Matilda’s Aussie grown frozen berries to begin production

Australia’s first 100 per cent locally grown frozen berries, will begin processing in the Yarra Valley next month.

The frozen berries will be processed on purpose built Australian engineered machinery in the Yarra Valley and the berries will be from Sunny Ridge Strawberry Farm.

Matilda’s co-founder Ruth Gallace says they’ve now secured distributors in every State and will start processing berries on its Australian designed and engineered machinery in the Yarra Valley next month.

“We have had to start this entirely from scratch.  That has meant having machinery purpose built and designed, and creating a factory from the ground up. The decision has meant things have taken much longer, much like an architectural house build, but we’ve chosen to take absolutely no short cuts, and we’re really proud of that.  Everything about this business is Australian made.”

Matilda’s was launched after 31 cases of Hepatitis A were linked by the Department of Health to Nanna's 1kg fresh frozen mixed berries, which are made using imported berries.

While Patties said after completing its microbiological and viral testing that it found no Hepatitis A or E.coli on recalled products, the recall pushed up demand for fresh Australian berries.

The origin of Matilda’s frozen berries will be completely transparent – labelled on each and every bag, with no part of the product, or process, occurring offshore.

Gallace had hoped to have product on shelves earlier, but refuses to compromise on quality.

“Now we’re at the end of the Victorian season, we’re going to use fruit from our Queensland farms when it’s at its absolute peak to ensure when it hits the shelves, we know unequivocally that we’re delivering the best product we possibly can.”

 

WTO puts the spotlight on food safety

The World Trade Organisation (WTO) committee dealing with food safety, animal and plant health, heard a record number of specific trade concerns when it met last week. 

A total of eight new trade concerns were raised at the meeting and 16 measures previously discussed were back on the agenda, making it the highest number of specific trade concerns raised in the Committee’s history.

Several members raised concerns about the European Union’s proposed amendment of its approval procedure for genetically modified food and feed (also known as biotech products).

The United States said that the amendment would allow EU member states to restrict or ban the use of such products with no justified reasons. Argentina, Paraguay, Uruguay, Brazil and Canada raised similar concerns, stating that the proposed revision would create unnecessary barriers to international trade.

In response, the EU said that the proposal does not introduce any restriction or ban on biotech products, but would only provide the possibility for EU member states to opt out of the EU decision of authorisation if they wish, for overriding reasons of public interest.

The committee also discussed China’s proposed amendments to tighten its safety assessment of agricultural genetically modified organisms.

Paraguay and the United States welcomed China’s notification, but noted the negative impact such a regulatory procedure could have on international trade. According to the United States, the delays and lack of transparency in China’s current biotech approval process remain a serious trade concern for exporters, and the proposed amendment could further prolong and complicate the approval process. In response, China said that the draft revision aims to enhance the safety assessment of agricultural GMOs, and invited WTO members to comment on the proposed revision.

Costa Rica has also places a temporary import ban on avocados from certain exporters, due to the presence of avocado sunblotch viroid — a disease affecting avocado trees – in various avocado-producing countries. Mexico and Guatemala said that Costa Rica’s measure halts trade and is not justified by scientific evidence. The concern was supported by the United States and South Africa. In response, Costa Rica noted that the measure aims to protect the country from being affected by sunblotch disease, and said that it would maintain close dialogue with its trading partners to resolve the trade concerns.

The meeting also discussed a few concerns that were raised at previous meetings of the SPS Committee, including the EU’s ongoing work on defining criteria for identifying endocrine disruptors, South Africa’s concern about EU measures on citrus black spot, import restrictions on Japanese food products following the nuclear power plant accident, and concerns expressed by Peru and a number of other countries regarding the application and modification of the EU regulation on novel foods.

One of the key functions of the committee is to provide a forum for WTO members to discuss their food safety, animal and plant health measures in order to ensure that these measures do not unnecessarily restrict international trade.

 

Australia has a big role to play in feeding the world

Joanne Daly, CSIRO; Rachel A. Ankeny; Richard Richards, CSIRO; Sally Gras, University of Melbourne, and Stephen Powles, University of Western Australia

This article is part of our series on the Science and Research Priorities recently announced by the Federal Government. You can read the introduction to the series by Australia’s Chief Scientist, Ian Chubb, here.

Joanne Daly
CSIRO Fellow and former Group Executive of Agribusiness and Chief of Division at CSIRO

Agricultural and food industries are an important part of the Australian economy and national identity. They are set to remain so as global demand for food rises over the next four decades.

While not seen as a major part of Australia’s GDP, these industries provide employment across both rural and urban Australia. They sustain rural communities, provide the majority of food consumed in Australia, and underpin our retail and food services industries. They also provide important export earnings, while having important interactions with our environment’s water, soil and biodiversity resources.

Research and technological innovation have long been integral to the success of our agricultural and food industries. Our hard-won reputation for high quality, safe and clean food is founded upon this bedrock.

Research and innovation continue to grow in importance, as our industries look to respond to increasing global demand for food. Producers will need to overcome major environmental challenges due to climate change, land degradation and biosecurity threats while also sustaining and increasing rates of productivity growth. Processors will need to remain competitive with low cost competitors and imports.

The science and research priorities for food recognise the need for research into three broad areas: supply chains; barriers to accessing healthy food; and enhanced food production.

Agricultural and food industries are so pervasive in our society that the other eight research priorities – particularly Soil and Water, Transport, Advanced Manufacturing, Environmental Change and Health – will also have significant implications.

A recurring theme across the Food priorities is the integration of knowledge and cutting-edge technologies. This enhances connections between producers and processors to respond to ephemeral market opportunities and changing consumer preferences.

It allows us to better target inputs in production and processing, not only for profitability but also to better manage land, water resources and biodiversity resources. And it enables reduction and reuse of waste streams.


Sally Gras
Director of the ARC Dairy Innovation Hub and Associate Professor at The Melbourne School of Engineering and Bio21 Molecular Science and Biotechnology Institute at The University of Melbourne

The new research priorities address key issues facing Australian food producers, spanning primary production, post-farm gate manufacturing, distribution and export.

Food safety, stability and shelf life are essential for the export of Australian food products to distant markets across Asia. Research could improve fresh and long life food products, such as yogurt and UHT milk, while new packing and preservation technologies could assist both domestic distribution and export.

Research on provenance and clean, sustainable production could also assist Australian manufacturers to compete on food quality rather than price, potentially accessing higher value markets.

New methods to recover water and byproducts may improve the profitability and sustainability of manufacturing. Food waste could also be reduced and recycled across the supply chain. Energy consumption is not directly mentioned in the Food priorities, but novel technologies could be used to increase energy efficiency, while the Environmental Change priorities may also assist industry adaptation.

The Advanced Manufacturing priority highlights the need to de-risk, scale up and add value to Australian manufactured products – research that could stimulate both product and process innovation. The focus on healthy Australian foods also encompasses some aspects of nutrition.

The priorities are well aligned with the new Food and Agribusiness Growth Centre, which aims to improve access to global supply chains and international markets. The priorities also build on the research networks and strengths established through the Australian Research Council’s Industrial Transformation Research Program, and will allow broad multidisciplinary contributions.


Stephen Powles
Director of the Australian Herbicide Resistance Initiative at the University of Western Australia, and grain farmer, Kojonup, Western Australia.

