What's Up Down Under: Two Major Retailers Dictate the Direction of Design in Australia

By Ken McGregor

Flavored milks are much greater profit returns than standard milk or cheese for dairies in Australia. These dairies are increasingly controlled offshore, with Big M in plastic contour mode, from San Miguel offshoot National Foods.

Australia is a very mature and sophisticated market for packaging design for fast-moving consumer goods (FMCGs). The agent, or agents, for change in this consumer environment are a duo of formidable supermarket chains known as The Big Two.

The Australian government has allowed Coles Supermarkets and Woolworths to control over 85% of big store sales, including the critical sector of food and beverage. Of the two, Woolworths appears to be more growth-oriented, better run, and more aggressive with package design strategies.

The supermarkets have grown by slick management, by organic expansion, and by acquisition strategies. The companies have expanded to become sourcing, buying, logistics, and retailing powerhouses—and they have not stopped there. Coles and Woolworths have diversified onwards into convenience stores, petrol stations, clothing lines, electronic products, liquor, and even, more recently, banking and financial services.

In retailing, volume sales are big and margins per unit sales are low. For further growth, the Australian retailers know they might see more hundreds of millions in savings by improving their logistics, with much of these plusses traveling straight to the bottom line. So what's all this trivia mean to packaging design? Heaps.

House brands up their quality

As Coles and Woolworths have expanded, they have developed new standards for their suppliers of food and beverage, pharmaceuticals, personal care, pet food, fruit and vegetables, etc. Within these standards are criteria for new or improved packages, which can save shelf life, cut down in-store handling, and attract more cashed-up consumers as they walk the aisles.

An extraordinary patented development by entrepreneurs, flavored straws from Unistraw have been exhibited at Cologne and are taking off on their home turf in Australia.

Premium cheese brands from the largest specialty cheese maker in the world, Bongrain of France, are set for a packaging design makeover following the company surprisingly selling out its Australian subsidiary, Lactos.

On the one hand, FMCG manufacturers or importers are being told to reassess their packages and improve brand definition, often by revamping labels and logos to make their products sell faster. On the other hand, The Big Two retailers have expanded rapidly into house brands and private label products.

The retailers have not necessarily stayed in the traditional arena of ordinary or standard-type quality of product. Instead, the retailers are increasingly adding better quality or even premium products within their house brand push. The aim is to improve house brands' products contribution in Australian supermarkets, currently 12% to 14% of total products on shelves, to 30+% within a couple of years.

This has injected much volatility into Australia's packaging design sector, which is about $250 million Australian/year. A result is that packaging design in the land of Foster's Beer, Vegemite, and shrimp "barbies" (barbeques) has become more demanding, more dynamic, and more intense for its professional practitioners and CEOs trying to make a better buck.

The shifting tides of retail

Takeovers can mean a big revamp in packaging and design. For example, the Heritage cheese brand from Tasmania is owned by Lactos, an offshoot of big French agrifoods player Bongrain, the world's biggest producer of specialty cheeses. But Lactos has recently been swallowed up by the San Miguel Group of the Philippines, and the design and packages are due for a major upgrade, sources confirm.

Australia's three relevant pack associations have not missed the message. They have upped their emphasis on design, previously a sector "orphan" within the industry. Design has quietly raised its head on seminar schedules, conferences, and ongoing high-profile topics. Thus, organizations from big to small now see themselves as design-supportive.

Australia's "duopoly" of The Big Two giant retailers is matched of course by the same in packaging materials and converters, namely the companies Amcor and Visy, and in label manufacturing, namely Avery Dennison and Raflatac. In packaging design, The Big Two are not two big companies, but two biggest cities—Sydney and Melbourne—where most package designers work and live.

The "gorilla" FMCG manufacturers in Australia are not averse to using four or five different package design firms at the same time. This reflects the diversity of products that these large players offer, companies as P&G, Gillette, Unilever, Heinz, Kellogg, McCain Foods, Goodman Fielder, George Weston Foods, Sara Lee, Kraft, and Nestlé.

However, some big manufacturers have withdrawn from the country, such as the U.S. company Smucker's, and other big package players, such as Rexam. Others, such as Kraft and Unilever, have started relocating some manufacturing into China. There is also a trend to design in Australia and produce specific packages in Asia.

Quick-hitting trends

A fascinating new venture involving Sweden's Tetra Pak will involve importing fully printed and labeled carton flatpacks from Europe. Wine contract filler Best Bottling will put them up on TP A3/Flex machines as part of a new dedicated processing line. The cartons are filled at Best Bottlers with premium wine into TP Prism packages ranging in size from 200 ml to one liter.

