We’ve all heard the news along the grapevine, GST reform is looking more than likely to extend to fresh food as State and Federal leaders look for solutions to address inefficiencies in Australia’s tax system and strengthen its economic position.
With likely changes on the horizon set to impact Australian food producers, Tony Pititto, Grant Thornton National Head of Food & Beverage urges the sector to take stock and consider how to safeguard profits margins in an operating environment that attracts GST to fresh food items.
“Most would agree GST reform is necessary and will more than likely extend to fresh food in the new reforms. With changes seemingly imminent, now is the time for Australian food producers to consider what these potential changes could mean for them and how it could impact the bottom line.”
“Consider your current channels to market; are you heavily reliant on the supermarket chains? If you are, then given the current competitive retail landscape; what happens if supermarkets adopt a policy that protects its customers from the price increase, leaving you as the supplier to absorb the cost? Australian food producers need to understand their true costs of production to determine their profit margins and the impacts of a possible policy.”
“Diversifying your customer base and channels to market will reduce your exposure to such policies that stand to impact your profit margins. With the possibility of an increase in tax in the local market, now is a really good time to be looking beyond local channels and start exploring the opportunities to be had in overseas markets, especially the Asia Pacific region.”
“For those sticking with the local market; investment in brand power and product innovation will be imperative to safeguard your profit margins. Be that brand that the retailers cannot afford to have left off the shelves. Be the price maker to your customers not the price taker, the best way to do that is to ensure your brand is the must have and your product is pioneering.
Australian food producers can prepare for likely changes to tax reform and be ready to operate in an environment that will see their products subject to GST.
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For more information please contact
Helina Lilley, National Public Relations Manager
T +61 2 8297 2421, M 0437 725 520, E helina.lilley@au.gt.com