I applaud and welcome that Food and Soil & Water are among the national research priorities. As never before, food is needed for a rapidly growing world. Australia already is a major food exporter, and being underpinned by research and development, we are poised to make substantially greater contributions to feeding the world.

Australia has competitive advantages in clean and green high quality grains, dairy and meats for global markets, especially booming Asia. However, there are many challenges and much R&D will be required if we are to sustainably deliver much higher quantities of quality Australian food.

Only through creative R&D will we be able to sustainably lift production from our fragile soil and our very limited water assets. Adverse climate change requires we attain even greater water use efficiency in our rain-fed Australian agriculture.

Conversely, in irrigated agriculture we have much to learn to better use water and to unlock the clear irrigated agricultural potential in northern Australia. Momentum is building to lift food production in northern Australia, and there are real opportunities but many challenges and underpinning R&D is essential.

At the post-farm gate level, Australia must establish how to build, label and capitalise on our clean, green, ethical and nutritious foods. With our high costs, sectors must develop and embrace all technologies to be competitive, including robotics in production and manufactured food items.

In my view, it is research and technologies in precision agriculture and robotics that require greatest attention if Australia is to substantially and sustainably lift food production and help feed the world.


Rachel Ankeny
Professor in the School of Humanities and convener of the Food Values Research Group at the University of Adelaide.

These priorities outline key issues facing the food industry if we view foodstuffs as products and expectations as primarily economic. They call for research on social, economic and other barriers to access to healthy Australian foods, which is to be applauded.

But what is largely missing are the challenges associated with human beings: producers, processors, retailers and distributors of food; consumers who make choices about what to purchase and eat; and policymakers who regulate the industry.

Also lacking is any explicit discussion about food security. In the narrowest sense, Australia is food secure; there is enough food per person on average. But there are deep social, political and pragmatic problems with making nutritious foods available, particularly in remote communities. Hence we experience food insecurity.

To build healthy and resilient communities (also covered in the Health priority), we must use (social) science to investigate the diverse barriers to food access and consumption.

Agricultural communities face challenges to their resilience, in part due to threats to their “social license to operate”. Sectors of the public are increasingly anxious about contemporary agricultural practices and their potential impacts on health, animal welfare and the environment.

They view efforts to make agriculture more efficient and sustainable as in conflict with historic shared values underlying traditional and small-scale family farming.

Hence the call to develop production capacity requires scrutiny not just as a technical problem, but in its broader socio-cultural context. “Sustainable” can refer to environmental, economic, and/or social sustainability. “High intensity” production, and especially novel technologies, are frightening to many and may continue to erode their trust in the food system.

Education alone is not sufficient. Understanding of technological and scientific issues associated with agriculture involves a mixture of values, attitudes, and knowledge.

Many opportunities exist if we read between the lines of the priorities about the types of research and ingenuity that are required to meet the challenges: social science is needed.


Richard Richards
Program Leader of the High Performance Crops for Australia group at CSIRO

Australia has been a world leader when it comes to food production in challenging environments. We have an enviable record, particularly in improving crop water-use efficiency whilst maintaining our clean and green image. The opportunities globally will open up for Australia if we can maintain this record as the challenges ahead globally are immense.

We must double global crop production by 2050 to feed 9 billion people. This must be done on less land area than we currently crop, with less water available and in the face of climate uncertainty. Food produced must not be at the expense of land degradation and it must be affordable, reliable and of high quality.

To achieve the productivity gains required by 2050, we must firstly close the gap between the theoretical potential yield at any location and any season based on temperature, water, sunlight and soil, and the current farm yield. This gap for our major food crops currently varies from 20% to 80%.

We must also aim to increase the potential or theoretical yield by increasing total photosynthesis and biomass. Ideally this will be achieved by increasing crop duration and light capture as well as improving the underlying biochemistry of photosynthesis. This will not only increase potential yield but also water-use efficiency.

This challenge is only achievable if there is additional investment in agricultural research. The rewards for Australia and the world are immense. Continuing economic prosperity for Australia will be one but also important will be reduced malnutrition, poverty, environmental sustainability and improved global stability.


Read more in the series on the science and research priorities here.

The Conversation

Joanne Daly is CSIRO Fellow at CSIRO.
Rachel A. Ankeny is Professor of History at University of Adelaide.
Richard Richards is CSIRO Fellow at CSIRO.
Sally Gras is Director ARC Dairy Innovation Hub and Associate Professor at University of Melbourne.
Stephen Powles is Director Australian Herbicide Resistance Initiative at University of Western Australia.

This article was originally published on The Conversation. Read the original article.

Australian wine exports rise in value and volume in 2014–15

In the 12 months to 30 June 2015, the value of Australian wine exports rose 5 per cent to A$1.89 billion according to the Wine Export Approval Report June 2015 released today by Wine Australia.

This is the first time the value of wine exports has increased on a financial year basis since 2006–07.

Wine Australia’s Chief Executive Officer Andreas Clark said growth in value was driven by the strength of Australian exports in the Asian market.

“The value of wine exports to Northeast Asia was up 29 per cent and Southeast Asia was up 18 per cent. We ship more than half of our exports above A$7.50/litre to Asia and the average value of those exports is A$18.49/litre compared to A$12.29/litre in Europe and A$11.54/litre in North America,” Clark said.

“This is the third consecutive financial year we’ve seen value growth in the above $7.50/litre price point, now worth A$529 million. It accounts for 28 per cent of total value share but only 5 per cent of volume.”

In the last 12 months, the average value of exports above A$7.50/litre went up 8 per cent to a record A$15.40/litre.

Exports of Australia’s highest-priced wines (above A$50/litre), which account for only 0.2 per cent of total exports, grew for the fifth consecutive year, up 62 per cent to a record A$123 million.

Clark said that the figures reflected the on-going opportunities for Australian wine in the premium price points and Wine Australia would assist winemakers, regions and exporters to capitalise on these opportunities through its recently released five-year Strategic Plan.

“Our two strategic priorities are increasing the demand and price paid for Australian wine, and increasing our competitiveness. We’ll be expanding our program of activities in the critical US market including the introduction of a formal Market Entry Program and we’ll continue to develop the export markets in Europe, China and Asia Pacific through activities that focus on Australia’s finest wines.”

The average value of total exports also increased by 0.3 per cent to A$2.61 per litre (driven by a 4 per cent increase in the average value of bottled exports to A$4.91/litre) while volume increased by 4 per cent to 724 million litres, the highest level since 2010–11.

In contrast, the average value of bulk exports continued to fall, down 7 per cent to A$0.95/litre. This was driven by a 25 per cent increase in bulk exports below A$1/litre and a decline of 21 per cent in bulk exports above A$1/litre.

Over the last 12 months, Australian wine was exported to 122 destinations by 1,405 exporters with the majority (904 exporters) recording volume growth, a turnaround from the previous year when the majority of exporters recorded declines. The number of Australian wine products exported hit a record high of 17,731, up 8.4 per cent.

