Sustainability Challenges In The Food And Beverage Sector Of Australia

Background and Sustainability Challenge of Australian Food and Beverage Sector

The food and beverage sector of Australia is a major contributor in the growth of Australian economy. It has generated approximately $74.0 billion in FY 2013-2014 (Brea 2015). The Australian Food and Grocery Council (AFGC) is the peak national industry of Australia, which accounts for around $125.9 billion food, beverage and grocery manufacturing.

It is the largest manufacturing sector of Australia, contributing around one-third of the total manufacturing. This sector is chosen for this report due to the vastness of it. The sector has a customer base of approximately 24 million and employee base of around 792,000 by June 2014.  Hence, AFGC aims to provide a world class, socially responsible, profitable and sustainable food, beverage and grocery industry to this huge number of Australians. The objective of this study is to analyze the sustainability issue of this sector (Australian Food and Grocery Council 2017).

Background and Sustainability Challenge of Australian Food and Beverage Sector

Historical Background and Overview of Food and Beverage Sector

The food and Beverage sector of Australia is quite expansive. It is an unequivocally major industrial sector, which is continuously meeting the food trends of the public. Australia is highly recognized in the world for its innovative food and beverage production. Apart from that, the country is voted year over year among the top ten wine producing companies in the world (Sacks et al. 2015). The food and beverage sector of Australia has been adopting and adapting innovation since colonization and developed itself as a part of multicultural society.

In the early colonial days, there was much originality, ingenuity and innovation in cooking. The concept of restaurant was fist appeared in the 16^th century (Mialon, Swinburn and Sacks 2015). The first restaurant of Australia was Freemasons’ Arms. Over the years, various food and beverage company were established in Australia with new and modern recipes and beverages. Today, the most recognized companies under food and beverage sector of Australia are Coca-Cola Amatil, Lion Nathan National Foods, JBS Australia and many more (Smith and Pititto 2014).

The food and beverage sector of Australia has significant contribution in Australian Economy. The sector provides employment to almost 800,000 Australians and generates annual revenue of $74billion. The total income of the sector has been increased by 4 billion from the year 2013 to 2014 (Austrade.gov.au 2017). Moreover, the profit of the sector is expected to grow by 1.6% per annum from the financial year 2015/16 to 2020/21 (Abns.com.au 2017). However, the profit margin of the sector is stagnant for the last few years as compared to other sectors in the country.

Over the years, the food and beverage sector of Australia is facing tough challenges towards maintaining sustainable practice. This sector has major environmental impact in regards to wastes generated from food processing and food wastes. On the other hand, it may face social development problem in regards to health and safety issues of the customers. Hence, this sector has been selected for demonstrating sustainability issues in its practice and practices towards overcoming those issues.

Historical Background and Overview of Food and Beverage Sector

Major Sustainability Challenges in Food and Beverage Sector

Sustainability Challenges
Customer Health and Safety	Towards increasing the profit level, the food and beverage companies are often using unhygienic ingredients in the food processing. It is ultimately causing health and safety issues and hindering social development through poor health of the people.
Marketing Communication	Oftentimes, the organizations are communicating their food and beverage brand to such group of customers for which those products are not suitable. Moreover, children are being more interested to such foods, which are not good for their health (Friel, Barosh and Lawrence 2014).
Transport	The transportation of food and beverage through various vehicles ultimately increasing the carbon emission rate. Moreover, it is degrading the environmental balance.
Product and Service Leveling Issue	In many cases, the sector faces issues related to product and service leveling in regards to various laws and standards.
Water Consumption	The sector consumes almost 66% of water for food and beverage production purpose. Hence, it contributes to the reason of water scarcity in the country.
Energy Consumption	The sector consumes almost 30% of the total energy of the country. Hence, it is facing sustainability issue in regards to huge energy consumption (Abns.com.au 2017).

Table 1: Sustainability Challenges of Food and Beverage Sector in Australia

(Source: Morgan 2015)

Influence of internal and external business environment on business sustainability

Business environment refers to the factors of business that have an effect on the business. For example, the terms, external forces, institutions, and business factors are all parts of business environment. These business elements are beyond the control of individual business organizations and have the power to influence the management of an enterprise. The business factors are customers, creditors, government, competitors, political parties, and socio cultural organizations etc, some of which have a direct effect on the business, while others have indirect effect (Babatunde and Adebisi 2012).

