What's Going On In The Australian Biscuit Market? Part Three: Who's Eating All Of The Savoury Biscuits?

biscuits, Australia, Arnotts, demographics, market segmentation

In Battle Of The Brands Australia’s last post we looked at the sweet biscuit consumer; which demographics enjoy chomping on a sweet biscuit.  Which it turns out is children and the elderly, but not so much those of us in between those two extremes.

In this post, we will do the same for “savoury biscuits”, a wide reaching category which covers everything from Arnott’s Shapes to water crackers to rice crackers and rice cakes.

Our first savoury biscuit consumption graph – on what proportion of each age group eats a savoury biscuit on any average day, and based on the ABS Australian Health Survey - throws up a few interesting factoids. 

Savoury biscuits, like sweet biscuits, are particularly favoured by the young and the old, with those in the middle not particularly fussed about them.

Quite which savoury biscuits each age group consumer probably differs wildly… not wanting to get too stereotypical here, but one can assume that the 2-3 year olds are nibbling on a rice cracker, the elderly a Jatz with a slice of cheese on top, which the teenagers stuff their faces with Arnott’s Shapes. 

And when I say “stuff their faces”, I mean it; look at that graph! 

Whilst the average savoury biscuit consuming Australian eats just less than 20g of savoury biscuits each day (or about nine Arnott’s Shapes), the average Australian teenager consumes about 42g!  Or about 18 Arnott’s Shapes!

For teenage males the figure is even higher: the average savoury biscuit consuming teenage Australian male consumes 56g of savoury biscuits (most of which are probably Arnott’s Shapes) a day!

That’s 24 Arnott’s Shapes!

This of course may have changed given the recent hoo-ha about the "new and improved" (ie "made worse") Arnott's Shapes recipe, but it's too early to say.

Now let’s have a look at the male/female split. 

Regardless of the teenage male obsession with Arnott’s Shapes, the savoury biscuit market is primarily a woman’s world, with the ABS Australian Health Survey telling us that the number of female savoury biscuit consumers significantly outnumber their male counterparts.

This is particularly the case for rice crackers and rice cakes, and anything promoted as being low in calories.

When looking at the volume of savoury biscuits being consumed, the Arnott’s Shapes guzzling male teenage demographic swings that proportion to… exactly 50/50!

Now if we put both the age group and the gender split together we can see again the extent to which the savoury biscuit market is dominated by the female demographic, particularly amongst the older age groups.

The world of savoury biscuits (and sweet biscuits for that matter) is a diverse one.  A broad church. To figure out which brands are winning the Battle Of The Biscuit, we are going to have to look a little closer at all the different sub-categories.  Chocolate biscuits, “flavoured snacks”, rice crackers, crackers & crispbreads… and that is what we are going to look at next.

What's Going On In The Australian Biscuit Market? Part Two: Who's Eating All The Sweet Biscuits?

biscuits, sweet biscuits, Australia, demographics, market segmentation

In this post we will have a closer look at those 24% of Australians (all 5.2 million of them) who, according to the ABS Australian Health Survey will be eating at least one sweet biscuit on a typical day.  Just to clarify: this doesn’t mean that 24% of Australia eat at least one sweet biscuit every day, but on a typical day, 24% of Australians will be partaking in the consumption of at least one sweet biscuit.

These biscuit fans are not evenly spread across Australia’s demographic landscape.  As can be seen in the following graph, they can be found in particularly large concentrations amongst both kids and the elderly.

Just over 36% of Australians age 71 and over eat sweet biscuits on an average day, a rate that is only exceeded by kids aged between 2 and 8.  Those aged in between – teenagers, young adults, the middle aged - don’t seem to particularly like sweet biscuits at all. 

Mind you, as Roy Morgan Research pointed out, although both kids and elderly Australians share a love of biscuits (both sweet and savoury), that is about the only thing their snacking habits have in common.

“Young Aussies... are more likely than any other age group to eat just about every snack category measured by Roy Morgan Research, while the older bracket tends to be below average for most snacks. So not only do these two groups sit at opposite ends of the age spectrum, they also have markedly different snacking habits – yet are somehow united by their penchant for biscuits.”