Australia’s top five export countries by value were:

  • US – down 7.9 per cent to A$415 million
  • UK – down 1.5 per cent to A$369 million
  • China – up 32.1 per cent to A$280 million
  • Canada – down 0.7 per cent to A$182 million
  • Hong Kong – up 28.4 per cent to A$112 million

Key figures released in the report by market are as follows:

Asia

Exports to Asia grew 26 per cent to a record A$600 million. China saw the strongest growth rising 32 per cent in value to a record A$280 million and is our number one destination for wine exports above A$7.50/litre (8 million litres, the same as the US and Canada combined).

Exports to Hong Kong hit a record for value in 2014–15, up 28 per cent to A$112 million, driven by exports above A$10/litre that accounted for almost a third of all exports to the market. With zero tax on wine in Hong Kong, it’s proven to be one of the strongest markets for premium Australian wine. The average value of exports to Hong Kong also rose 23 per cent to A$14.12 per litre.

Exports to Japan were up 10 per cent in value to A$44 million. The strongest growth was in bulk wine exports that grew five-fold in volume, which can be partly attributed to the removal of tariffs on bulk wine.

Other Asian markets experiencing growth include Malaysia (up 26 per cent to a record A$42 million), Thailand (up 16 per cent to A$16 million), South Korea (up 28 per cent to A$10 million) and the Philippines (up 19 per cent to a record A$6.1 million).

Taiwan is another growing market for Australian wine. Exports rose 47 per cent to A$15 million in 2014–15 while average value rose 20 per cent to A$8.33/litre. Wine Australia will host a Barossa Old Vine Heritage master class in Taipei on 23 July in partnership with Austrade, the first event Wine Australia has held in Taiwan.

UK and Europe

Europe accounts for a third of Australian wine exports by value and more than half by volume. The UK’s emergence as a wine packaging hub sees increasing shipments of bulk wine (which is lower priced due to lack of packaging) distributed around the UK and Europe. While exports to the region are on the rise (up 5 per cent to 374 million litres), value declined 1 per cent to A$584 million.

The UK remains Australia’s biggest export market by volume remaining steady at 251 million litres however value declined 2 per cent to A$369 million. The drop in value can be attributed to the 10 per cent decline in the average value of bulk wine exports to A$0.99/litre. There was a small rise at the higher end with the average value of bottled exports up 1 per cent to A$4.11/litre, the highest since 2006–07.

Exports to Germany increased in value by 6 per cent to A$50 million and in volume by 15 per cent to 39 million litres. This growth was offset however by a decline in average value, with the average value of bulk wine exports falling 10 per cent to A$0.84/litre and bottled exports falling 15 per cent to A$3.58/litre.

United States

Total Australian wine exports fell 8 per cent in value to A$415 million as a result of declines in bottled exports across all price points. Bulk wine exports however grew 4 per cent to A$53 million.

Of the 50 states in the US, the five that consume the most wine also account for two thirds of Australia’s wine exports to the US – California, New York, Florida, Texas and New Jersey – valued at A$251 million.

Canada

Australian exports to Canada declined 1 per cent in value to A$182 million while volumes increased by 1 per cent to 60 million litres. With a relatively small domestic wine industry, Canada relies heavily on imported wines and Australia was a major source of bulk wine with the below A$2.50/litre segment experiencing the strongest growth, up 5 per cent in value to A$25 million.

Growth in the A$5.00–$7.49/litre segment (up 4 per cent to A$51 million) contributed to the average value of bottle exports rising 1 per cent to A$5.26/litre, the highest it’s been since 2009–10.

 

Online shopping agreement links Australia and Korea

Australasian online shopping channel, Yes Shop, has signed a supply agreement which could help Australian food manufacturers break into Korea.

The reciprocal agreement allows Australian brands to list their products on Hyundai’s HMall online shopping platform. Hyundai Department Store Group is one of the biggest retailers in South Korea, with its Home Shopping and Online businesses among the biggest there too.

“This supply agreement allows Australian Food & Beverage producers to sell their products to South Korean consumers, without having to invest hundreds of thousands in warehousing, distributing and marketing their products,” said Paul Ding, Director, Yes Shop

HMall carries over 2 million lines of product and has relationships with more than 3,500 suppliers of quality products and global brands. South Korea has the world’s most developed home shopping market, where online retail recently over-took traditional ‘bricks and mortar’ department stores in sales.

“Similar to the Amazon model, producers warehouse their own goods, and ship directly to the purchaser from their warehouse, allowing both large and small businesses to take advantage of this agreement, without needing to invest in a large production run up-front,” Ding said.

“When the Korean Free Trade Agreement is in full effect, nearly 99.8 per cent of goods will enter duty free, meaning that a range of food and beverage producers can use this agreement to gain easy access to the Korean market.

“There’s tremendous demand for high quality Australian food and beverage products in the Korean market.  Organic food products including baby foods and those with certain health or beauty benefits are highly sought after." 

 

China presents opportunities for heat resistant chocolate

China is forecast to become the leading APAC chocolate market in 2018, a market that may present opportunities for the innovative.

Heat-resistant chocolate has resurfaced in the media, after a Swiss bulk chocolate manufacturer, Barry Callebaut released a thermo-tolerant chocolate, with a melting point up to 4 degrees Celcius higher than the normal 34 degrees Celcius. But Barry Callebaut isn’t the first, with the likes of Mondelez, Nestle and Hershey having already developed heat-resistant chocolate.

Heat-resistant chocolate could still provide opportunities for growth, particularly in the climates that traditionally turn chocolate into a melted blob.

According to Euromonitor, Japan (US$3.6 billion) was the biggest market in APAC/ANZ for chocolate confectionery sales in 2014, followed by China (US$2.7 billion), Australia (A$2.6 billion), India (US$1.7 billion), Indonesia (US$1 billion) and South Korea (US$570 million).

However, China is forecast to overtake Japan as the leading APAC chocolate market in 2018, with significant growth also predicted from India (and a strong performance by Japan) to drive much of the growth forecast for the Asia Pacific region over the next five years.

China and India are forecast to increase their chocolate confectionery markets by US$2 billion a piece, which represents 67 per cent total period (2015-2020) growth for China and 104 per cent for India.

While the Asia Pacific is predicted to lead confectionary growth, it’s forecast that the Middle East and African market won’t be too far behind.

“In five to 10 years, heat-resistant chocolate will be more important than premium chocolate in the Middle East and Africa, as they don't have the necessary infrastructure to keep it cool,” said Jack Skelly, Research Analyst, Euromonitor International.

But not all the analysts are convinced, with mouthfeel a concern.

“Mouthfeel will be the most important issue – specifically how to make a chocolate with a 50 degree melting point melt in a 37 degree mouth,” says Daniel Grimsey, Senior Research Analyst, Euromonitor International.

 

Research helps winemakers find descriptions easily understood by Chinese wine consumers

New research will help wine producers and distributors to describe their product more effectively using terms more easily understood by Chinese wine consumers.

The Chinese Lexicon Project – a two year long research initiative by the Ehrenberg-Bass Institute at the University of South Australia funded by the Australian Grape and Wine Authority (AGWA) – has revealed what terms Chinese consumers use when describing a wine and what Asian fruit and vegetable flavours are equivalent to the Western ones used to describe wine.

“Describing a wine as tasting of blueberry is hard to understand if you have never seen or tasted a blueberry”

The project, led by Dr Armando Corsi, Dr Justin Cohen and Prof Larry Lockshin, involved more than 250 Chinese wine consumers from Shanghai, Guangzhou and Chengdu.