The features of business environments are as follows:

Totality of external forces: the business environment can be defined as the sum total of all external things and aggregative in nature.

Specific and universal forces: both specific and universal forces affect a business environment. The specific forces influence the business environment on regular basis in the day-to-day activities, while, the general or universal forces affect the overall performance of the organization.

Dynamism: a business environment is always dynamic. It is changing constantly. It keeps on changing even if the technology or customer preference changes or a new entry happens in the market.

Uncertainty: it is very uncertain as forecasting future is very difficult, moreover if chnges happened frequently, the prediction becomes all the more difficult (Galbraith?Emami and Lobstein 2013).

The business environment can be classified in internal and external environment. This classification is based on the level of intimacy with the firm.

Internal environment is referred to the environment, which has a direct influence on the business. These environment is generally controllable by the organization. The factors are the company’s physical facilities, personnel, marketing techniques etc. Value system, mission, vision and objectives, management structure are the key elements of the internal environment of business. The organizational structure, such as, the board of directors, influences the business decisions (Lee, Olson and Trimi 2012).

External environment is referred to the environment, which has a indirect influence on the business. These factors are uncontrollable by the organization. Suppliers, customers, financers, marketing intermediaries, public, economic, social, political, legal and technical environments are all part of the external business environment (Botha, Kourie and Snyman 2014).

Business sustainability is often referred to as the corporate sustainability. It is the management of the triple bottom line, that is, social, economic and environment. In other words, the management of social, financial and environmental demands and is concerned with ensuring the responsible, ethical and continued success of the organization (Bansal and DesJardine 2014).

Sustainability of a business is dependent on the economics of sustainable development. This type of business has no or little negative influence on the environment. The external factors such as social performance focuses on the development and expansion of the business through the cross-cultural collaborations between the companies, government, communities or non-governmental organizations. The government can influence the sustainability of a business by putting restrictions on its activities (Teece 2012).

Major Sustainability Challenges in Food and Beverage Sector

In case of food and beverage industries, the suppliers, customers, governmental regulations regarding clean and healthy food, influence the industry as external factors. On the other hand, the management structure of the firms plays the role of internal factor affecting the business sustainability. The food and beverage sector of Australia is also bound to maintain the Corporate Social Responsibility (CSR) like any other industry. The other factors are dynamism, innovation, knowledge management, human capital, intellectual property, service innovation, human resource management, are all internal factors affecting sustainability through achievement of competitive advantage.

Focus on Sustainability in Australian Food and Beverage Sector

Focus on Sustainability
Water Efficiency	The sector has targeted to reduce water consumption per tonne of production by 20% by the year 2020 (Morgan 2015). Moreover, the sector has responded to the water scarcity through rain water harvesting and water recycling plants. In this way, the sector has improved wise use of water and secure efficient water supply.
Waste Management	The sector has targeted to reduce waste to landfill by 40% from per tonne of production. It has developed partnership with the consumers and retailers towards reducing food waste and investigating waste-to-energy at the sector. The reduction of waste in the food supply chain is also the major concern for the federal government. In this way, the sector has effectively managed the landfill emission and improved environmental protection.
Energy and Emission	The sustainability committee of this sector has also made commitment towards increasing energy efficiency and reducing energy emission in the food supply chain. The target of the committee is to reduce emission by 20% by the year 2020 (Friel, Barosh and Lawrence 2014). Moreover, the sector has responded to the low-emission technologies like biogas, natural gas generators, photovoltaic solar panels and biomass fired boilers. The initiatives of the sector towards low energy emission and energy efficiency have been aligned with the compliance of federal scheme. This scheme actually regulates energy use and emission outputs. In this way, the sector has been contributed enough towards environmental protection and builds their reputation in the market.
Packaging	The sustainability committee of this sector has taken initiatives towards increasing the recycling rate of packaging by 70% by the year 2015. On the other hand, the sector is also committed to reduce the packaging litter by 20% by the year 2020 (Mialon, Swinburn and Sacks 2015). Australian Packaging Covenant (APC) has made a co-regulatory agreement between the Government and companies towards reducing adverse environmental influence of consumer packaging. The optimizing and renewing packaging technique has ultimately reduced the environmental impact and reduced overall operational cost.
Sustainable Ethical Procurement	In this initiative, the sector is committed towards ethical sourcing of products and reducing ecological impacts. The sector is large consumer for raw materials. Hence, it has major role for arranging ethical source of products. In this initiative, it is ensured that raw materials are sourced through complying with independent certification schemes.

