’s serious food loss and wastage problem, estimated to cost the country nearly $4 billion a year at farm gate value.
The Australian Food Cold Chain Council (AFCCC), the peak advocacy body comprising concerned industry leaders covering refrigeration assets, transport and food distribution, will release an online education program, Thermometers and the Cold Chain Practitioner this month.
The program is aimed squarely at those the AFCCC regards as the super heroes of the food cold chain process – the people who oversee the movement of food through refrigerated transports, loading docks and cold rooms across the nation.
Industry research convinced the AFCCC that Australia desperately needed a new Cold Food Code that should be adopted by industry to stimulate a nation-wide educational push to bring Australian cold chain practices up to the much higher international standard.
The educational program starting with temperature measurement is the first of a planned five-code series.
The AFCCC has invested in new online education software that will be used to develop training programs to support the release of the actual Code document that will cover temperature technologies and how they should be used for monitoring a variety of foods carried in the cold chain.
The initiative runs alongside the work being done by other authorities, including Food Innovation Australia (FIAL) and the Commonwealth Government, which has signed up to a United Nations treaty to halve food wastage by 2030.
Some of the rising levels of national food wastage is considered to be the result of poor temperature management, and poor understanding of how refrigeration works in a range of storage environments. This includes from cold storage rooms through to trucks and trailers, and even home delivery vans.
Australia has world-class refrigeration and monitoring technologies, but the AFCCC believes industry will have to adopt serious training programs so that those responsible for moving food and pharmaceuticals around the country can get the best out of the available technologies.
Because of the vast distances in this country, food transport is a series of refrigerated events, in the hands of a range of stake holders.
Mangoes picked in the Northern Territory may be handled through stationary and mobile refrigerated spaces as many as 14 times by multiple owners on a 3,400 km journey to Melbourne.
If temperature abuse through poor refrigeration practices occurs in just one of those spaces, the losses at the consumer end are compounded, and shelf life can be either drastically reduced, or result in the whole load being sent to landfill.
People working at the coalface of the industry can sign on independently to do the course, which the AFCCC believes will be an important next phase in their professional journey. Kindred organisations involved in the cold chain will be encouraged to become retailers of the education program. Many industry groups have already signed up to help drive cold chain practitioners to the training program from their own websites.
There will only be modest charges for the course, which will help fund AFCCC’s continuing work on assembling the research and expertise to complete further parts of the overall Code of Practice. This will ultimately be gifted to the cold chain industry for the purposes of universal adoption.
The extent of food wastage in this country should not be under-estimated. It is almost criminal that one quarter of Australia’s production of fruit and vegetables are never eaten and end up in land fill or rotting at the farm gate. This loss alone accounts for almost two million tonnes of otherwise edible food, worth $3 billion.
A government-sponsored study released earlier in 2020 revealed that meat and seafood waste in the cold chain costs the country another $90 million and dairy losses total $70 million.
It’s not just the wasted food at stake. The impacts on greenhouse emissions, water usage and energy consumption will end up being felt nationwide.
The AFCCC was formed in mid 2017 by a cross section of industry leaders covering manufacturing, food transport, refrigeration and cold chain services.
The Council sees itself as an important part of the solution, encouraging innovation, compliance, waste reduction and safety across the Australian food cold chain.
The new Council is not about promoting an industry – it wants to change the industry for the better. It acknowledges that Australia’s track record in efficient cold food handling, from farm to plate, is far from perfect.
G.Mondini, a name that delivers innovation, quality and experience in providing dynamic tray sealing systems continue to grow with their ground-breaking tray sealer innovation.
With the culmination of over 45 years’ experience in designing and building tray sealing systems, the TRAVE was created to be at the heart of any packaging system. The design and construction mean this tray sealer can handle the demands of all industrial environments, deliver secure packs with every machine cycle, ability to seal any shape and size of packaging materials on the market, and with patented Platform Technology allows for different packaging technologies to be applied in a simple modular way.
The TRAVE range of fully automatic tray sealing systems deliver on reliability, efficiency and can produce a variety of new innovative packaging options including Vacuum Skin, Darfresh On Tray, MAP, Slimfresh, Slicefresh and the Award Winning Paperseal. Attention to design detail means this is the most hygienic tray sealer on the market, guaranteeing customers the best possible solution.