The participants described the taste of a selection of Australian white, red, sparkling and dessert wines.

Participants selected a series of generic wine descriptors as well as choosing from a list of specific fruit and vegetable flavours. These flavours were either Western fruit and vegetables or proposed Chinese equivalents.

The research found that generic wine descriptors, such as “mellow”, “lingering” or “fruity” were three times more likely to be used than specific wine descriptors by Chinese wine consumers.

Dr Corsi says that wine has been predominantly described in China using Western terminology but such descriptors lack meaning if the consumer has little or no experience of tasting that particular fruit, vegetable or spice.  

“Describing a wine as tasting of blueberry is hard to understand if you have never seen or tasted a blueberry,” Dr Corsi says.

“What this research has provided is evidence of what specific Chinese fruit and vegetable flavours are equivalent to the Western descriptors currently used on wines in China.

“We can now say that the equivalent to blackberry preserve is dried Chinese hawthorns.”

The project also investigated the likeability, willingness to pay and perceived price points of different wine styles.

The research showed that what is perceived to be more expensive is not necessarily what is liked the most.

“There is also the potential for similar research to be undertaken in other countries to determine what cultural descriptors they would use to describe the taste of different wines.”

 

SA says it’s uniquely ready for the FTA with China

Intense business and government preparation and negotiations with China over the previous three years have positioned South Australia to reap the benefits of the newly-signed China-Australia free trade agreement.

The FTA comes less than a month after South Australia’s largest trade delegation travelled to economic powerhouse Shandong province in China, targeting new relationships and business opportunities.

A sister state of South Australia since 1986, Shandong Province has the third largest GDP of all provinces in China, is one of the country’s top manufacturers and produces almost half of all wine in China. It has a population of around 100 million.

Sean Keenihan, the vice president of the Australia China Business Council said the FTA would see greater trade volumes for South Australia and strategic investment to scale up the state’s production to meet growth in Shandong as well as greater China.

Wine tastings are one way that South Australia has been raising awareness of its industries in China.

Chief Executive Officer of Food SA Catherine Barnett said the free trade agreement provided a “gift’’ for food industries in South Australia.

“It is now up to businesses to seize this opportunity to grow by being smart with their marketing, branding and positioning,’’ she said.

“This should provide a sense of urgency for local agriculture to act as there are other countries also looking for these types of opportunities.

“It provides a rare opportunity to increase market share and attract investment, ideally in partnership, with China.

“South Australia producers are predominantly small to medium enterprises and often family owned which means they are very nimble in the market place to seize opportunities, as opposed to large conglomerates.

“There is a lot of intellectual property in SA around agriculture and horticulture which really stands us in good stead.’’

Senior Trade Commissioner to Beijing for Austrade, Michael Clifton said beef, sheep, dairy and seafood industries should be very optimistic about achieving terrific outcomes as a result of the FTA.

“We are seeing already businesses jockeying for buying position with South Australian business following the announcement of Seppeltsfield signing a deal to export 1.5 million litres of premium wine to China every year and the Stehr Group signing its first deal to export 40 tonnes of tuna to China worth around $1 million.

“This is happening before all the benefits of the Free Trade Agreement come in to play because businesses want to secure their buying positions and relationships with South Australia companies.’’

South Australia’s beef and sheep farmers will also gain from the phased abolition of tariffs ranging from 12 to 25 per cent.

Darren Thomas, owner of South Australia’s largest meat exporter Thomas Foods International, said the tariff reduction would allow the meat industry to be more competitive, especially against the New Zealand market.

“We certainly have had a heightened focus on a China with the Free Trade Agreement in mind. We are working closely with our clients to ensure they are aware of the benefit of the FTA.

“One of the biggest benefits will be through direct investment to accelerate the opportunities for companies through either formal sales partnerships or equity investment. It will also perhaps allow Chinese companies to invest in their own right to capture opportunities.’’

Thomas Foods is South Australia's largest meat exporter.

Thomas is also the chairman of Brand South Australia, the entity tasked with building awareness of the opportunities within the state.

“There’s in no doubt that through the new brand of Brand South Australia we have been able to increase the awareness and geographic location of South Australia in a consistent and coordinated approach,’’ he said.

Next week delegates who attended the Shandong Forum will come together again with Premier Jay Weatherill who will outline the next steps in trade and investment outcomes.

 

China-Australia trade agreement a compromised victory

After ten years of marathon negotiations, the China-Australia Free Trade Agreement (ChAFTA) was signed in Canberra this week. Australia now has an FTA with its number one trade partner, becoming one of the few developed economies (Singapore, Korea and New Zealand) to have signed agreements with China.

Negotiating ChAFTA has proven exceptionally fraught. Launched amid much fanfare in 2005, reaching mutually agreeable terms proved harder than expected. Twenty-two rounds of negotiation were required, talks “stalled” on several occasions, and at one point the then Trade Minister Craig Emerson described the FTA as “overrated”. Many in the Australian business and policy communities will be relieved the agreement is finally concluded.

The Abbott government has described ChAFTA as “history making”, and put considerable effort into spruiking the many gains it will offer for Australian exporters.

But the deal is what’s known as a “positive-list” trade agreement, which puts certain limits on the benefits it offers Australian industry.

The type of agreement matters

The “positive-list” and “negative-list” approaches are, broadly speaking, the two methods for negotiating trade agreements. While debates over trade negotiation strategies may seem arcane to all but the most seasoned trade lawyer, they are critically important in shaping the ultimate form of an FTA.

Under the negative-list approach, governments begin by agreeing to liberalise all forms of trade protection (typically, tariffs and quotas) between their two economies. Recognising some sectors as “too sensitive” for full liberalisation, they then negotiate a list of products for exclusion. The negative-list approach presumes everything is on the table, with talks focused on identifying what will be left out of a trade agreement.

Conversely, positive-list negotiations instead focus on what will be included. Governments start by presenting a list of “requests”, and then offer and counter-offer until an agreeable balance is struck. (E.g. “If I agree to your demand X, will you agree to my request Y?”). This presumes nothing is on the table initially, and gradually adds content as governments decide which sectors are most important to them.

These approaches tend to produce different outcomes. Negative-list lends itself to broader and deeper trade liberalisation, because it places the onus on governments to justify why a sensitive sector should be excluded. Positive-list often leads to shallower and narrower agreements, and is often frowned upon by “free trade” purists. However, it is a useful strategy in cases where trade liberalisation is politically contentious or difficult, and governments simply wouldn’t be comfortable with deep reform.

 

Prime Minister Tony Abbott watches as the president of China Xi Jinping shakes hands with Fortescue Metals CEO Andrew Forrest after signing a MOU as part of the free trade agreement. Alan Porritt/AAP

 

Who are the positive-list winners in ChAFTA?

While the ultimate agreement was as much about what Australia requested as what China was willing to concede, there are three sectors which have emerged as the big winners:

  • Agriculture, where tariffs on Australian beef, dairy, wine, fruit, pork, sheep meat, seafood and some grains will be phased out over a period of years
  • Services, where increased market access will be offered to the legal, education, telecommunication, financial, tourism and healthcare sectors
  • Mining, where tariffs on coal, alumina and some base metals will be eliminated.

