Australia represents one of the most attractive long-haul export markets for UK food and beverage brands. With grocery prices approximately 15% above UK levels, a population of 27 million with high disposable incomes, and genuine consumer appetite for imported premium products, the margin opportunity is compelling for brands with the right positioning and patience.

However, the market is dominated by a tight retail duopoly. Woolworths and Coles together control approximately 65% of grocery sales, creating significant barriers to entry. Ranging decisions are centralised, promotional expectations are intensive, and rate-of-sale thresholds are unforgiving. The ACCC's 2025 supermarket inquiry confirmed the market is "highly concentrated" with limited incentive for the major chains to compete vigorously on price, which has implications for both consumers and suppliers.

The UK-Australia Free Trade Agreement (A-UKFTA), which entered into force in May 2023, has removed customs duties on over 98% of UK food exports to Australia. This is a meaningful advantage, but the real barriers to this market are commercial, not regulatory.

The Australian grocery retail market is valued at approximately A$148 billion (c. £75 billion), serving a population of 27.1 million. Per capita grocery spend is among the highest globally, driven by high wages, heavily urbanised population centres concentrated on the eastern seaboard, and a food culture that increasingly values quality, provenance and variety.

Market growth has been running at approximately 4-5% annually, driven by population expansion (Australia's population grew by over 600,000 in the year to June 2024, the fastest rate in decades), rising demand for convenience formats, and the continued expansion of private label offerings across all major retailers. Food price inflation moderated through 2024-25 but remains a sensitive political issue, with the ACCC's formal supermarket inquiry keeping pricing practices under sustained public scrutiny.

Key consumer trends shaping the market include strong demand for health-oriented and "free from" products, growing interest in plant-based alternatives, increasing focus on sustainability and ethical sourcing, and the rapid expansion of online grocery. E-commerce now accounts for approximately 7-8% of grocery sales and is growing at over 20% annually, with both Coles and Woolworths investing heavily in AI-powered fulfilment centres in partnership with Ocado and Instacart respectively.

Australia's grocery retail market is one of the most concentrated in the developed world. Understanding the retail landscape is essential before approaching distributors or making route-to-market decisions.

Woolworths is the clear market leader with approximately 38% of supermarket grocery sales. It operates over 1,100 stores across multiple formats including Woolworths Supermarkets, Woolworths Metro (convenience), and the premium-positioned Dan Murphy's and BWS chains for alcohol. Woolworths has been investing aggressively in digital capabilities, including AI-driven demand forecasting and automated fulfilment centres with Ocado.

Coles holds approximately 28% market share across 850+ stores. It has been the more aggressive innovator in-store, launching AI-powered smart trolleys in partnership with Instacart in early 2025, and opening its first AI-driven customer fulfilment centre in Sydney. Coles is expanding its private label programme, particularly through the Coles Finest premium tier and its organic ranges.

Aldi continues to gain market share, now holding approximately 10%, driven by cost-of-living pressures pushing consumers toward discount options. However, Aldi's limited SKU model and centralised European buying operation make it extremely difficult for UK brands to gain a listing.

Metcash supplies the IGA independent network of 1,400+ stores. Individual IGA store owners have significantly more autonomy over ranging decisions than the major chains, making this the most accessible route for new imported brands to build an initial footprint and generate sales data.

The predominant route to market for imported food and beverage in Australia is through a local distributor or importer. Direct supply to major retailers from the UK is not practically viable for most brands under A$50 million in local revenue. Your distributor is your de facto country manager; choose them accordingly.

The Australian distributor landscape has a clear tier structure. National distributors such as PFD Food Services, Acosta (formerly Greenlit Brands), and Stuart Alexander have direct relationships with Coles and Woolworths buyers and can manage the full promotional calendar across all states. Regional specialists cover specific states or territories, which matters given the vast distances involved. Specialist and niche distributors focus on categories such as organic, free-from, ethnic foods, or premium/gourmet, often with stronger relationships to independent retailers and foodservice.

Foodservice is an increasingly important alternative entry channel. The Australian restaurant, cafe and hotel sector is large and growing, and foodservice wholesalers such as PFD, Bidvest, and Metcash Campbells can provide a lower-barrier route to build brand awareness before approaching the major grocery chains.

Australia's geography creates real distribution complexity. The eastern seaboard (Sydney, Melbourne, Brisbane) accounts for approximately 80% of the population, but serving Western Australia, South Australia, and the Northern Territory adds significant logistics cost. Your distributor needs warehouse capability in at least Sydney and Melbourne, with the ability to service other states either directly or through sub-distribution arrangements.

Australia's food regulatory environment is governed by Food Standards Australia New Zealand (FSANZ) under the Australia New Zealand Food Standards Code. While broadly aligned with international standards, there are several areas where UK exporters regularly encounter problems that delay or derail market entry.

Labelling is the first major hurdle. Country-of-origin labelling is particularly strict and differs fundamentally from the UK/EU system. All food products must display the standard mark showing the country where the product was made, grown, or produced, plus a bar chart indicating the percentage of Australian ingredients. As a fully imported product, your label will show 0% Australian content, which can create a perception issue with consumers who lean toward "Aussie Made." Nutritional information panels must follow the FSANZ format, which differs from UK/EU layouts. Allergen declarations must comply with Australian requirements, which include sesame (not mandatory in the UK until recently) and lupin.

