Revenue rise for Australian food and beverage makers: report

The latest Unleashed Manufacturing Health Index saw Australian food and beverage makers’ revenue and profitability rise, while taking control of their excess stock.

For only the second time in seven years, Australian small and medium-sized manufacturers posted more than $600K in average revenue in a quarter, according to the report from inventory management software company Unleashed.

Beverage makers saw average revenue jump 13% over the past financial year, from $1.89m to $2.39m. Their contemporaries in food saw more stable growth, up $60K YoY to $2.37m.

Connor Nestor, CEO of coffee manufacturing company New Ground, said that many Australian beverage makers are doubling down on their research and development.

“From what we have experienced in the coffee market in Australia, there’s been enough of a domestic demand for businesses to build new verticals and expand their product’s reach. This year alone, we’ve had way more interest in new product formats like cans or instant coffee, which reflects companies being more strategic and long term with their thinking,” Nestor said.

“I think it’s also telling what a mixed bag of results we’re seeing from big international brands trying to launch into Australia or New Zealand. To me, this reflects how hard it is to grow into new markets, but also the value that consumers put on brands that are genuinely locally made.”

The first-quarter average sales revenue of $640K is only topped by the third quarter of last year, when the average SME brought in $650K, reflecting a positive overall outlook for Australian makers in spite of global trade turmoil.

Producer Price Index data from the Australian Bureau of Statistics showed manufacturers were able to raise prices by almost 1% in Q1, bolstering their higher sales revenues. However, international context is important when trying to understand changes in the manufacturing sector, said Unleashed’s Head of Product, Jarrod Adam.

“As much as it’s been a very positive start to the year from a sales perspective for Australian manufacturers, it’s also been hugely unsettling. Uncertainty is the enemy of good business, which is even more true of a goods maker who often looks at production on a 6-to-18-month timeline,” Adam said.

“From our conversations with manufacturers, improving revenue has largely been a testament to Aussie resourcefulness, where businesses have taken the moment to seek out new products and markets. I’ve seen this from beer brewers shipping products to China, coffee roasters looking at canning, or makeup brands setting up shop in Korea.”

Despite heightened Australian manufacturing sales activity, the details are important in the latest Manufacturing Health Index.

Purchase orders, which are typically a strong predictor of future revenue, saw a steep dive to begin the year. In the past quarter, orders receded to an average of 177 per company across all Australian manufacturers, the lowest in a quarter since Q4 2020 during the heat of the pandemic.

Warehouse managers cut their excess stock at the beginning of the year, from $35K at the end of 2024 to $22K last quarter. All but one of the 13 subsectors reduced their overstock volumes to start 2025, with food makers leading the charge, dropping to $30K in excess stock — the lowest levels since 2020 and a 83% dip from $177k of overstock to close out last year.

A potential contributing factor to this warehousing behaviour was the tariff-tainted Aussie dollar at the start the year, raising the cost of imports for Australian manufacturers, Adam said.

“The cheap Australian dollar in the first quarter certainly loomed large for local manufacturers, who often rely on US-dollar denominated imports to create their products. It’s likely some makers would have looked to eat into their extra inventory to try and wait out the trade storms and currency volatility before committing to large ongoing purchases,” he said.

Image credit: iStock.com/Khanchit Khirisutchalual