James White, marketing and sales director at Select Equip, a food equipment company which has been in business for over 35 years and the exclusive distributor of G.Mondini, explains, “It isn’t common knowledge that Mondini TRAVE 350 -R & Trave 384 -R tray sealers can be on the water within 4 weeks from order, with the same Trave performance at a more affordable price. Its all about delivering on all levels with no compromise on its functionality with Mondini PLATFORM Technology fully integrated into its construction. It’s all about offering our customers a real competitive advantage to develop and build their business quickly to meet retailer timelines and demands.”
When it comes to making purchasing decisions with food packaging equipment like tray sealing, it needs to be top-of-mind that capital expenditure is a fixed cost, but it is the ongoing cost of ownership that needs to be considered as well. TRAVE is the lowest cost of ownership compared to any other tray sealer currently on the market today.
Select Equip expertise is on delivering a complete system and support service throughout a clients entire growth cycle. The Trave range of tray sealers is the only system on the market that is delivered future proof and ready to adapt to retailers ever changing packaging format requirements. It’s all about thinking about ‘systems’ and the efficiency and reliability that having one supplier for all your food packaging needs can provide (as opposed to having to rely on different suppliers.) You receive your support, service, equipment, spare parts, and advice all from one place,” said White.
G.Mondini and TRAVE are available through Select Equip. To find out more visit selectequip.com.au email email@example.com or call 1800 1010 122.
Consumers are more concerned about food safety than environmental considerations, according to DNV GL’s ViewPoint survey. A total of 4,500 consumers from across the globe were asked about their food purchasing habits and the results indicate a strong preference for factors impacting the individual consumer. Food safety (55 per cent of respondents) and health issues (53 per cent) were regarded more important than wider external factors, such as environment (38 per cent) and social aspects (35 per cent).
Wider issues such as the environment or social aspects, with the exception of waste and recycling, tend to be of less interest when consumers decide what to buy. While there are geographical differences, often influenced by local legislation, context or recent scandals, there seems to be less interest in issues such as reduced greenhouse gas emissions (10 per cent), human rights (13 per cent) and animal welfare (16 per cent), for example.
“Food safety is still top of the agenda for consumers. However, the survey results seem to indicate that while food & beverage manufacturers and retailers may have invested considerably in protecting consumers, they are not 100% convinced that all products are safe to consume,” says Joy Franks-Laing, global food & beverage manager in DNV GL-Business Assurance.
The survey highlighted a clear trust gap; unbranded packaged food (69%) did not carry the same weight of trust as branded goods (85 per cent). However, there were indications that digital solutions – such as QR codes that show the individual history of a product – may offer a means to build trust. Only 19 per cent of consumers use QR codes on packaging regularly but this would rise to 65% if it was perceived to offer insight into a product’s origin and verification of food safety standards being met.
Consumers are even willing to pay more for products that they trust. If the product information is verified or if the product or manufacturer is certified to a food safety standard, 69% are willing to pay more. Food safety certification is quite common at the manufacturer level. The survey suggests that there is a huge upside for the food industry in improving communication to consumers on food safety and other product characteristics.
“Blockchain-enabled digital assurance solutions such as DNV GL’s My Story helps companies track and share the true story behind its product. Access to product characteristics is instant through an engaging QR code label on the packaging. Letting consumer explore proof of food safety, origin and authenticity, for example, taking the mystery out of the product’s history, building consumer trust and confidence on the spot,” said Franks-Laing.
Australia has some of the highest labour rates in the world, so naturally, optimising processes and using skilled labour where they are most valuable makes sense. While some are still of the opinion that automation is costing jobs, automation is in fact creating jobs and enhancing productivity.
As production increases, it requires more people to manage the up and downstream of the process increase and allows businesses to make more profits. This gives businesses more time to train and upskill their team members in areas more useful to the company.
Adding to the complexities of manufacturing is the need for stringent health and safety requirements which remains a key focus for food and beverage manufacturers of all sizes, as well as those processors in similar industries.
Universal Robots recently helped a global healthcare brand, Sanofi to free up time where it was needed most.
Seven UR10 collaborative robots (cobots) were deployed at Sanofi’s Tours site in France. The integration into packaging lines was used to meet new productivity requirements, that optimised the organisation and reduced load carrying and operator movements in palletizing boxes with tablets and capsules. Thanks to the installation of the UR cobots, Sanofi has increased its production and improved health and safety related to the reduction of MSDs (musculoskeletal disorders) of its operators. These employees are now able to focus on higher value-added tasks.
