Beyond Coles & Woolworths: Export Markets That Pay Premium for Australian Food
Almost every conversation Pete Taitoko has with mid-tier Australian food manufacturers eventually arrives at the same wall: the supermarket duopoly. Coles and Woolworths together control roughly 65% of Australian grocery, and the commercial reality of supplying them is well-documented — margin pressure, private-label competition, late-payment penalties, and the constant threat of being delisted. The question more and more founders are asking is the same question Pete has been answering for three decades: is there another way?
There is. And for an increasing number of food processing manufacturing companies in Australia, it looks like Dubai, Mumbai, Lagos, and Riyadh.
The Domestic Margin Squeeze Has a Ceiling
Mid-tier Australian FMCG manufacturers have been told for years that scale is the only way to survive in the local retail environment. Build volume, get on supermarket shelves, accept the margin compression as the cost of distribution, and try to make it up on volume.
The equation has stopped working for many. Recent industry data shows operating profits across Australian food and grocery falling even as top-line revenue grows — input costs, energy, packaging, and logistics are all rising faster than wholesale prices. The AFGC has been increasingly vocal about this margin squeeze, and audited accounts from listed players confirm it.
In that environment, additional supermarket volume can actually erode profitability. The food manufacturing design decisions that made sense five years ago — bigger lines, more SKUs, lower unit cost — don't necessarily produce a healthier business today. The smarter question: where else can the same product sell, and what would the margin look like there?
Why Middle East, India, and African Markets Pay Premium
So if it’s not labour, what is killing Australian food manufacturing projects?
Capital cost. Specifically, the upfront investment required to establish manufacturing operations in Australia in the first place.
Pete sees this constantly. Companies come to RMR with viable products, clear market demand, and a genuine desire to manufacture in Australia. The business case works on the operational side — margins are achievable, volumes are there, the product quality is right. But the capital expenditure required to get the facility up and running makes the ROI timeline unacceptable.
And the numbers are getting worse. Australian construction costs have escalated dramatically, driven by demand in residential and infrastructure sectors, skilled trade shortages, and materials inflation. A new-build food manufacturing facility that might have been marginal five years ago is now clearly uneconomic.
The result? Projects that should happen in Australia get moved offshore. Not because the ongoing cost of manufacturing here is uncompetitive, but because the cost of getting started is too high.
What Export-Ready Manufacturing Actually Looks Like
Most Australian food manufacturers were built to supply Australian retail. Their facilities, processes, and quality systems reflect that. Pivoting to export means more than just signing a distributor agreement — it means making sure the production capability matches what the destination market requires.
This is where food processing specialists earn their fees. The design considerations for export-ready manufacturing include:
Shelf-life engineering. A product that lasts 21 days from a Sydney factory to a Melbourne shelf may need 90+ days from a Sydney factory to a Riyadh shelf. That changes formulation, packaging, sterilisation, and process requirements — and it has to be designed in, not bolted on.
High-care processing. Many export markets require demonstrated high-care food safety capability. Our article on high-care facility design explains what that involves at the production-engineering level.
Regulatory compliance overlays. Halal certification for the Middle East, FSSAI registration for India, country-specific labelling — most have facility-level implications that are easier to design in than retrofit.
Volume scalability. Export contracts often arrive in larger, more concentrated lots than domestic orders. Facilities designed around domestic order patterns may need fundamental process redesign to handle export-scale volumes efficiently.
Packaging and logistics integration. Palletisation, container-loading, and shipping documentation must be a core part of production flow — not an afterthought.
Designing for Export Doesn't Mean Abandoning Domestic
RMR Process has worked with several Australian food processing manufacturing companies who built or expanded their facilities specifically to capture export upside alongside domestic supply. The common thread: export ambition was designed in from day one, not discovered after the fact.
The Birch & Waite project in Sydney is a good example — a $13.5M facility built with export-ready thermal processing and packaging technology that opened up new market opportunities the previous facility couldn't service. The dairy dessert manufacturer case study describes a similar trajectory: domestic-first growth followed by national-scale capability that positioned the business for export conversations.
If you're earlier in the thinking, our article on whether to upgrade or expand walks through the decision framework, and our piece on repurposing existing facilities covers what's possible at lower capital cost.
Talk to RMR Process
RMR Process helps Australian food manufacturers solve the capital cost equation through intelligent facility design, process engineering, and project management. If you’re evaluating a manufacturing project and the numbers aren’t stacking up, it’s worth a conversation.
Download our factory cost comparison guide or contact the RMR Process team to discuss your project.