And although teenagers and young adults appear to be less inclined to eat sweet biscuits, those that do eat quite a bit. As illustrated by this graph:

The average (the median in this case, for all you stats/math fiends) daily quantity of sweet biscuits consumed by all sweet biscuit consuming Australians is 26g.  That works out to be just over one Tim Tam.  Less than two Mint Slices. Just over three Milk Arrowroot biscuits.  Or five TeeVee Snacks.

The sweet biscuit consuming teenager/young adult on the other hand consumes an average of just over 30g of sweet biscuits on a day.  That’s about one and a half Tim Tams. Or two Mint Slices.  Or over four Milk Arrowroot biscuits (although, let’s face, this demographic probably isn’t eating Milk Arrowroots).  Or seven TeeVee Snacks.

Now let’s have a look at the male/female split. 

Regardless of whether you look at it in terms of the number of consumers or the weight of the biscuits they consume, it’s a pretty even split.  There are slightly more female consumers of sweet biscuits…

But those males who do eat them must eat quite a lot because males are quite a bit ahead when measured by the weight of the biscuits.

Now if we put both the age group and the gender split together, then we can see how important each group is in terms of the number of sweet biscuit consumers.  And despite the low proportion of 31-50 year olds and 51-70 year olds eating sweet biscuits, the huge size of these age groups (there were 6.3million Australians aged between 31-50 years in 2011-2012 and 4.8 million age between 51-70 years, compared to only 1.8 million in the 71 and over age group) means that they remain, if not quite the core of the Australian biscuit market, certainly a key demographic.

But have a closer look at the gender split within the 71 and over age group, which shows a definite skew towards the Granny enjoying a Monte Carlo or a Kingston with her cup oftea demographic. It’s nice to know that this demographic is still alive and well.

And if the low proportion of “working age” Australians consuming sweet biscuits is simply because they do not have time to sit down and enjoy a nice cup of tea and biscuit, then perhaps there is hope for the Australian biscuit market after all.  If the Australian Baby Boomer generation takes to the tradition upon retirement, then maybe we will see another sweet biscuit boom!

What's Going On In The Australian Biscuit Market, Part One: Australians Are No Longer Taking The Biscuit!

biscuits, Australia, scan data, market growth, Arnotts

The Australian biscuit market is in trouble. 

It - the Australian “bickie” - used to be the default snack for generations of Australia. It was the answer to the question of what to dunk into your cup of tea.  Or coffee.

So proud were Australians of their biscuits that any American visitor daring to refer to them as “cookies” would find themselves at the receiving end of a stern correction: “We don’t call ‘em cookies here you drongo! They’re called bickies mate!”

Those days are gone.  Nobody says "drongos" anymore.

Nor do Australians eat biscuits anymore.  At least not in the numbers they once did.  There are simply so many more snacking options for them to eat. Consumers are switching to other snacking options, in other aisles of the supermarket.  Healthier options.  Or more decadent options. 

There’s such a wide range of biscuits on offer in your average Australian supermarket that making sweeping generalisations is rather futile. Some biscuit categories are growing and some are not.  But as a general rule, those biscuits whose major function is to be dunked in a cup of tea or coffee are struggling. 

To illustrate this point, let’s see what the folk at Roy Morgan Research have to say on the matter:

“In 2015, 42.4% ofAussies reported eating at least one sweet biscuit in an average seven days,down from 46.3% in 2011. Consumption of savoury biscuits/crackers remainedrelatively stable at 32.4%, a fraction less than 2011, when it was 33.1%.”

Oh dear.

Or take a look at this graph depicting the volume growth of biscuits through major supermarkets since 2010, using data lifted – as is the case with most of my graphs – from RetailWorld’s Annual Report. 

Well that, I’m sure we can agree, is one hell of a depressing looking graph.  Despite my choice of a sunny yellow backdrop.

Ever since the “golden days” of 2010 and 2011, the volume growth of biscuits has been negative for three out of four years.  And in the single year it was positive, it just scrapped through with 0.4% volume growth.

