Insight – From good to Greater: Why Australian F&B exporters should consider Taiwan as part of a holistic strategy
Starting in a small market can have a big impact in the long run.
By Brent Moore, Senior Trade Commissioner, Austrade Taipei
Over the course of a six-year posting as Trade and Investment Commissioner
in Shanghai, I witnessed the doubling of Australia’s food and beverage
exports to China. This impressive growth has been underpinned by increasing
wealth and standard of living and the phasing out of most tariffs under the
China-Australia Free Trade Agreement.
While the China market has been a miracle for Australian food exporters,
the data belies many of the operating challenges individual Australian
firms face. This is particularly the case for small and medium enterprises
entering the market for the first time.
Some reasons why Australian brands don’t achieve desired goals include:
- the lack of a long-term vision and resourcing
- difficulties in finding key sales, retailing and distribution talent,
including the right business partners
- products that over-emphasise Australian fauna in branding and marketing
and under-emphasise quality and status
- low investment in in-store merchandising, point-of-sale advertising and
promotion.
Despite the wealth of opportunities, the largest market may not always be
the optimal market for exporters taking the first step into Greater China.
Thankfully, there are a number of intrinsic characteristics that make
Taiwan an attractive ‘goldilocks’ market (not too small, not too big), both
as a final export destination and a means to gain in-market experience and
develop regional partnerships prior to scaling up in mainland China.
A great test market
Taiwan is the 12th largest destination for Australian agrifood, and the
sixth largest market for packaged and value-added foods, outranking the UK,
Thailand and Canada.
Taiwan has several characteristics that make it a high-repeat consumer base
that is receptive and demanding of foreign products.
Taiwan has a similar population to Australia; 11% are estimated to have
lived or studied abroad. More than eleven million residents take overseas
trips each year. And, to our advantage, there is a substantial Taiwanese
diaspora in Australia.
Food plays a prominent role in Taiwan. There are 120,000 restaurants in the
country, or approximately one for every 200 residents. The average
Taiwanese eats out 30 times per month. Taiwan’s food self-sufficiency rate
is approximately 30%.
Retail and distribution structures are considered highly mature businesses
in Taiwan – which can mean fewer complications for Australian companies
when doing business.
In mainland China, doing business in each province or city cluster can mean
dealing with a different importer/distributor. Taiwan has a smaller number
of market leaders with a wide geographic reach, most with international
origins and management experience (for example, Costco, Carrefour and
7-Eleven).
Convenience retailing: A stepping stone to mainland China
Taiwan is a world leader in convenience retailing, with one convenience
store for every 2,304 residents.
There are more than 5,000 7-Eleven outlets in Taiwan – twice the number of
outlets operated by the brand in China and seven times the number in
Australia. Other major companies include Family Mart and Hi-mart.
Convenience retailing is the fastest growing retail segment in mainland
China after e-commerce, increasing annually at 15%. It is an ideal, but
overlooked, sales platform for Australian food and beverage products.
Products such as artisanal beverages, snack foods and other ready-to-eat
products are especially well suited for convenience retailing. Taiwan can
be a useful stepping stone to refine and tailor a retail value proposition
before expanding onto the mainland.
Regional influence and connectivity
For premium F&B products, Japan is the undisputed market leader in
Taiwan, setting an awe-inducing benchmark for presentation and packaging.
Australian companies unafraid of a little healthy competition can sharpen
their marketing acumen by learning from the success of Japanese brands in
Taiwan. Japanese products compete in many of the same categories as
Australian products, including seafood, beef, butter, milk, fruit,
confectionery and beer.
But more importantly, Australian brands can test their marketing offerings
in a Mandarin Chinese-speaking market. International brands that become
popular in Taiwan are typically well received by consumers in cities like
Shanghai, Beijing, Guangzhou and Shenzhen.
Taiwanese companies play an oversized role as investors in China’s value
chains, with more than a million members of the Taiwanese diaspora working
on the mainland. Food service and retailing are areas of strong business
connectivity.
For example, in food service, Taiwanese bakery chain 98 Degrees operates
938 outlets across China and Taiwan. The chain also operates 12 stores in
Australia, which was a test market for expansion into North America.
Taiwanese conglomerate Uni-President is the largest drinks producer in
mainland China, and the third largest producer of instant noodles. Within
Taiwan, Uni-President operates Starbucks, 7-Eleven, Mister Donut and
Carrefour.
Make the right connection
Australian F&B exporters looking to better understand the Taiwanese
market and build new connections are invited to register for:
The event is designed to help Australian companies based in or exporting to
Asia to gain a better understanding of the Taiwanese market and identify
business opportunities. The program includes in-depth market briefings,
retail site visits, one-on-one meetings and industry networking.