Darrell Adams, head of South-east Asia Oceania for Universal Robots, believed that the same level of success can be experienced in our local markets, including food and beverage manufacturing and processing.
“Sanofi wanted to reduce the load carried by the operators working on the line. While one cardboard box wasn’t very heavy, lifting a total of around 300 to 700 kg per person per day quickly added up!”
Compact, safe and flexible
Used for palletising, these seven UR10 cobots offer a payload of 10kg and a reach of 1300mm. According to Sanofi Tour’s new works manager, Giles Marsal, these compact cobots were ideal for this application where an arm needed to be installed between two pallets.
“The team were pleased with the ease of programming and the cobots’ flexibility, making it possible to add various sized grippers in just a few seconds,” said Adams.
“The cobots continue working hard, loading and unloading pallets at the end of the line with no strain at all. The application also offers the possibility to change pallets next to the palletising robot safely”.
Sanofi also noted that the integration of these cobots has brought ergonomic benefits in terms of load carrying, travel and a notable reduction in the work time one the line for its operators.
Marsal was quoted saying that thanks to ‘cobot discovery days’, Sanofi employees have now bought in and the cobots are well received. They now look to these cobots as a good collaborator rather than a threat. They are easy and safe to work with and have helped avoid long-term health risks for Sanofi’s employees.
A leading expert in food safety standards is calling for all relevant businesses in the food industry – restaurants, manufacturers, packaging companies, retailers and transport providers – to meet Australian and global food safety standards to help reassure consumers in the current pandemic. The call comes as the industry faces the challenge of quelling customer fears about the potential transmission of COVID-19 via food.
Maidie Wood is a food safety expert at SAI Global, a provider of food safety certification and training, which has audited thousands of businesses to ensure they comply with industry regulations.
“There is currently no evidence to suggest that coronavirus is transmitted through food. COVID-19 is a respiratory virus, which is spread almost exclusively through person-to-person, or person-to-surfaces-to person contact – as was the case with earlier strains, including MERS and SARS. On the other hand, food contamination risks are typically microbial,” said Wood.
“As we learn more about the virus, there may be a slim chance that COVID-19 does present some cross-contamination concerns. It is contracted by inhalation or a similar mechanism, such as breathing in infected droplets from another person’s cough. As a result, it might be possible that a person can get COVID-19 by touching the food or food package that has had the virus on it and then touching their mouth or nose. However, any trace of the virus would be destroyed by proper cooking.”
Although any food safety risks of the virus continue to be evaluated, Wood warns that it is extremely important that food businesses have hygiene systems in place that meet Australian standards, and where necessary, take additional measures to keep the risk levels low. “In times of increased pressure on businesses within food and packaging supply chains, it is imperative that correct hygiene, sanitisation, and pre-operating procedures are strictly adhered to. For business owners, excluding ill workers from your premises is also a necessary prevention measure.
“Although it’s a legal requirement that all food businesses in Australia are trained in food safety, more in-depth Food Safety Supervisor training, such as HACCP certification, should be considered during – or following – this challenging health and safety crisis. SAI Global encourages food manufacturers, retailers and food services to get certified to meet internationally recognised food safety standards such as SQF, FSSC, ISO 22000, BRCGS and IFS – which all incorporate HACCP – to enable them to improve their processes, increase efficiencies, and ultimately, communicate to their customers they have robust food management systems in place.”
The five tips are:
1. Ensure your team are aware of the COVID-19 situation and take it seriously. The scale of COVID-19 is unprecedented. Therefore, managers need to check in with staff regularly to review their welfare and address any concerns as quickly as possible. For instance, staff should be encouraged to be open about their symptoms if they suspect they’re unwell and express any concerns about their circumstances, such as job security. There is a risk that food handlers may continue to work while infectious if they believe their job security is threatened. The best way to monitor staff is to check their body temperature as this cannot be hidden.
2. Review the social interaction of your workforce. In the current social distancing environment, separation of shifts will allow greater time for cleaning and sanitisation of equipment, services, or common dining areas. Food businesses should also consider minimising the number of staff in production areas and position them in all areas of the premises so that they are an appropriate distance apart. Minimising the overlapping of shifts or rosters as much as possible is also vital.
