Consumers who want to celebrate Australia Day this weekend by buying Australian could be in a bit of trouble.
There are very few, if any, consumer brands that are truly Australian. Vegemite of course is owned by Americans, Tooheys is owned by the Japanese, Myer by the Dutch and OPSM by the Italians. Then of course Country Road is owned by South Africans and Sorbent by Netherlanders.
IBISWorld reveals that of Australia’s top 2000 companies by annual revenue, around 670 are foreign owned. The foreign companies earn revenue of $427.2 billion – which is 21% of total Australian revenue.
Not that it matters. Phil Ruthven, founder of IBISWorld, says the so called nostalgia brands like Vegemite no longer make up a significant proportion of Australian spending.
“Take Myer,” he says. “It used to dominate, making up 11% of all retail sales. But now they are 4% to 5% and they have been overtaken by other retailers such as McDonald’s and KFC.”
He adds that the brands are not even that important to Australians. “Look at Vegemite. It still is important as an icon, but you don’t go out and order a Vegemite sandwich. You can’t get one at Subway.”
Ruthven says the surveys he has seen that ask “would you buy Australian?” reveal that jingoism is dead. “The patriotism went along with the Aussie brands. People say they will buy Australian only if the product is as good or better than a foreign brand. I don’t think even Dick Smith, who is trying to get people to buy local peanut butter instead of Kraft, will succeed unless it is better.”
He adds that’s a good thing. “If we start urging people to buy local, then why should foreigners buy our goods? It’s cutting off your nose to spite your face.”
He predicts these brands are not heading for extinction – yet. “They don’t just disappear, they get diluted.”
So what are Australian icons? Ruthven nominates the services industries. “They are the things we spend most of our money on. You have companies like HBA, the banks like NAB and airlines like Qantas.”
Even the trend by tourists to buy local produce as they drive along the coast or wind their way through the countryside will not be driven by patriotism. “That’s just people preferring to buy fresh produce – not Australian. If fact they wouldn’t care less if a foreign company owned the farm.”
Robert Bryant, IIS general manager, says it is interesting that on Australia Day so many foreign companies dominate what we think of as Australian industries. Instead, domestic operators settle for niche market access and are acquired or go bankrupt because of comparative disadvantages in production.
Mining companies, bio-pharmaceutical and high tech companies are also going from strength to strength.
Local mining firms have returned enormous value to investors with an average return on shareholders funds of 38.4% compared with 26.3% for foreign competitors.
“By exploiting our strengths in skilled labour and IP we can continue to move away from manufacturing and into the economy of the future to truly become the clever country,” Bryant says.
Here is IBIS’s list of top performers:
- Coca Cola Amatil
- Woodside Petroleum
- Newcrest Mining