These commitments will be transformative for the Australian industries that have been lucky enough to get on the positive-list. But they fall well short of what could genuinely be described as “free trade” between Australia and China. If a sector is not on the list, Australian exporters must contend with China’s normal trade policy regime. For these industries – including sugar, wheat, many manufactures, and most professional services – life after ChAFTA will be business as usual.

Even for the industries included, positive-list means ChAFTA commitments often fall short of full liberalisation:

  • Certain commitments in the transport, construction, telecommunication and legal sectors will only apply in the “Shanghai Free Trade Zone”, not the entirety of China.
  • Wool exporters get duty-free access for only a fixed volume of exports (initially 30000 tonnes, rising to 45000 by 2024)
  • Australian-owned hospitals can only be established in four Chinese provinces and three cities.
  • In education, the only firm Chinese commitment is to list some 77 Australian providers on a government website
  • Farmers will have to wait for some time – nine years in the case of beef and cheese – for tariff cuts to fully take effect.

These caveats and carve-outs illustrate the inherent trade-off in the positive-list approach: a tricky trade agreement is made easier, but only by sacrificing across-the-board liberalisation.

Picking winners also means picking losers

The political reality is that the Chinese government is unlikely to have ever agreed to the stronger negative-list approach in ChAFTA. However, this has meant the Australian government has been forced to make difficult choices over what to prioritise, and what to leave out.

First, the government has had to “pick winners” when setting its priorities. The beef, dairy and tourism sectors have been the main beneficiaries. But picking winners also means picking losers, many industries have been left out. The long-suffering sugar and rice industries were both victims, reportedly cut from negotiations in exchange for China shelving requests around state-owned enterprise investment.

In this context, it’s worth asking how and why these decisions were made. Was “beef-in/sugar-out” a conscious decision to maximise national economic interests? Or does it reflect the relative lobbying strength of these sectors?

Second, the government has had to favour current exporters over future economic opportunities. ChAFTA will ensure 95% of Australia’s current (2013) exports to China will enter duty-free. However, by the time the agreement takes full effect in 2024, the Australia-China trade profile will surely have changed. As Chinese urbanisation and growth progresses, service exports are likely to become more prominent while primary commodities less so. Unfortunately, the positive-list ChAFTA agreement targets the export sectors of today, rather than those of tomorrow.

This raises questions about what will happen to emerging service sectors not presently on the list. While telecommunication firms now have access to the Shanghai Free Trade Zone, will this be the most important Chinese market in 2024 or 2034? And what of service sectors Australia has yet to develop?

ChAFTA is an imperfect agreement, borne out of political difficulties and the compromises these have entailed. Some sectors are in, but others are out, and carve-outs and caveats impose limits on many of the concessions. The unpleasant – but unavoidable – reality is that positive-list FTAs are not about “free trade”, but picking winners and commiserating losers.

The Conversation

Jeffrey Wilson is Fellow of the Asia Research Centre at Murdoch University.

This article was originally published on The Conversation. Read the original article.

 

Free Trade Agreement with China signed

Australia’s dairy industry, agriculture sector and beef and sheep farmers are the big winners of the Free Trade Agreement signed today by Minister for Trade and Investment Andrew Robb and his counterpart, Chinese Commerce Minister Gao Hucheng.

Australia’s agriculture sector will be able to capitalise on its well-deserved reputation as a clean, green producer of premium food and beverage products. Tariffs will be progressively abolished for Australia’s $13 billion dairy industry. Australia’s beef and sheep farmers will also gain from the phased abolition of tariffs ranging from 12-25 per cent and all tariffs on Australian horticulture will be eliminated.

China is Australia’s largest trading partner, with total trade worth almost $160 billion in 2013-14, and a growing source of investment.

The China-Australia Free Trade Agreement (ChAFTA) will lock in existing trade and provide the catalyst for future growth across a range of areas including goods, services and investment.

The Agreement secures better market access for Australia to the world’s second largest economy, improves our competitive position in a rapidly growing market, promotes increased two-way investment and reduces import costs. It is a win for households and businesses alike.

On day one of the ChAFTA, more than 85 per cent of Australian goods exports will be tariff free, rising to 95 per cent on full implementation.

Tariffs will be eliminated on a wide range of Australian manufactured goods, including pharmaceutical products and car engines.

Tariffs will be removed on almost all Australian resources and energy products, including the 8 per cent tariff on aluminium oxide on the first day of the Agreement, benefitting our exports worth around $1.3 billion a year. The tariffs on coking coal will be removed on day one, with the tariff on thermal coal being phased out over two years.

ChAFTA completes a trifecta of trade agreements with Australia’s top three export markets, accounting for more than 55 per cent of our total goods and services exports.

Australia’s FTAs with Korea and Japan are only months old and according to a joint release by Tony Abbott and Andrew Robb, Australia is already seeing increased exports compared to a year ago – like a 26 per cent increase in frozen beef prime cuts to Korea and a 84 per cent increase in the same product to Japan. Macadamia exports to Korea have more than doubled, and Japan is importing 82 per cent more of Australian rolled or flaked oats. Increases have also been seen in wine, lamb, horticulture and many other products.

The Agreement will enter into force after the completion of domestic legal and parliamentary processes in China and Australia, including review by the Australian Parliament’s Joint Standing Committee on Treaties, and the Senate Foreign Affairs, Defence and Trade References Committee. Both countries are working to complete these steps and bring the Agreement into force as soon as possible.

The full text of the Agreement is now publicly available online at: dfat.gov.au/chafta.

 

Beston Global Food Company to buy United Dairy Power

Adelaide-based Beston Global Food Company (BGFC) has come to the rescue of Murray Bridge milk processor United Dairy Power, by contracting to buy it out of receivership with the goal of supplying its South Australian milk products to Asia.

BGFC – headed by Adelaide businessman Roger Sexton, has, over a period of three years, built up its investments with the view of taking premium clean, green Australian food and beverage products into global markets, particularly China and Asia.

“A key objective when we established BGFC was to take healthy eating to the world’s growing communities with Australia’s best foods,” Sexton said.

“Our business model is an integrated closed loop supply chain whereby we own the raw materials, take advantage of advanced know-how and technology in the production process and control the marketing and distribution of the end products through Company owned subsidiaries in key global locations.”

“Being able to purchase and revitalise United Dairy Power is a win-win. BGFC has secured additional dairy resources to feed its growing overseas markets. We make an even greater contribution to realising the State’s food export vision, and through our investment we are adding value to a regional economy and keeping local jobs and ownership.”

United Dairy Power, with plants which employed about 130 staff and contractors in Murray Bridge and Jervois in South Australia, was placed in receivership in late April. At the time, it was estimated that the region could lose about $170 million in net wealth as a result of the closures.

The facilities at UDP have been involved in the production of cheese and other milk products for over 40 years but had been operating at only around 30 per cent capacity at the time of the receivership.

 “Our company will invest considerable capital into UDP to upgrade its facilities at Murray Bridge and Jervois, increase the production capacities of the two plants and introduce new products for distribution into China and the ASEAN region by BGFC subsidiaries based in Thailand, Vietnam, China and Brunei,” Sexton said.

Under the ownership of BGFC, the name of UDP will be changed to Beston Pure Foods.

 

Maggi to lose over $250m following food safety ban

Maggi, a subsidiary of the Nestlé group, is set to lose over $250 million in brand value following a ban imposed by the Food Safety and Standards Authority of India (FSSAI).