3. Ensure adequate sanitisation facilities with instructions are provided, so that food handlers thoroughly and frequently wash their hands. Though good hand hygiene is common practice among most food businesses, consider increasing it under the current circumstances – according to guidance from the Department of Health. Additional handwashing and sanitisation points should be set up throughout food businesses. Handwashing and then sanitisation should be considered as the new normal routine.
4. Supervise all areas in which food is exposed to ensure it is not contaminated. While COVID-19 can be destroyed by cooking, it can survive on surfaces, such as benches, for several days. If a food handler has been unwell, and there’s concern that a surface might be contaminated, all food packaging should be removed from that surface and effectively disposed of.
5. Advise staff that they can refuse service to any customers who appear unwell, providing this meets the necessary standards and regulations. According to Australian food regulators, businesses have the right to refuse service to customers if they display notable COVID-19 symptoms, such as fever or coughing. The ability for food handlers to exclude patrons underpins a fundamental social responsibility measure outlined by the Australian Government Department of Health, which has demanded members of the public stay home while displaying any symptoms.
South Africa-based Green Farms Nut Company (GFNC) has announced its investment into foremost Napasol pasteurisation technology, to meet and surpass current and future food safety requirements in key export destinations around the world. This decision underscores the organisations ongoing commitment to deliver best in class quality product to its customers, as well as secure value for their supply base of producers and farmers.
According to the World Health Organisation (WHO), globalisation, urbanisation and changing consumer habits has resulted in a longer and increasingly complex global food supply chain. These challenges put greater responsibility on food producers and handlers to ensure food safety. The WHO urges building and maintaining focus on adequate food systems and infrastructures, like laboratories and legal frameworks, as well as multi-sectoral collaboration between governments and stakeholders through the value chain.
“GFNC is extremely pleased to be in the position to proactively take responsibility for our role in the ongoing and inevitable changes taking place in the food industry at large, and macadamia sector more specifically. This decision is a crucial part of our strategy to continue growing and refining processing capability. In so doing retain value add capacity and supply chain accountability at source in South Africa,” said Allen Duncan, CEO, GFNC.
Approximately 25 per cent of South Africa’s macadamias are processed by GFNC. Together with its processing partner network, spanning Australia, Brazil, Malawi and Kenya, the groups marketing business, Green & Gold Macadamias sells roughly 20% of the world’s crop in key territories around the globe. This purchase represents the initial move to making further investment into technology that warrants compliance with increasing microbiological safety standards and global access to highly regulated markets.
The Napasol process ensures 100 per cent of the treated product is pasteurised to a >5log level of reduction of pathogens and is regarded as the market leader in pasteurization equipment for tree nuts. Efficient microbiological reduction is obtained with dry saturated steam, which is natural, effective, and maintains the raw characteristics of the nut. The batch process, which is validated for >5log reduction in pathogens for all tree nuts, meets the risk assessment reduction levels published. The process also preserves the flavour, colour and texture of the raw kernel.
“This outlay will sustain bullish market access for the business, provide the best quality product to our customers, and provide the opportunity to achieve the best possible prices for our farmers. Together with buffering our producers from potential knock-on effects of macadamias that do not meet food safety legislation,” said Jill Whyte, chairperson and owner, GFNC.
The Napasol is planned for installation at the White River factory in the second half of 2020 and should be operational for the remaining 2020 processing cycle. GFNC will have capacity to assist competitor processors with their pasteurisation needs until the decision is taken to invest in their own technology to support market and customer requirements.
Biosecurity officers recently intercepted a number of fruit items at Australia’s borders, which were found to be carrying a citrus disease.
Head of Biosecurity, Lyn O’Connell, said the items were intercepted on separate occasions and all tested positive for citrus canker pathogen.
“This is an example of the significant biosecurity risks that Australia faces and why it is so important to follow our biosecurity conditions,” O’Connell said. “Back in 2004, a citrus canker outbreak had a major impact on our million-dollar citrus industry and the disease has also caused extensive production losses in citrus industries overseas.
“These recent interceptions are particularly concerning given there is an ongoing national response plan in place to manage previous detections of citrus canker in Northern Territory and Western Australia. In the past few months, a passenger arrived at Brisbane Airport with one kilogram of limes and another brought dried citrus peel with them.
“Biosecurity officers also intercepted dried whole citrus fruit that was imported, and all of these items were confirmed to be carrying the citrus canker pathogen. The products were declared and they were all destroyed to ensure the biosecurity risks were effectively managed.