Table 2: Focus of Sustainability

(Source: Friel, Barosh and Lawrence 2014)

Conclusion: 

The food and beverage industry of Australia is one of the biggest manufacturing industries. This industry has more sustainability issues to handle than other industries. Since, it is directly related with people’s health and well-being, the emphasis on the sustainability is very important. This report addresses the issues of business sustainability in the food and beverage sector of Australia. It shows that, internal, external business environments have influence on the business sustainability, and it is a good practice for all the companies. This is based on the data published in the Australian food industry reports of 2013-14.

References:

Abns.com.au. 2017. Food & Beverage Industry | Australian Business News Source. [online] Available at: https://abns.com.au/foodandbeverage/ [Accessed 9 Apr. 2017].

Austrade.gov.au. 2017. Food and Beverage – Austrade’s industry capability information – Austrade. [online] Available at: https://www.austrade.gov.au/International/Buy/Australian-industry-capabilities/Food-and-Beverage [Accessed 9 Apr. 2017].

Australian Food and Grocery Council., 2017. State of the Industry 2016: Sustaining Australia. [online] Available at: https://www.afgc.org.au/wp-content/uploads/AFGC_State-of-the-Industry-2016.pdf.

Babatunde, B.O. and Adebisi, A.O., 2012. Strategic environmental scanning and organization performance in a competitive business environment. Economic Insights-Trends & Challenges, 64(1), pp.24-34.

Bansal, P. and DesJardine, M.R., 2014. Business sustainability: It is about time. Strategic Organization, 12(1), pp.70-78.

Botha, A., Kourie, D. and Snyman, R., 2014. Coping with continuous change in the business environment: Knowledge management and knowledge management technology. Elsevier.

Brandenburg, M., Govindan, K., Sarkis, J. and Seuring, S., 2014. Quantitative models for sustainable supply chain management: Developments and directions. European Journal of Operational Research, 233(2), pp.299-312.

Brea, E, 2015. Food Innovation Australia Limited (FIAL). Food & Beverage Market in Australia. [online] Available at: https://fial.com.au/system/files/knowledge_repository/report_130904%5B1%5D%20copy.pdf.

Friel, S., Barosh, L.J. and Lawrence, M., 2014. Towards healthy and sustainable food consumption: an Australian case study. Public health nutrition, 17(05), pp.1156-1166.

Galbraith?Emami, S. and Lobstein, T., 2013. The impact of initiatives to limit the advertising of food and beverage products to children: a systematic review. Obesity Reviews, 14(12), pp.960-974.

Lee, S.M., Olson, D.L. and Trimi, S., 2012. Co-innovation: convergenomics, collaboration, and co-creation for organizational values. Management Decision, 50(5), pp.817-831.

Mialon, M., Swinburn, B. and Sacks, G., 2015. A proposed approach to systematically identify and monitor the corporate political activity of the food industry with respect to public health using publicly available information. Obesity reviews, 16(7), pp.519-530.

Morgan, M.J., 2015. Food festivals, food marketing and the re-invention of a rural community. The Journal of New Business Ideas & Trends, 13(2), p.57.

Sacks, G., Mialon, M., Vandevijvere, S., Trevena, H., Snowdon, W., Crino, M. and Swinburn, B., 2015. Comparison of food industry policies and commitments on marketing to children and product (re) formulation in Australia, New Zealand and Fiji. Critical Public Health, 25(3), pp.299-319.

Smith, L. and Pititto, T., 2014. M and A activity in the food and beverage sector. Food Australia, 66(4), p.24.

Teece, D.J., 2012. Dynamic capabilities: Routines versus entrepreneurial action. Journal of Management Studies, 49(8), pp.1395-1401.