It’s hard not to be pessimistic, since the key take away from a graph such as this is that Australians have fallen out of love with the biscuit.  

But why?

Here are some thoughts: biscuits are used for a number of functions.  For older generations they are a treat which they can dunk in their tea (and are consequently at risk from the demographic challenges also facing the world of tea).  For younger generations working in their offices, they are a snack.  Something to get them through the afternoon. 

Sadly for biscuits, the number of snacking options is expanding all the time and many of these are perceived as being at least reasonably healthy. As has been noted elsewhere, by other people, Australian appetites are diverging in two different directions. Some Australians are attempting to eat healthier, whether they be image-conscious millennials or Baby Boomers whose doctors have just explained that they aren’t youngsters anymore. Whilst others embracing the latest in freak-shakes and Nutella-balls. Two trends that often reside in the same person. 

It’s diet or decadence.  And if I’m going to break my diet, you’ve got to make it worth it for me.  Sadly for Arnott’s their Assorted Creams range no longer really cuts it.

On the other hand, the biscuits we are eating are getting fancier. 

There’s never been a more exciting time to be an Australian biscuit connoisseur.  As can be seen if we look at the value growth graph!

Not a phenomenal amount of growth, but hey, it looks as though biscuits may be making a miraculous comeback, on the back of fancier biscuits!  All those Zumbo-concocted Tim Tams! And Arnott’s Twisted Faves!  And fancy European brands of wafers, like Loacker and Kras!

  

So let’s have a look at the Australian biscuit consumer. 

To begin with: how many are there?

Well, according to the ABS Australian Health Survey (sadly from 2011-2012, there ought to be an update in a year or so) on an average day, 24% of Australians will eat a sweetbiscuit, and 17.3% of Australians will eat a savoury biscuit.  Or to put it another way, 5.2million Australians will eat a sweet biscuit, and 3.7million will eat a savoury biscuit.

(Now “sweet biscuit” in this case - and in the case of the Roy Morgan figures also - includes plain biscuits, cream biscuits, shortbread, chocolate coated biscuits and choc chip cookies.  “Savoury biscuits” covers everything from Arnott’s Shapes to water crackers to rice crackers and rice cakes.)

These biscuit fans are not evenly spread across Australia’s demographic landscape.  They can be found in particularly large concentrations amongst both kids and the elderly.

And this is the case regardless of whether we are talking about sweet or savoury biscuits, as my next two posts will reveal!

What's Going On In The Australian Tea Market Part 3: Twinings Replaces Lipton As Australia's Most Popular Tea Brand!

Australian tea market, Twinings, Lipton, market share, scan data

As I demonstrated in my previous post, we are witnessing a fundamental shift in the Australian tea market away from black tea, and towards a mixture of green tea and “herbal and fruit infusions.” We are also seeing a gradual shift away from tea overall, thereby making this battle of the brands more intense.  For this fundamental shift away from black tea is being replicated in a similar shift away from Lipton, for decades the mainstream tea drinkers brew of choice (and black tea specialists), and towards the far more fancy offerings of Twinings.

As Australians consumers have switched from black tea to the more relaxing assortment of “herbal and fruit infusions”, so have Twinings (or Twinings Of London, to use their full and rather more pompous name) not only taken the lead over Lipton in the last couple of years, but have left Lipton in the dust!

The two trends are clearly related.

In the following graph, "green" represents brands that are on-the-go and making market share gains (and quite obviously it is Twinings that is the big winner here) whilst red represents brands that have stopped, or more accurately, have gone backwards (in this case Lipton is the big loser).

... there has been a huge swing towards Twinings and also to a grouping of smaller brands termed as "Others".  Brands such as Madame Flavour and Higher Living, who will surely be big enough to justify their own market share figures next year.

And just to emphasise just how much Twinings have been the winners of the Australian tea market since 2012 - and how much Lipton have been the losers - we also have this graph (the size of the logos representing their market share)

And if course there has been an almost as large swing away from Lipton, and to a lesser extent Dilmah and Bushells, and to an even lesser and virtually insignificant extent: Madura.

