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.

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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.

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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.