Maggi will destroy $64 million worth of noodles in India which have been branded “unsafe and hazardous” after the FSSAI discovered “higher-than-allowed levels of lead” in some noodle packets.

Maggi’s brand was valued at $3 billion prior to the food safety ban, which ranked the noodle manufacturer as the 23rd most valuable food brand in the world. However, Brand Finance analysts have calculated that the $64 million loss of goods combined with a damaged brand, results in a reduced brand value of $2.8 billion.

Nestlé India has said the noodles in India are safe, but that they have decided to take the products off the shelf due to “an environment of confusion for the consumer”.

This, Nestlé believes, does not provide a conducive environment to have the product in the market, at this moment.

Speaking to the media, Paul Bulcke, Global Chief Executive, Nestlé said: “The trust of our consumers and the safety and quality of our products is our foremost priority everywhere in the world. Unfortunately, recent developments and growing concerns about the product have led to confusion for the consumer to such an extent that we have decided to take the product temporarily off the shelves, in spite the product being safe”.

Responding to the recent concerns around lead, Nestlé has conducted extensive, additional tests on over 1000 batches of MAGGI Noodles at its own accredited labs, complimented by tests on over 600 batches at external laboratories. All results indicate that MAGGI Noodles are safe and well within the regulatory limits established in India. Nestlé has shared these results with the authorities, as well as with the broader public online.

Nestlé has decided to challenge the high court whilst also raising “issues of interpretation” of India's food safety laws.

The Maggi Noodles Nestlé sells in Australia are made in Malaysia.

 

New ingredient prevents yoghurt from setting

A new protein-based ingredient will allow dairies operating a set yoghurt production line to use their existing equipment to make drinking yoghurt.

The Nutrilac protein ingredient, developed by Arla Foods Ingredients, is added to the manufacturing process at the beginning of the production cycle. It subsequently prevents the yoghurt from setting, resulting in a liquid yoghurt drink with a protein level of up to 5 percent.

When added to a standard set yoghurt recipe, the Nutrilac protein blocks the mechanism that causes the product to gel, creating instead a protein-rich drinking yoghurt – without requiring the installation of a new production line. Colours, flavours, sugars and sweeteners can be added at the beginning of the manufacturing process as per usual, along with healthy ingredients for fortification such as calcium, fibre and probiotic bacteria.

Torben Jensen, Category Manager for Fresh Dairy Products at Arla Foods Ingredients, said: “Our Nutrilac protein offers an easy way for dairies to add another product range to their portfolio, and to make much better use of their existing production line. This is an ingredient solution that can be used by dairies of all sizes. However, we expect it to be particularly interesting to smaller companies without the space to install a second line, but who wish to capitalise on the great opportunity offered by protein-rich drinking yoghurts.”

 

Australian wines win at Decanter World Wine Awards

A total of five Australian wines have claimed International Trophies at this year’s Decanter World Wine Awards.

International trophies are the highest accolade that a wine can achieve at the Decanter World Wine Awards. This year’s event saw 35 International Trophies awarded from a total of 15,929 wines tasted at the beginning of the judging process.

The Australian International Trophies winners:

  • Tasmania’s Bay of Fires 2014 Sauvignon Blanc was awarded the Gold International Trophy: Sauvignon Blanc over £15.
  • Clare Valley’s Leasingham 2009 Classic Clare Riesling was awarded the Gold International Trophy: Dry Riesling over £15.
  • Adelaide Hills’ Longview Epitome Late Harvest Riesling 2013 was awarded the Gold International Trophy: Sweet under £15.
  • McWilliam’s 2008, 1877 Cross-Regional Blend claimed the International Trophy: Red Blend over £15.
  • And Sidewood’s 2013 Mappinga Reserve Shiraz won the International Trophy: Red Rhône Varietals over £15.

The awards were judged by 240 of the world’s most refined palates including 85 Masters of Wine and 23 Master Sommeliers.

For the full results list, click here.

 

Cider still UK-centric product, but USA, Australia and South Africa making inroads

Canadean expects global consumption of cider to grow around 5 per cent annually to reach over three billion litres in 2020.

Although the UK will remain the world’s largest cider market, it will lose considerable consumption share to the US, Australia and South Africa.

According to a new Canadean report, over the next five years an additional 640 million litres of cider will be consumed worldwide. Total volume of the global cider market is expected to reach three billion litres in 2020, up from an anticipated 2.4 billion litres in 2015. Although the UK will hold its position as the market leader in cider consumption, the country’s share in the global cider market is shrinking. Canadean expects the UK's market share to decline from 41 per cent in 2015 to 33 per cent in 2020, losing most of it to the US, Australia and South Africa, where nearly 70 per cent of the additional 640 million litres of cider will be consumed.

New and innovative ciders will cause growth in the US

The US cider market – the third largest in the world – will grow at an average annual rate of 12 per cent between 2015 and 2020, compared to an average global growth rate of just 5 per cent. Rakhee Sturgess, analyst at Canadean, said: “The launch of new and innovative ciders will cause this growth, as will the introduction of cider to new regions in the US. More consumers will discover the beverage and change from beer and other flavoured alcoholic drinks to cider. Tradition and culture are important in the promotion of ciders and will increase demand for products from the UK.”

Premium flavours and craft drive growth in Australia

According to Canadean, growth will also be strong in the Australian cider market, with an average annual growth rate of 12 per cent between 2015 and 2020. “Super premium fruit flavours of Scandinavian cider brands like Kopperberg and Rekorderlig are driving the increased consumption in Australia. But growth is also caused by the introduction of mass market brands like Somersby at a far lower price point than typical branded ciders,” said Sturgess. Craft ciders are also growing in popularity, with more apple producers returning to their roots and producing small-scale artisanal ciders.

Product positioning key to success in South Africa

In South Africa, product innovation in terms of both flavour and packaging, which appeals particularly to a younger demographic, is helping to drive up both volume and value. The market is becoming increasingly competitive, with new players entering the sector and existing producers investing in strong product positioning to expand their consumer base.

In terms of per capita consumption increase, New Zealand stands out, with consumers expected to drink an extra 10 litres per person in 2020 than in 2015; reaching 18 litres compared to the UK’s 15.5 litres and a global average of just 0.4 litres. New Zealand’s premium apple crop is spawning a flourishing interest in cider production. “Cider's profile as a summery, fun drink fits well with the taste and culture preferences of Australians and New Zealanders,” Sturgess said.

 

Australian Dairy & China – great hope or just great hype

'China' and 'Dairy' seem to be appearing in the same sentence everywhere right now.

There has been lots of noise about in-bound investment from farm to factoryand plenty of talk about the dairy market in China, Aussie milk being flown there and sold for eye-watering prices, demand growing for infant formula etc.

Earlier this week I participated and presented at the "Unlocking Dairy for China" workshop held by and at the Food Innovation Centre (FIC) in Melbourne. The FIC is run by Mondelez with funding from the Victorian Government with a vision of helping grow food exports to Asia. 

There were ~20 delegates as well as eight presenters. Two dairy companies sent four representatives each which shows a certain level of interest in the topic. 

Susie White facilitated the workshop and still managed to draw this graphic recording at the same time. An amazing skill I'm jealous of as well as a great summary of the day!