“While Australia’s biosecurity officers and detector dogs do a great job, this is a valuable reminder that we need everyone to do their part and not bring or send prohibited items to Australia.”
Last year, more than 12,000 citrus items were intercepted at Australia’s international airports. Any one of these items may have posed a serious risk.
You must correctly declare biosecurity risk material when travelling or importing to Australia. If you don’t, penalties may include prosecution or fines. If you are visiting Australia, you can have your visa cancelled.
The coronavirus outbreak is already having a severe impact on China’s foodservice and on-trade channels and this could become “more serious and longer-lasting” if the virus is not contained in the next six to eight weeks, leading agribusiness banking specialist Rabobank has warned.
But the extent of the impact on Australia’s agricultural sector will be limited in the short-term and will depend on how quickly the virus is contained, it says.
In a just-released report by the bank’s China-based research team, Recent Coronavirus Impacts on Chinese F&A, Rabobank says “disruptions are being experienced across the entire F&A (food and agri) supply chain” with the virus – which has infected more than 40,000 people to date – disrupting trade, production and supply chains as well as having a significant impact on out-of-home food consumption with the closure of many foodservice outlets.
With the virus outbreak arriving at the peak of 2020 Chinese New Year activities, it has had a large impact on out-of-home dining in the country, the report says.
“Given what we have seen on the ground, along with news received from major chains – for example, the closure of stores by Starbucks, Haidilao, McDonald’s, and Yum China – potential revenue losses for both retail and foodservice for the Chinese New Year week could range from 20 per cent to 80 per cent”. A loss of between USD 31 billion to USD 124 billion across retail and foodservice, it says.
While the report says a quick and effective containment of the virus could lead to a rapid bounce-back, the longer the virus is uncontained beyond March, the more extensive, sustained and structural the impact will be on the F&A chain.
Regardless of when coronavirus is contained, Australian-based head of Rabobank Food & Agribusiness Research, Tim Hunt says it will “almost certainly” have a larger impact on food and beverage industries than the global SARS (Severe Acute Respiratory Syndrome) epidemic in 2003 – including in Australia.
Discussing the current and potential impacts of the virus on Australia and New Zealand’s food and agribusiness industries in a podcast, Coronavirus: How worried should we be, Mr Hunt says coronavirus has already spread more widely than SARS but it is Australia’s “much larger exposure to China” that is the biggest difference between current events and SARS.
“If we go back to 2002 just before the SARS crisis, Australia sent eight per cent of its ag exports to China”, Mr Hunt says. And this was largely in the form of fibre to be processed for export.
Fast forward to 2020, he says, and Australia sends around 28 per cent of its food and agricultural exports to China, much of which is consumed within China. “Add to that, the stronger links that have been developed between Australia and China in terms of exports, tourism, education and investment, we have a very different environment in which we might see the potential impacts of coronavirus this time compared to SARS in 2003.”
There are likely to be both first and second-round impacts of coronavirus on the Australian agricultural sector, Mr Hunt says, with the first round already being felt by any food and ag business relying heavily on the food service channel in China, particularly perishable goods.
“For example, rock lobster shipments to China have all but ceased in the last couple of weeks,” he says, “while chilled meat shipments for food service are also a risk category given a lot of hot pot restaurants are closed at the moment.” And while wine isn’t perishable, Mr Hunt says, sales are also likely to be low for those focused on the Chinese food service industry.
While Chinese consumption of meat, dairy and grains is unlikely to fall in the short-term, Mr Hunt says if the virus continued for many months to come, second-round impacts –“likely to hit our F&A industries” – would come into play.
“Hopefully we won’t get to ‘round two’,” he says, “but if we do, incomes may fall in China and we may eventually see less growth in sales of premium food and beverages as that wealth effect starts to kick in.
“And this may start to go beyond just food service sales and logistical disruptions to potentially impacting consumption in general of meat, dairy, grains and seafood.”
That said, Mr Hunt says, in the event coronavirus has second-round effects, the currency exchange rate would act as an “important stabiliser” for Australian agricultural exporters, with the Australian dollar likely to depreciate significantly as the market responded to slowing economic growth and rising risk concerns. And this, he says, would “somewhat offset” any fall in global commodity prices when expressed in local currency terms.