Let's see what these swings mean in dollar terms.  Twinings have gained just over A$20m in retail sales, Lipton has lost almost as much at A$17.6m, and the "Others" collection of brands is now A$12m bigger than it was just three years ago.

Lipton’s fortunes are largely tied to black tea, a product category that is increasingly looking old-fashioned.

That’s not to say that Lipton isn’t innovating.  They have “intense” black tea bags.  And decaffeinated black tea bags.  And they are rather big in green tea, where they are currently pushing a “non-bitter” variety, which means I guess that they are targeting green tea drinkers who don’t actually like green tea, thereby widening the category’s appeal.

Lipton is also quite big in “milk/latte style teas” – essentially chai tea – but that too, is a category in decline.  As recently as 2012, milk/latte style teas sold almost as much as green tea.  Now it’s only about half as much.

In summary then, Lipton is strong in three categories (black, green and “milk/latte style”), two of which are in serious decline.

Where Lipton is not big is in “herbal and fruit tea infusions,” which – making up just over 18% of the Australian tea market up 14% in 2012 – is the Australian tea industry’s great multi-coloured hope.

And it is here that Twinings – particularly with their Herbal Infusions range of peppermint, chamomile & spearmint, chamomile honey & vanilla, lemon ginger and whatever else their band of mad tea scientists can come up with– is shining.

Offering a rainbow of herbal flavours is not the sole key to Twinings success. Just in case you are not sure if a Camomile Honey and Vanilla tea is not exactly your cup of tea, they’ve become quite adept at offering these fancy flavours in smaller pack sizes, whereas most Lipton tea is packed in boxes of one hundred. This isn’t just to encourage trial. Since consumers of herbal tea are rather more adventurous than their black tea drinking brethren, it also gives consumers the option to pack their pantries with a range of flavours, depending on strikes their fancy.

These boxes are also charged at a premium, which further helps them gain market share. 

And gain market share they have!  Back in 2012, Twinings had 24% value market share, a couple of percentage points behind Lipton, who had been market leader for as long as anyone could remember.

Twinings now have just over 30% value market share, leaving Lipton – at 21% - in the dust.  All of this despite being priced at a considerable premium to, well, every other brand on the market.

And there you see quite irrefutable evidence of the power of a product differentiation strategy, in this case differentiation based on tiny boxes of "herbal and fruit tea infusions."

Twinings success isn’t only due to “herbal and fruit tea infusions”.  The brand’s growing popularity leads to growing shelf space, and they have used this shelf space to promote the world of tea beyond just English Breakfast and Earl Grey.  If you want to try a bit of Darjeeling, Assam or Russian Caravan, chances are that Twinings will be the only brand in store.

Ironically, Unilever – the owners of Lipton – have also been the owners of the T2 range of specialist tea stores – and were arguably the key catalyst for the whole herbal tea revolution - since 2013.

Lipton haven’t been the only victims of Twinings success.  Dilmah, it could be argued, have been impacted even more. Having positioned themselves as a more sophisticated black tea, they too have seen their market share eroded as consumers shift to Twin-“hey look, we’ve got the Royal Seal Of Approval”-ings, falling from 13.1% in 2012 down to 11.6% in 2015. 

And whilst it’s highly unlikely that many Bushells drinkers have crossed over to Twinings, they too have been hit by the declining black tea market, falling from 7% in 2012 down to 5% in 2015.

Just as Australians have become connoisseurs of coffee (although – as will be mentioned in a future post – instant coffee still outsells the “real thing”) it was only a matter of time before they discovered there was more to tea than what they may previously have supposed. And with both Sydney and Melbourne holding tea festivals, the Australian tea market is likely to get far more wonderfully complex. 

The question is, which brands will be able to take advantage of this shift in tea drinking preferences?  Will Lipton be able to learn from its’ T2 stable-mates and become a force in the new face of tea?  Will the new kids on the block such as Higher Living and Madame Flavour ride the wave to future riches?  Will the mid-level 5%-ish market share brands such as Nerada and Madura be gradually squeezed out the market?  Or will the future be entirely owned by Twinings?

