IBISWorld reveals top 20 industries by export growth

Australia’s FMCG producers have been enjoying buoyant export growth over the past five years. Five of the the recent top 20 industries by export growth include rice growing, seafood processing, grape growing, cider production, and vitamin and supplement manufacturing.

Against the backdrop of free trade agreements, exporting industries in merchandise exports, excluding services, are estimated to be worth $22.3, over the five years through 2015-2016.

Rice bowl of Asia

“Rice exports have been volatile over the past five years due to mixed demand, price movements and the reliance on water,” said Jem Anning, IBISWorld senior industry analyst. “However, Australian rice growers have benefited from rising demand from Japan since 2011-2012, when the Fukushima nuclear disaster occurred.”

Australian rice exports are estimated to generate revenue of more than $619 million in 2015-2016, which has increased at an annualised 29.5 per cent over the past five years.

Overseas markets hooked

“Australian produce is perceived to be of higher quality and many Asian markets are prepared to pay a premium for produce such as bluefin tuna and rock lobster, increasing revenue over the period,” said Anning.

Exports in the seafood processing industry are forecast to have grown by an annualised 27.3 per cent over the said period to account for 75.4 per cent of industry revenue in 2015-2016.

IBISWorld found rising imports have encouraged domestic seafood producers to focus on exports by capitalising on growing economic prosperity and rising disposable incomes in many Asian nations.

Most significantly, Vietnam is the main destination for Australian seafood exports, representing 62.6 per cent of total exports. IBISWorld found that exports to Vietnam, particularly rock lobster and abalone, have grown rapidly over the four years through 2014-2015.

Low hanging fruit

The grape growing industry has enjoyed substantial growth in exports over the past five years. In 2010-2011, grape exports represented 8.4 per cent of revenue, a figure that IBISWorld anticipates will more than triple to 26.8 per cent by 2020-2021.

“The majority of fresh grapes grown in Australia are exported, mainly to markets in Asia. Local grape producers have experienced a notable upturn in exports due to trade agreements signed in 2014 and 2015. The free trade agreement with South Korea lifted tariffs on imported Australian fresh grapes and the Japanese and Chinese agreements will gradually remove tariffs over the next seven and four years, respectively,” said Anning.

Bubbling away

“Exports have grown rapidly over the past five years, in part because of the signing of a free trade agreement with Korea in April 2014 that has led to a surge in cider exports to that country. Over the next five years, IBISWorld expects free trade agreements with China and Japan to encourage more Australian cider to be exported, most notably premium products,” said Anning.

IBISWorld calculated cider export growth to be 25.8 per cent annualised and valued exports at $16.5 million in 2015-2016.

Crowded markets in Europe and North America were identified as constraining further export growth, but the weaker Australian dollar, coupled with increasing interested in cider, assisted in boosting demand by reducing prices for Australian cider.

Supplementing domestic demand

Exports in the vitamin and supplement manufacturing industry are high and increasing, totaling an estimated $365.0 million in 2015-2016. IBISWorld found 26.6 per cent of industry revenue was derived from exports in 2010-2011 and anticipates this to reach 42.1 per cent by 2020-2021. This growth in exports is likely to be the result of the two major manufacturers, Swisse and Blackmores, continuing to expand into Asia, encouraged by healthy overseas demand.

“Over the next five years, exports are forecast to gain a larger proportion of industry revenue as the lower Australian dollar makes it cheaper to export products made here,” said Anning.

“Asian markets, particularly China, are expected to offer significant growth opportunities for Australian products, valued for their quality, as the burgeoning middle class consumes more imported goods and focuses on greater health awareness,” added Anning.

IBISWorld also identified the close proximity and several free trade agreements between Asian economies and Australia as decisive growth drivers for the industry.

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