Going forward, Mr Hunt says, it will be important to closely monitor developments, including this week’s return to work in China after the extended New Year holiday and how the Chinese government continues to manage the outbreak including restrictions on the food service sector.
“But the most important development will be when we see a slowdown in the rate of infection,” he says. “SARS took around three and a half months for the infection to start slowing but after that, it didn’t take long for infections to cap a few weeks later.
“While we have no idea how this virus will behave compared to SARS, there won’t be any easing of restrictions until it does.”
Mr Hunt says it will also be critical to monitor the spread of the virus to other countries such as Indonesia, Vietnam and other parts of South-East Asia, because if it spreads “we will start to see the same set of impacts in a second very large set of export markets for Australia”.
Rock lobster – likely to be the most exposed sector, with 95 per cent of sales going to China. While rock lobster sales from WA have ceased for now, fishermen can leave the lobsters in the ocean and catch their quota later if quota windows allow.
Read meat – short-term disruption is likely given logistical disruption and reduced eating out by Chinese consumers. The general shortage of protein in China as a result of African Swine Fever is still expected to result in ongoing strong demand from China once the short-term impacts of coronavirus are overcome.
Grains – limited impacts are foreseen both initially and in the event of a second round phase.
Dairy – at this stage, limited first round impacts as most of what is shipped (i.e. powders and infant milk formulas) have a good shelf life and are consumed at home. That said, cheese consumption could be impacted as it is mainly used in food service (for burgers and pizzas).
Sugar – very little disruption is expected to impact sugar trade flows, processing and consumption. But indirectly, the dip in the oil market – associated with concerns on the impact of the outbreak on global growth – could push Brazilian millers to produce more sugar this season which would lead to a softening in global prices, and ultimately, Australian prices too.
Wine – On-premise consumption of wine in China in 2019 accounted for around one third of total wine sales. Sales into this channel are expected to fall in the short-term while restrictions on group dining remain in place. That said, volumes of wine sold via e-commerce are likely to rise as distributors attempt to push more product into, and invest more money in developing, this sales channel.
Horticulture – Fortunately the cherry industry had air freighted most of its crop to China before the virus hit, something that would have been highly problematic a month later. In the next two to three months the main threat to export fruit and vegetable crops will be logistical, with demand from Chinese consumers for quality imported fresh produce not expected to fall from current levels.
When coffee nerd Tom Baker joined forces with Philip Moore in 2013, they probably didn’t realise within five years they would have an award-winning product on their hands.
Moore, the distiller, and Baker, a designer by trade, both loved coffee and decided that consuming it in a liqueur form had yet to be perfected, and thus Mr Black was born.
Brewed on the Central Coast of New South Wales at Distillery Britannica, Mr Black has not so much found a niche in the coffee liqueur market but taken it by storm.
Mr Black is a cold brew that has made headway into the UK and US. Five years ago it won a gold medal at the London Spirit Show and has continued to collect silverware on a regular basis. Mr Black operations manager, Rick Roper, can see only good things in the future for this Australian-based beverage.
“In 2017, Mr Black was launched in the US and has now established itself as the biggest selling Australian spirit there,” said Roper. “It is highly regarded and is developing a strong following coast-to-coast.” The product itself is cold-brew, pressed coffee using speciality lot Arabica beans from Colombia and Kenya blended with high-quality grain spirit to make the final product that you see today.”
However, with that growth came logistics issues. In order to keep on top of the bureaucracy of running the business, Roper knew the company needed something to complement its simple inventory system, so decided to invest in Unleashed Software. Like Mr Black, Unleashed has a good reputation within its market. Roper said Mr Black needed a system that would handle the increased throughput, product size and range as it started to grow. This was because it became apparent that if something wasn’t put in place soon, the ability to keep on top of the increasing volume of product could get out of hand.
“Prior to implementing Unleashed, we were only using Xero but found it inadequate for the business because it couldn’t handle manufactured items,” he said. “Xero is a great accounting system but without a bill of material structure, it can’t assemble finished product from components. There was a need to have an inventory system that integrated with Xero in the cloud that was easy to use and could handle manufacturing to grow as the company did. Unleashed immediately gave us control and accuracy of materials and costs.
“In our case, we convert varieties of coffee, speciality sugars, bottles, and packaging into Mr Black in different concentrations and sizes and we have to have accurate inventory transactions at every step,” he said. “Unleashed does that and keeps track of inventory down to batch and unit of measure with ease.”
