Insights into consumer food product labelling trends will help the Australian grains industry respond to expected future demand in South-East Asia for products with strong health and sustainability claims.

Thanks to investment from GRDC, the Australian Export Grains Innovation Centre’s (AEGIC) research will increase the Australian industry’s understanding of health and sustainability drivers within its value chains. Ultimately, this helps align Australian grain and systems with future demand in the most-profitable markets.

AEGIC’s research involved analysing food product labelling claims designed to entice consumers. For example, a granola product in Indonesia might advertise itself as containing healthy wholegrain Australian oats. Other products might claim they are produced using environmentally aware cropping systems.

AEGIC aligned this consumer survey data with industry perspectives gathered through a series of interviews in Indonesia and Vietnam, along with customer surveys in Japan and South Korea.

Preserving available price premiums and ensuring that Australian grain is delivered to markets that have the willingness and capacity to pay for the quality and service is crucial to preserving the ongoing profitability of Australian grain farming systems.

How will demand be driven?

AEGIC’s research clearly demonstrated the two attributes of ‘sustainability’ and ‘health’ will become important drivers of demand in key Australian grain export markets.

There are different mechanisms at play for each of these drivers, and the pressures to implement systems that deliver products to meet this demand are likely to come from different sectors of the value chain. The drivers will also emerge at different times and in different ways.

There are important differences between demographics in these markets compared to Australia. Incomes are generally not as high, and populations are younger and growing more rapidly than Australia.

The differences in wealth also mean that many consumers must consider satiety and price before other considerations. So even where there is a willingness to pay for products produced in a sustainable manner, there might not be the capacity to do so.

For health claims, the consumers themselves will ‘pull through’ demand for foods that provide a personal health benefit, whether it be in lowering cholesterol, increasing nutrient uptakes or others that may be available. This demand is already apparent and, as incomes increase in these key markets, this market segment will continue to grow.

Sustainability-based demand is expected to come from pressures at the company level – in other words, governance changes, investor reporting requirements and access to finance. In these cases, the intermediate companies in value chains will need to respond to demand for these characteristics.

Companies will likely need to report sustainability activities to either shareholders or agencies such as governments and exchanges. These external pressures will likely drive demand for sustainably produced grain products in the medium term.

How can Australia respond?

The more we understand how and when there will be increased demand for grain produced with genuine health or sustainability benefits, the better the industry will be placed to ensure the benefits are transferred to stakeholders throughout the value chain, including growers.

This is preferable to the alternative of chasing after markets once the horse has bolted. The value of AEGIC’s research is that it drills down into what is relevant and actionable for the Australian grains industry.

AEGIC’s research will help the Australian grains industry develop long-term strategies to respond to these consumer trends.

AEGIC is an initiative of the Western Australian State Government and Grains Australia. GRDC provides investment to Grains Australia, which in turn invests in AEGIC.

More information: Dr Chris Carter, chris.carter@aegic.org.au