Only time will tell.

P.S. You know what goes well with a cup of tea?

That’s right, a biscuit.

And that’s the category we’re going to look at next!

What's Going On In The Australian Tea Market Part 2: Australia Falls Out Of Love With Black Tea

Australian tea market, black tea, Twinings, Lipton, market share, scan data

Before we look at who is winning the Australian tea wars, it’s probably most instructive to look at what type of tea is winning.  Because, as you will see, one is clearly influencing the other.

To illustrate what is going on in the Australian tea market, I have concocted this graph in the form of a planogram.  I call it a planograph. 

Here we have a planograph of the types of tea that Australian tea drinkers were enjoying back in 2012, according to the Retail World Annual Report.

And here we have a planograph of the types of tea that Australian tea drinkers enjoyed just last year – 2015.

So what can we tell from this?

To begin with, black tea, although still by far by the dominant tea in Australia, the mainstay of the Australian tea market whose bitter goodness has given generations of Australians something to dunk their biscuits into? 

It remains what most people think of, when they think of a nice relaxing cup of tea. 

It is however a category in decline.  According to the scan data quoted in Retail World’s Annual Report black tea made up 70% value market share in 2012, but that has fallen down to 64.5% in 2015.  Not a revolutionary shift perhaps, but certainly a significant one.

Let’s look at another data source.  Australia’s tea import figures, as quoted by UN Comtrade. Since – other than the quite popular Madura and Nerada brands – the vast majority of tea in Australia is imported, these should give us a good idea of the condition of the market. The caveat has to be made of course that not all of this is being sold through supermarkets.  Some is being served in cafes, and wherever else people drink tea.  Probably a lot of old aged homes.  

But it should serve well as a guide.  A guide that is pointing downwards.

 Australian tea imports have fallen from 22.1million kgs in 2012 (which was something of a high point) down to 20.9million kgs in 2015, with the black tea figures showing a decline from 19.1million kgs down to 18.3million kgs.  Again, not a revolutionary shift perhaps, but certainly a significant one.

So what are the tea drinkers of Australia drinking? Green tea?  Yes, and – making up 11% of the retail tea market, up from about 8% in 2012 - it is growing at a decent rate.  But that’s certainly not all.

The biggest change is the growing popularity of what Retail World’s Annual Report has decided to call “herbal and fruit infusions.” This category made up 18.2% of tea sold through Australian supermarkets in 2015, up from 13.9% in 2012.  This is the stuff that is changing the game!

And this – as any black tea enthusiast will tell you, and any glance at the ingredients list on a box of “herbal and fruit infusion” will confirm – is a deeply ironic situation.  For the vast majority of “herbal and fruit infusion” teas do not contain any tea at all.

The fastest growing segment in the Australian tea market essentially contains virtually anything that is not actually tea!

Or, as the commentssection of a Guardian article on the rise of “craft tea” put it rather more bluntly:

“Half the crap they're drinking isn't even tea.

Y'know, a random scraping of rainforest humus and that potpourri that great aunt of yours has in that little dish on that hallway table where she keeps the telephone isn't tea.”

Quite.

But that doesn’t stop it from being quite lovely stuff.

I haven’t mentioned the final category of tea: “milk/latte style teas,” which is mostly made up of chai tea.  This too is a category in decline.  As recently as 2012, milk/latte style teas sold almost as much as green tea.  Now it’s only about half as much. 

I would suggest – based I admit on nothing more than personal experience - that this is because whilst it has been difficult for the cafes of Australia to convince the tea drinkers of Australia that they can brew a better cup than you can in the privacy of your own home, this is not the case in relation to chai tea.  Your local café can almost certainly serve you a better cup of chai than what you can get at the supermarket.  If they can’t, it’s time to find a new local.

All of which is great news for growers of camomile blossoms or strawberry petals.  It is not good news at all however for tea farmers.  And is most definitely not good news for Lipton, who until a couple of years ago was Australia’s favourite tea brand, and a brand whose product assortment is strongly skewed towards black tea.

So based on these trends, what brands are winning the tea battle of the brands?