My top takeaways, moments, insights and themes were:

  • Yes, it's a very large market with its affluent population growing, the middle class is 400m people plus 50m richer still
  • It's not one homogenous market – China is more culturally/linguistically, religiously and genetically diverse than Europe!
  • The burgeoning middle-class (avg family income $40K) doesn't have high disposable income – they're not the ones buying milk for $9/litre
  • Perception of issues with food safety and quality are very high
  • 'Natural' products are valued & international products more trusted
  • Food is purchased online at a much higher rate in China than in most western countries e.g. 40 per cent of Chinese consumers buy food online versus 10 per cent in the US
  • Dairy in China is nearly as big as the US dairy market at the retail level  in dollar sales terms and growing much faster
  • Fruit flavoured milk drinks are a popular format
  • NZ sent $189m of butter to China in 2013, Australia…just $8m – do you think the FTA might make a difference in time?
  • Shelf life is the technical crux for everyone thinking of taking their products to China
  • Chinese retailers are demanding milk has 50% of its shelf-life remaining at the time of stocking. Tricky for HTST milk – there will be more ESL
  • Cold chain is critical and its getting better in China all the time – the last mile especially for e-commerce deliveries is still missing
  • Every 2°C rise in storage temp you lose half your shelf life – it's a rule of thumb for milk
  • Serialisation – a unique code on every item – will be huge everywhere not just China – 7% of Norco's retail packs sold in China are scanned by the purchaserto ensure authenticity. I thought that was surprisingly high but is strong evidence for the need to build trust in your product
  • The whole clean green thing is a bit of a given for any western dairy producer – not a point of significant difference for Australia or NZ
  • The Export Markets Insights work from FIAL & Victoria University's SCIU is really very good. They need to market it better – dig in if you want good stats on exports to Asian consumer markets 
  • It's not a surprise, but the Chinese palate and expectations from dairy are very different. The learning here is if you're a SME looking to take a product to China get to the FIC to get your insights & prototypes done while they're still 'subsidised' by their grant money (i.e this year).
  • Getting Australian fresh milk into China is hard work but its being done by at least five Australian brands/producers now with more going soon
  • Getting other more complex dairy products into China is much more difficult because of their trade rules on ingredients in imported food

In the end I left thinking that there is a lot of potential, that we are probably closer to the beginning of the growth in this relationship than the peak, but that being successful will require determination, great relationships and the right products. There's very little that says Australia is in a better position than the rest of the world though – and the competition is sure to be be fierce. Hard work ahead.

Mark Fink is the Commercial & Communications Manager at Dairy Innovation Australia.

 

Coopers to brew and distribute Brooklyn Lager

Coopers Brewery is set to brew and distribute one of America’s leading craft beers, Brooklyn Lager.

Coopers and New York-based Brooklyn Brewery, have reached an in principle agreement for Coopers to brew and keg Brooklyn Lager at its Regency Park facility and distribute the beer in keg, bottle and can formats across Australia and New Zealand.

Distribution would be undertaken by Coopers’ distribution company, Premium Beverages.

Tim Cooper, Coopers’ Managing Director, said final contracts had not yet been signed, but both parties were working towards an agreement coming into effect from 1 August.

“Brooklyn Brewery is regarded as one of the leaders of the American craft brewing movement,” Cooper said.

“Its flagship beer, Brooklyn Lager, is a high quality, all-malt beer which would fit well into the Coopers portfolio.

“While Brooklyn Lager has previously been sold in Australia, its distribution has been patchy. This agreement will overcome those problems and we believe the beer will quickly establish itself in the Australian market.

“Premium Beverages will also import and distribute other variants in the outstanding Brooklyn range as part of the agreement.”

Cooper said he and Coopers Sales and Marketing Director, Cam Pearce would be visiting Brooklyn next week to finalise arrangements.

Brooklyn Brewery was established in 1988 by former Associated Press Middle East Correspondent, Steve Hindy and banker Tom Potter.

Today, the brewery is ranked as the eleventh largest craft brewery in America and exports to 29 countries around the world.

Cooper said Premium Beverages had been looking for an American craft beer to help round out its international portfolio, which includes Carlsberg, Sapporo, Kronenbourg 1664, Kronenbourg Blanc and Mythos.

“Brooklyn Brewing is highly regarded for the quality of beer it produces and will help strengthen this portfolio,” he said.

Coopers currently contract brews Carlsberg and Sapporo at its Regency Park Brewery.

 

General Mills launches Yoplait yogurt in China

General Mills will launch three new Yoplait yogurt lines in hypermarkets, supermarkets and convenience stores in Shanghai.

The three lines are: Perle de lait, a thick and creamy French-style yogurt, Panier de fruits, the first fruit on the bottom yogurt in the category, and O’Fruit, a drinkable yogurt with big fruit pieces that requires an extra-large straw to drink.

“Our entry into China with Yoplait is a major milestone in General Mills history,” said Ken Powell, General Mills chairman and chief executive officer. “We’re excited about the prospects for growth across our global yogurt business. Yogurt has been one of the hottest food categories in the world over the past decade. We like our positions in key developed markets, and we see plenty of room for future growth as category consumption continues to develop in emerging yogurt markets.”

General Mills is focusing Yoplait’s initial launch in Shanghai and plans to grow the brand through a city-by-city approach before expanding geographically

 According to Euromonitor, China is the biggest market for yoghurt and sales have more than doubled in the last five years.

Raphael Moreau, Food Analyst, Euromonitor International said “Yoplait is mostly present in developed markets, with North America and Western Europe together accounting for over 80 per cent of the brand’s sales in 2014, while Asia Pacific generated a paltry 3 per cent. When General Mills acquired a majority stake in Yoplait from its previous owner, Sodiaal, in 2012, the group stated that bringing the brand to China was on the agenda. Already the world’s largest yoghurt market in 2014, China is forecast to generate over 40 per cent of global absolute growth in value sales over 2014-2019. Per capita consumption is expected to rise from 4.0kg to 6.4kg over the same period, gradually closing the gap with Japan and South Korea, which stood at 11.8kg and 9.0kg respectively in 2014. Alongside other Asian markets, consumption of drinking yoghurt in China exceeds that of spoonable yoghurt, although the latter category is expected to continue recording stronger growth.

euromonitoryogurt.jpg

Source: Euromonitor

“However, yoghurt is increasingly concentrated in China, with the top five players, of which four were local companies, together accounting for an estimated 73 per cent of category sales in 2014. The most popular brands, such as Mengniu and Momchilovtsi (Bright Food), made strong inroads by reaching a larger number of consumers through wider nationwide distribution. This was helped by their focus on ambient yoghurt, offering easier logistics, which among the top four players only Wahaha failed to replicate,” Moreau said.