Biosecurity is the area that catches most UK exporters off guard. The Department of Agriculture, Fisheries and Forestry (DAFF) enforces some of the strictest import protocols in the world, particularly for products containing animal-derived ingredients, dairy, eggs, seeds, nuts, or certain plant materials. Import permits may be required, and products can be held at the border for inspection. Wooden packaging and pallets must meet ISPM 15 treatment standards.

The UK-Australia FTA (A-UKFTA) entered into force on 31 May 2023 and removes customs duties on over 98% of UK food exports. The remaining products (principally some cheese and steel) are being phased to zero over 5-6 years. To claim the zero-duty preference, products must meet the FTA's rules of origin, and an origin declaration must appear on the commercial invoice. GST at 10% applies to virtually all imported goods regardless of duty status.

The new mandatory Food and Grocery Code of Conduct, effective from 1 April 2025 and enforced by the ACCC, is changing the supplier-retailer dynamic. It introduces penalties for unfair trading practices and supports anonymous reporting by suppliers, which may gradually improve the balance of power in commercial negotiations with the major chains.

Australia's grocery price index sits at approximately 115 (UK = 100), meaning food prices are around 15% higher than in the UK. This premium, combined with the zero-duty access under the A-UKFTA, creates one of the more favourable margin environments among long-haul export markets. But the landed cost equation is more complex than it first appears.

The key costs to factor in are: sea freight (typically 4-6 weeks from the UK, with costs varying significantly for ambient versus chilled/frozen), customs brokerage fees, GST at 10% on landed value, distributor margins (typically 25-35% depending on category and volume), and retailer margins (typically 35-45% for the major chains, with additional promotional investment expected on top).

Promotional depth and frequency are a defining feature of Australian grocery retail. Both Coles and Woolworths run aggressive promotional calendars, and brands are expected to participate. Deep-cut promotions of 30-50% off are common, and if your landed cost doesn't leave sufficient headroom for these promotional events, the commercial model will fail. This is the single biggest reason UK brands struggle in Australia: the maths works at full price, but collapses under promotional pressure.

Australia uses the Australian dollar (AUD). The GBP/AUD exchange rate has been relatively volatile in recent years, typically ranging between 1.85 and 2.00. Pricing to Australian retailers is done in AUD, so the UK exporter bears currency risk unless the distributor agreement specifies otherwise. Currency hedging is strongly recommended for any meaningful volume.

Australia's shared language and cultural heritage with the UK is both an asset and a trap. British brands often carry positive associations: heritage, quality, authenticity, and a sense of tradition. Categories with particularly strong UK affinity include tea, biscuits, confectionery, craft beer and spirits, premium condiments and sauces, and speciality preserves. However, the commercial environment is distinctly Australian and should not be underestimated.

Australians are more price-conscious than many UK exporters expect, despite high average incomes. The cost-of-living squeeze has intensified this, with Aldi's continued market share gains demonstrating the consumer shift toward value. The "Support Australian Made" sentiment is genuine, growing, and politically supported. Imported brands need to articulate a clear reason for existence beyond simply being "British"; the product needs to offer something that isn't available locally.

Business culture is direct and relationship-driven. Australian buyers respect straightforward communication and well-prepared proposals, but they expect you to understand their market and their commercial realities. Arriving with UK-centric assumptions about pricing, promotional mechanics, or consumer behaviour signals a lack of seriousness. Your distributor should be coaching you on these dynamics before you attend any buyer meeting.

Australia's growing multicultural population is creating new opportunities. The significant Asian-Australian community (particularly Chinese, Indian, Vietnamese and Filipino) is driving demand for diverse food products and flavour profiles. This demographic shift is reshaping the specialty and ethnic food aisles and creating space for products that might not fit traditional "British export" categories.

Key opportunities: Strong and growing premium food segment driven by high disposable incomes and consumer willingness to pay for quality. UK-Australia FTA delivering zero duty on virtually all food products, a significant competitive advantage over non-FTA countries. Rapid population growth creating expanding consumer base. Growing Asian-Australian demographic driving demand for diverse products. Foodservice channel providing a lower-barrier entry point for building brand awareness. Strong e-commerce growth through Amazon AU, Coles Online, and Woolworths' digital platforms. Harris Farm and specialty retailers actively seeking differentiated imported products. New Food and Grocery Code of Conduct improving supplier protections against unfair trading practices.

Key risks: Retail duopoly concentration creating severe buyer power imbalance; the ACCC has formally identified this as an oligopoly with limited incentive for price competition. High freight costs and 4-6 week shipping times creating working capital and freshness challenges. Aggressive private label expansion at both Coles and Woolworths squeezing branded shelf space. Strict biosecurity and labelling requirements that differ significantly from UK/EU standards. Geographic distances creating distribution complexity and cost variation between eastern seaboard and other states. Currency volatility between GBP and AUD. Promotional depth expectations that can destroy margins if not planned for. Growing "Australian Made" consumer preference working against imported brands. Aldi's expansion putting downward pressure on pricing across the market.