The key market for the Aussie "wine-a-carton" is the province of Ontario, Canada, where winemaker Boisset of France has made a killing in the past eight months with its French Rabbit wine in Tetra Pak, which is beating out glass bottles. But local substitution for glass bottles to carry wine does not stop with cartons. For over three years, another Aussie bottler, Barokes, has been selling high-quality wine packaged in narrow cans. This can involves a secret patented inside lining that can handle not just white or red wine, but also sparkling wines.

Celebrating Christmas in
Summer With a Cold One

The Foster's Group Limited has had no small part in beer's popularity in Australia and worldwide, and Foster's had been closely watching the development of the aluminum bottle market in North America. "We waited to launch our Crown Lager in aluminum bottles until just the right time—at the height of the holiday season," says Paul Gloster, consumer solutions manager for Foster's Australia.

Foster's Crown Lager is the market leader in Australia, popular with the nightclub set as well as sports fans. Foster's considered other package options, but felt that an aluminum bottle offers the unique shape, upscale look, and distinct style that would enhance the premium image of Crown Lager. "It looks great in people's hands," says Gloster, "and aluminum keeps our Crown Lager cooler much longer than glass in the hot Australian sun."

Of course, the new packaging introduction was not without its bumps in the road, according to Gloster. "Many operational challenges were overcome, ranging from pallet sizes to seal application," Gloster says. "But we had CCL and Amcor Australasia as partners through the process. We couldn't have done it without them."

In general, convenience foods remain a big factor in Australia, but ready meals are not yet the boom sector once forecast. One exception is the category of prepared salads, such as Mrs. Crocket's and Harvest FreshCuts, which have done very well.

While designers take account of the over-50s market in seals and closures, they have lunged deeper of late into children's products, while functional foods, organics and "healthy products" are making significant inroads into food and beverage manufacturing for all ages.

The Australian supermarkets want pharmaceutical, personal care, and food packages with neat squared bottoms, stand-up pouches, and innovative, often tamper-proof pouches. It is all about preserving shelf space and getting enticing colored packages that will fly off the shelves.

Manufacturers of fresh produce are being forced into forsaking their traditional corrugated paperboard boxes and switching to more expensive collapsible plastic crates, which eliminate double handling and are reusable. With several hugely expensive product recalls because of sabotage or blackmail by criminals, the retailers want more and more products to be securely tamper-proof.

Nestlé used tubes to debut its XXX mini mints to combat long-established Tic Tacs from the Mars Group. SunRice, Australia's monopoly rice exporter, opted to use handled rigid plastics bottles with closure-measuring capability, called "Pour and Store." Manildra followed the SunRice lead with rigid but packed pasta, and Sunbeam used plastic tubs for its fruit recipes. Behind all of these was a Sydney-based contract packer, Packmaster International, with its CEO Steve Segaram personally building his major design and patenting operation called NuPack Solutions.

Shelf strategies of all kinds

Packaging converter Impact International is behind toothpaste-shape tubes for Leggo's tomato paste, and ubiquitous multipacks stream into soft drinks, yogurt, fruit juices, and beer—but not pet food yet. Contoured rigid plastics are evident in sweeteners like Equal and drinking chocolate from Cadbury and competitor Swiss Miss.

In iced coffee, Big M from San Miguel's National Foods, does its own flying off the shelves in cartons or bottles. However, eggs packed in rigid transparent cartons from Europe's Kuhn have failed. Garnier's green colored shampoos are selling well and Sipahh Flavored Straws from Australia's own Unistraw have hit a big buying demand from children. The Sipahh, incidentally, is doing so well it that Sipahh felt compelled to file patent infringement claims against Nestlé in London.

Aerosol sprays from major contract packager Pax are dominating in personal care and paint, but have also infiltrated food, holding olive oil, canola, macadamia oil, and creams. While 50-ml Olay packages of regenerist serum from Procter & Gamble and Ignite shower gel from Lynx, in 50-ml and 250-ml packages, are all seen as design successes.

It must be said that glass is not always the last option these days in Australia. Queen Fine Foods in Queensland has introduced its own 250-ml "stubby" bottle for maple syrup, an identical package to that imported from the Canadian-based Camp Company.

Ken McGregor has been Editor of Australia's Packaging News since 1992. Reach Ken at kenmcgregor@yaffa.com.au.