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In 2004, Australia signed a bilateral free trade agreement (FTA) with the United States. This will become operational from January 2005, and will allow increased access to the American market as well as a potential influx of American produce into Australia. There could be an increase in imports from America of raw materials, potentially resulting in a decrease in prices for some of the raw materials required for breakfast cereals. Food Standards Australia New Zealand (ANZFA) ANZFA is a statutory authority with the task of developing and enforcing food standards that cover the entire food industry. This also includes areas such as labelling and packaging that requires all packed foods and beverages to list the contents of ingredients on the label. Changes in food standards and labelling regulations can increase production costs across the industry. If genetically modified crops were introduced for the making of breakfast cereals, labelling requirements would be enforced by ANZFA. Australian Competition and Consumer Commission (ACCC) The role of the ACCC is to enforce the Trades Practices Act 1974 and the Prices Surveillance Act 1983 to ensure that the competitive nature of markets are maintained, and protects both small business and consumers from unfair business practices. This could serve as protection for Uncle Tobys, as one of their main competitors (Kellogg’s) has 55% of the market. Opportunities Rating Threats Rating Increase in raw material imports under FTA 3-4 Increased food regulation 2-3 ACCC to keep market competitive 4-2
Page 15 of 89 Technological Over the last five years, major technological changes have taken place in the industry. Computerization has enhanced quality control methods and Just-in-Time (JIT) manufacturing has reduced inventories and therefore capital costs for mills.1Retailers are introducing self-scanning checkouts that increase service for those customers that use them and save on labour costs.2Technology has also enabled the building of up-to-date Customer Relationship Management (CRM) systems, which can help identify trends and future opportunities. With the proliferation of the internet and E-Business, time conscious consumers can now order groceries through large supermarket chains via the internet (eg. ) and have them delivered without entering the supermarket. While adoption of online grocery shopping is a small proportion of household grocery expenditure, it is expected to increase, and this also negates any influence of product positioning on supermarket shelves. The use of genetically modified (GM) food evokes public debate and the response to GM foods remains cautious. GM foods are not presently used in cereal manufacture, but the technology in crop production could enable disease and insect resistant strains, thus increasing supply and guarding against spoilage.