Ease of use has been one of the key benefits of Unleashed along with the ability to be partnered with other software. This was why Mr Black management decided the software solution was the right choice for them. In addition to Xero, Unleashed has partnered with other third-party vendors. Users can use their accounting system with an easy-to-use integration module in the integration store.
“You can also custom integrate other software via programming interfaces (APIs), that Unleashed can assist with,” said Roper. “Otherwise, to access support to use Unleashed, with clients like us, you can choose an integration partner. Ours is Cloudsolve in Sydney. Besides providing support to get us up and running between Xero and Unleashed, they also provide ongoing support and some outsourced financial services.
“Unleashed is continually adding modules and capabilities outside of pure inventory management. For example, the integration store offers more sophisticated material planning and eCommerce solutions. We have also integrated Unleashed with Shopify allowing efficient online sales fulfilment and billing.”
The key to any type of integration software is not only how it can streamline processes but also the ease of set-up and use. Roper said that Unleashed was not hard to set up or use and has been ideal for getting on top of manufacturing and inventory.
These integration capabilities have made Unleashed a widely used inventory software that is adaptable to many companies’ different needs, according to Roper.
“They are not trying to be a SAP or Microsoft Dynamics or anything like that,” he said. “It is inventory management software in the cloud and is simple to use.”
Roper said the core modules are great to use when it comes to raising and completing sales and purchase orders. For example, orders can be cloned from an earlier order and emailed from the screen. With some background setups in customers, suppliers, pricing, items, document templates and so on, transaction efficiency is high. Users don’t have to do excessive manual steps. In other words, there are less errors and it saves time, according to Roper.
“The dashboard set up displays relevant data such as period to date sales revenue and margins, purchasing and sales transaction status, inventory levels and stock turn KPIs,” he said. “Data access and exports are straightforward. Standard reports are all there and custom reports can be set up.
“While they are adding new features all the time, many features that are nice to have are there. One is that relevant information is displayed in various formats depending on the screen. For example, in Purchases, order minimums are made visible and supplier prices auto-populate” said Roper. “It has a pricing module by group, customer and product, enabling pre-setting of customer sales terms. Again, this helps with the accuracy and efficiency in order processing. It also has min/max stocking levels that can be set for alerts and reordering, as well as a simple replenishment function, which we use for reordering some items.
“For us it’s a one-size fits all. Set up was fast and no customisations were necessary. Even though we started small, all the modules are available to all users whether it is a one-user account or a larger multi-user account. For us, as we have grown, we didn’t need to upgrade do get additional modules. It’s scalable.”
Being a lesser known brand in a competitive industry can be an issue. But if there is a sure way to prove to an industry that you are serious about being a point of difference, while also trying to build your brand, then winning a prestigious award is a good start.
That is what happened to ELGi, the Indian-based manufacturer of high-quality industrial air compressors. When the biggest competitor is German engineering in the form of Kaeser, it can be a hard row to hoe when trying to convince potential clients about the comparitive benefits of your gear. However, winning the coveted Deming Prize for Total Quality Management – the first industrial compressor manufacturer outside of Japan to win the award – goes a long way to show how committed ELGi is to making a dent in the market, including in food and beverage manufacturing plants in Australia.
Having bought Pulford Air & Gas and its subsidiary Advanced Air Compressors in 2018, the company has an ambition to become the second biggest compressor company in Australia.
It concedes that number one, Atlas Copco, is almost unreachable, but the company is keen to get higher on the ladder. ELGi national sales manager, Greg Gillespie, and business development manager, Brian Vegh, both know that they have a hard job ahead of them going from sixth in the pecking order up to number two. However, they also have a belief and confidence that the product not only has the ability and technology to do the job, but the manufacturing process is second to none.
“Atlas Copco is the Empire State Building on the graph you see on a piece of paper,” said Vegh. “We are number six at the moment, but there is not much difference between number six and number three.”
And in order to get up the pecking order, ELGi’s strategy is to espouse the benefits of its products such as the standards they are manufactured to, and the importance of the total quality management measures it has in place when it manufactures the compressors.
“ELGi compressors meet every international standard that any other company meets,” said Gillespie. “They control 100 per cent of the manufacturing process, from the sand they collect for the castings right through to the final product.”
