Why Hospitality in South Australia “doesn’t work!” Part three – Food distribution chain.

Here we are, at the final steps of our examination of the Hospitality Market in South Australia. And last, but not least, the Food Market.

What are the main issues in the Food Market in South Australia which is interfering with the good development of Hospitality?

INTRODUCTION: Business health in any hospitality sector is largely determined by the availability of the required ingredients, and knowledge about these ingredients, on the market . South Australia has some problems with the availability of ingredients due to difficulties within the supply (distribution) chain, starting from what is grown on the farm or small-holding, and what is produced only seasonally, through to a lack of independent shops and the size of the market in general (demand).

DISTRIBUTION CHAIN FOR HOSPITALITY BUSINESSES AND MARKET SIZE: Unless the final point-of-sales business is located in the Adelaide CBD, where there are specialist supply chains available, hospitality establishments are limited by both the number of ingredients available, and the price (influenced by both order size and shipping costs), which needs to be passed on to the customer, making quality food providers much less competitive against the fast food outlets. The issue is further exacerbated in rural areas, where there is a much lower population density, which lowers the financial returns for any business, and becomes a deterrent to the establishment of a business or else the variety and quality of its products. (Fortunately, in some country areas, suppliers and business work more interdependently, and have created quality niche markets.)

LACK OF INDEPENDENT FOOD SHOPS: South Australia, as previously stated in a precedent post, has a shortage of independent food distributors. Major players cover the whole market with standardized food offerings, leaving little room for small and independent operators. This has a direct impact upon the availability of quality foodstuffs, as major players are often influenced in their product choice by issues such as shelf-life and low costs. Such practices take market share away from small, highly-specialized shops, ones where customers can be in touch with acknowledged food professionals, and can access local and seasonal products, which would be beneficial for the development and attractiveness of the local environment.

SEASONAL AND LOCAL: It is rare to find food that is both seasonal and locally produced (within a 100km range) on the shelves of the big distributors. Clearly, Australia’s size is a critical market factor, and the consequential transportation and storage of goods has a negative impact upon food quality, which, consequentially defines the customer’s palate, having never tasted food directly from the fully ripened plant in season, which would be common in my country of origin, Italy (or Europe generally). In such places there are often food shows and food festivals throughout the seasons and regions, which as a result, have great impact upon the customer’s eating habits and personal health. (Let’s avoid the health topic for the moment).

CONCLUSION: In conclusion, producers and importers of quality goods are immediately impacted by competition from the big distributors, and further constricted by the high price of raw materials. This is compounded by their available market size due to difficulties in access to and distribution of their products. Their prices are consequentially high, and they rely on a small volume of customers to maintain their viability. To survive, some may choose to seek alternative opportunities in nearby states, such as Victoria and New South Wales. 

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