Australia’s food market is entering a “new normal” following a volatile five-year period shaped by the COVID-19 pandemic, supply chain disruptions, and inflationary pressures, according to a new Rabobank report.
The report, Australia’s Food Market is Embracing the New Normal, by Rabobank’s RaboResearch division, marks March 2025 as five years since the onset of economic and supply chain upheavals that altered food availability, pricing, and consumer habits.
Michael Harvey, RaboResearch senior analyst for consumer foods and the report’s author, said the industry has faced a “convergence of forces,” including global supply bottlenecks, geopolitical conflicts, rising commodity and energy prices, and weather-related supply issues.
“As result, we saw a period of reduced food and ingredient availability, multi-decade high food price inflation and changes in consumer behaviour, including a switch away from out-of-home dining to eating in,” Harvey said.
“All of this happened amid an unprecedented decline in real disposable incomes for Australian households, which changed food-purchasing behaviour, particularly among lower-income younger Australians.”
While the market is stabilising, Harvey noted that food producers, manufacturers, retailers, and food service operators must continue adapting to long-term structural changes.
“The food market environment appears to be normalising in 2025. However, behind the scenes, there has been extensive structural change to the market and supply chains across the food service and food retail sector,” he said.
The report highlights shifting grocery shopping habits as households adjust to cost-of-living pressures.
Consumers are increasingly choosing supermarket private-label products, long-life or frozen goods, and discounted items.
The trend of in-home meal preparation has strengthened food retail, while discount retailers have gained market share.
Retailers, in turn, are expanding private-label product lines, investing in e-commerce, and introducing innovative offerings such as ready-to-eat meals and healthier snacks.
Harvey noted that private-label penetration, previously impacted by COVID-era supply disruptions, is regaining momentum.
“As we go into 2025, private labels are regaining market share and conditions are favourable for this trend to continue. Consumers will remain value conscious and retailers are focused on growing their own brand offerings while ensuring supply chain resiliency to support their product ranges,” he said.
Australia’s food service sector, including restaurants, cafes, and bars, has faced a slower recovery due to economic pressures and shifting consumer behaviour.
The report notes that post-lockdown reopenings, increased remote work, and tighter household budgets have reduced dining-out spending.
“Cafes, bars and full-service restaurants have been hit the hardest, experiencing significant declines in performance,” Harvey said. “Conversely, limited-service and chain operators have emerged as the winners, with Australian consumers increasingly opting for takeaway, delivery and drive-through services.”
The sector has also struggled with rising wages and input costs. A recovery in restaurant margins and increased foot traffic will be crucial for stability.
”While there are early signs of improvement, dining out will remain a luxury for many Australian households until household budgets substantially improve,” he said.
The report also highlights notable food service trends, including the expansion of global quick-service restaurant (QSR) brands, the rising popularity of bubble tea, growing demand for convenience and time-saving options, continued expansion of sushi brands, and strong consumer preference for barista-made coffee.