Both Gillespie and Vegh know that there is a perception that compressors not manufactured in the US and Europe are somehow not up to scratch. This is why the company introduced Total Quality Management processes, which culminated in winning the Deming Prize in 2019. Not only that, the company has so much faith in its compressors it offers a 10-year warranty, something most of its opposition don’t do. There is also the perception that their compressors are made to Indian standards, which can sometimes be at odds with Australian regulations.
“A domestic product in India will have a metal starting box on it, which is acceptable over there, but you can’t have a metal starter box here in Australia,” he said. “The ones that arrive on these shores are all up to Australian standards already.”
Two of the key attributes of the compressors are the aforementioned 10 year warranty and their operational efficiency. Gillespie said the efficiency is about 10 per cent better than most similar products that are on the market. There is a reason for this.
“ELGi manufactures all the main components themselves. They mainly use Siemens motors and contactors,” said Gillespie. “We manufacture our own air end, which is the most expensive part of the machine – from the sand to the finished product. The design work they put into the air end to make it more efficient is top notch.
“Then there is the efficiency. Over a five year period, the cost of compressed air is 85 per cent of the cost of electricity/power. If you get a machine you start talking about 200kW of installed compressed air, and they run 24/5 days a week or 24/7 – which is anywhere between 5,000 and 8,000 hours a year. We can supply customers with a machine that is going to be anywhere between 3 and 8 per cent more efficient than some other machines out there. That is a lot of money over five years.”
The most expensive part of compressor is the air-end, which is important when it comes to the 10-year warranty. This is the actual screw where the air gets compressed, and in the case of ELGi, it is one the company has designed itself. It is for this reason they are happy to offer such a long warranty period for their compressors.
“We have heard of situations where only a 12-month warranty on air-ends was offered,” said Gillespie. “The warranty ended on midnight of that day. If it failed the next day, you have got nothing. Absolutely nothing.”
And how suitable is the company’s range for the food and beverage industry? When you’re talking its oil-free range, they are perfect, said Gillespie.
“When it comes to working in food and beverage, our compressors are Class 0,” he said. “With the quality system we use, everything is 100 per cent trackable and traceable. If you open up a machine you will see every screw, nut and bolt hallmarked in yellow.”
“That means every part has been checked. Every single one,” said Vegh. “If you have been in the factory, everyone who works at the foundry is on a production line. They go through a comprehensive checklist when the machines are being manufactured.”
The company is also aware of the impact its manufacturing will have on the environment and have measures in place to make the least amount of impact as possible.
“The sand they use to do their casting will only come from a reputable source and they recycle over 90 per cent of it because of the environmental issues,” said Gillespie. “It is also cost-effective. They’ve built the plant around that supply so they only have to use the minimal amount of sand they need.”
Finally, there is the back-up service that is available. Both Gillespie and Vegh point out that while the product is very good, if there are not people on the ground to help customers, then that can cause a whole range of problems.
“One of the hardest issues with industrial compressors in Australia is retaining and getting good service personal,” said Gillespie. “Most of them started out as fitter and turners. That is what I started out as and there are not of lot of us that stay on the tools their whole career.”
He believes one of the reasons it is hard to employ service technicians are the specifications of the job.
“Being a service technician means you are on the road a lot,” said Gillespie. “You have to like that. Some guys get sick of the travelling and driving. You have to be very autonomous.
“You do routine maintenance of products but then you have to walk into a business where everybody is looking at you. There’s 30 people standing out on the street like there is a fire drill waiting for you to fix it for them. When that machine is down, the down time is so costly to a company they want it fixed now. And some tradies are just not interested.”
Vegh reiterates that you can’t underestimate the back-up service.
“Some of the bigger air compressor manufacturers, for want of a better description, are just selling boxes. That is all they do,” he said. “Once that is done, they are onto the next customer and that’s it. One of our biggest selling points is our after sales service. We have the Advanced Air and ELGi distribution network. We have 52 service technicians nationally, as well as New Zealand.
“If you need help at 11.59pm just before the whole country is waiting for the fireworks to go off on New Year’s Eve or 9.32am on Christmas Day, we will be there to help you. It’s the 24/7, 365 days a year help and support that we pride ourselves on. Selling a compressor is not the hard thing, it’s what you do for the customer in three years’ time that makes a difference.
“Each person who works in the plant prides themselves on the quality of the product.
“We have a rigorous checking process here in Australia when it comes to the ELGi gear we bring into the country. If it is not up to scratch we send it back.”