“Therefore, it is challenging for global new entrants to build a major presence by covering a wide proportion of the Chinese population, as shown by the largest foreign player, Yakult, only ranking fifth in 2014. As local manufacturers are rapidly improving their quality reputation against foreign-owned brands and focus on innovations, differentiation strategies are also more difficult to achieve for foreign brands. The rising popularity of functional spoonable yoghurts, benefiting from their perception as improving the immune and digestive systems, has largely been driven by domestic companies, notably Bright Food and Bright Dairy, the latter having acquired Australian yoghurt producer Mundella Foods in early 2014. In a competitive environment already dominated by local producers, Yoplait could benefit from opting for a co-branding strategy. In Japan the brand has developed such an agreement with Meiji under the Gurt brand, available in squeezable pouches for on-the-go consumption targeting children. A similar strategy could also be explored at a later stage by Yoplait in China. Such a move could allow Yoplait to leverage a large domestic company’s production and distribution capacity to bring wide exposure to its brand, while emphasising its positioning as a foreign brand using clearly identifiable differentiation elements,” Moreau said.

“While the Chinese market remains vast enough to bring rewards to new entrants, they are likely to increase their chances of success if they emphasise functional credentials. Among large global yoghurt manufacturers competing against Yoplait, Meiji opted for such a positioning as it introduced the chilled pro-biotic yoghurt range Meiji Bulgaria to China in December 2013, also accompanying the launch by setting up a local production unit. Meiji plans to achieve sales worth ¥2 billion (US$17 million) by 2016 – a modest target which would only give the company a share of around 0.2% in yoghurt, reflecting its premium positioning. While Yoplait can expect to at least match this performance, it is similarly likely to remain a niche player, and would therefore benefit from targeting specific consumer groups, for example through packaging designed for on-the-go consumption, or with more innovative functional recipes.”

 

Not many facilities could test for Hep A: Patties CEO

Patties Foods ran into a number of difficulties when conducting their Nanna’s berries recall, but the most surprising was the lack of Hepatitis A testing facilities in Australia.

“The difficulty in Australia is up until recently, there hasn’t been a rigorous testing regime around Hepatitis A in food products because it hasn’t been considered to be a high risk virus in food production, so not many laboratories actually tested for it so when this recall incident came about, it was very difficult to get people quickly doing the testing because they had to effectively learn how to do the tests,” said Steven Chaur, CEO and Managing Director of Patties Foods.

Following the recall in February, there were a number of tests carried out both in Australia and overseas.

Both the Department of Health and Patties used the South Australian Research and Development Institute (SARDI), as according to Chaur, they were “the most advanced on setting up regular protocols on testing for Hepatitis.”

Patties Foods also sent 380 samples to specialist laboratories in the United States and Italy that specifically tests for Hepatitis in food products, none of which found a conclusive link to Hepatitis or E.Coli.

The Department of Health found two samples that tested trace positive to Hepatitis.
“One of those was from a consumer that had Hepatitis and also had a packet of berries and that test result came back inconclusive in relation to where the Hepatitis source came from,” Chaur said.

“There was another packet which was randomly purchased by the Health Department from a store in Geelong and they had that tested but it came up trace positive for Hepatitis but bordering on the limits of what they would call scientifically significant. So from that one sample, it was very difficult to draw a specific conclusion if it was indeed the berries that were the ultimate cause of the Hepatitis.”

But the difficulties for Patties didn’t end there.

“During the course of the recall it was actually very difficult to undertake proper product traceability tests because many of the 34 cases actually didn’t have any product left, they didn’t have any pack samples, they didn’t have any residual product, no use-by date codes, no barcodes, so it made it very much like looking for a needle in a haystack,” Chaur said.
In addition to testing samples for Hepatitis A, according to Assistant Minister for Health, Senator Fiona Nash, the Department of Health conducted rigorous scientific analysis of information from interviews with affected people, comparisons with people who were not ill and traced the source of berries eaten by affected people.

This led to the Department of Health's conclusion there was “very strong evidence that consumption of Nanna's 1kg fresh frozen mixed berries led to an increased risk of developing Hepatitis A infection in this outbreak.”

Chaur said despite this conclusion, there hasn’t been any scientifically definitive cause-related evidence to suggest it was the Nanna’s berries.

“The Health Department were relying on epidemiological surveys where they basically interviewed patients who’ve contracted Hepatitis A and undertook a questionnaire around trying to identify where the Hepatitis came from and in all cases, people consumed berries and by that there was a link drawn supposedly to Nanna’s being the common source.

"The facilities were tested in China, the product in our warehouses was tested, the product returned from supermarkets was tested and there was no evidence that there was a systematic amount of any virus of pathogen in the products,” he said.

The impact

Patties has announced it expects a loss of earnings of approximately $1.5m NPAT during FY15 resulting from the frozen berries recall.

“It’s fair to say that the sales of frozen berries was severely affected, and not only for Patties but for everyone in the category, this category has gone from a $200 million category growing at 40 percent per annum in supermarkets to now growing at 14 percent per annum and something like $50 million has been shaved off the retail sales value of the category.

“In terms of Patties products, our core savoury business, which is about 90 percent of our business, is actually in growth. We didn’t see any detrimental impact of the recall for brands like Four ‘n’ Twenty, Herbert Adams or Patties and those brands continued to remain in growth and interestingly enough, Nanna’s Apple Pies, which the brand is most famously known for, is actually in growth as well and we didn’t see any direct impact of the fruit recall,” he said.

“We saw definitely an impact in the first one to two weeks but certainly the brand has recovered since then.

Patties has since set up a laboratory in Sydney and implemented a ‘positive release’ protocol on all its frozen berry products, which means every batch is now tested in Australia for HAV and E.coli, and are only released to market when negative test results are provided.

All Nanna’s and Creative Gourmet berries now being released to supermarkets have passed this test with nil detection. Nanna’s and Creative Gourmet berries are amongst the most rigorously microbiologically tested berries now sold in the Australian market.

Are we better prepared?

Last month, FSANZ said they would not be increasing their surveillance of imported ready-to-eat (RTE) berries.

FSANZ completed a risk statement on hepatitis A virus and imported RTE berries which looked at the likelihood of a food safety issue occurring, the consequences and mitigating factors. The risk statement concluded that RTE berries produced and handled under Good Agricultural Practices (GAP) and Good Hygienic Practices (GHP) are not a medium to high risk to public health.

“From Patties Foods’ perspective that’s quite frustrating because we’re only one of thirty suppliers of berries into the country and we’ve taken extraordinary steps to make sure that these products are so rigorously tested, we’re testing up to four times from farm, to production, to export to landing in Australia, before it gets to consumer and that same standard doesn’t necessarily need to apply now to any other importer.

“We’ve worked with a number of suppliers locally to make sure that we’ve got capability to do Hepatitis A testing and of course we test every batch sample before it gets released to supermarkets in Australia so that same rigour doesn’t necessarily need to apply to any other supplier and we’d actually call for that standard to apply to everybody,” Chaur said.”
 

Amcor Flexibles completes acquisition

Amcor Flexibles Asia Pacific has completed its acquisition of Zhongshan Tiancai Packaging Company, expanding Amcor’s footprint in China to a total of ten manufacturing plants.

Located in the Guangdong province of Southern China, the acquisition consists of one manufacturing plant specialising in printing and manufacturing multi-layer films for the food, beverage, and pharmaceutical end markets. The acquisition also sees approximately 390 staff join Amcor and will bring with them strong packaging expertise to benefit our customers in the South China region and beyond.

Ralf K. Wunderlich, President of Amcor Flexibles Asia Pacific said “The acquisition is testament to our commitment to Amcor’s growth in China. As a market leader in flexibles packaging in China, it is also an opportunity for us to further build our innovation expertise and product offering for our customers.”

 

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