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Mining Boom, Five sectors to invest in once the Australian mineral resource boom ends: Innovation

Five sectors set to thrive beyond the mining boom

By Oliver Milman
Thursday, 26 July 2012

feature-miners-thumbConcerns were raised by economic soothsayers this week when a new report predicted the end of the mining boom – Australia’s runaway success story – within two years.

 

The Deloitte Access Economics Business Outlook praised Australia’s 21-year stint without a recession but pointed out that the boom would not last forever, forecasting that it will “crest and then ease beyond 2014 and 2015.”

 

Like it or not, new businesses won’t be able to rely on the resources sector propping up the rest of the economy in the long term.

 

But while any decline in the mining industry will have knock-on effects for some enterprises, there are still plenty of post-boom opportunities for innovative, nimble start-ups.

 

Indeed, many entrepreneurial figures argue that a shift in our economic obsession from the stuff we can dig up from the ground will allow smart start-ups to shine.

 

Most obviously, clean energy ventures look set to be bolstered by initiatives such as the Federal Government’s $200 million Clean Technology Innovation Program.

 

The private sector is stepping up too, as evidenced by this week’s unveiling of the first five clean tech participants in Ignition Labs’ new start-up accelerator.

 

But what other industries look set to thrive beyond the boom? StartupSmart gazes into its crystal ball to pick out five areas that budding entrepreneurs should be keeping an eye on in the next few years.

 

Click on the tabs below for more information on each of the five sectors:

 

 

1. Biotech

 

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While our web and mobile-based start-ups are starting to gain traction both in Australia and overseas, investors seem more willing to fork out major sums of money for our biotech innovators.

 

A report from earlier this year picked out biotech as a key area for funding and this appears to be borne out by a number of recent deals, including a $15 million round for needle-free vaccine invention Vaaxas.

 

The early stages of building a biotech business is still costly and time-consuming, with the industry recently calling for more government support to get innovations off the ground.

 

However, Australian ingenuity in this area is clearly turning heads overseas and could flourish while the resources sector slowly fades. The numbers are strong, too – revenue is estimated to grow by 10.3% in the coming year to reach over $2.4 billion.

 

2. Personal fitness and wellbeing

 

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Australia’s ageing – and increasingly overweight - population is set to fuel a number of business opportunities in the years to come, such as the personal fitness industry.

 

These huge demographic trends look set to fuel the fitness boom in the years to come, although the mining industry does contribute to the sector by regularly building gyms for fly-in-fly-out workers.

 

Figures released by the Department of Education earlier this year showed that in the past five years, the number of fitness instructors in Australia has grown 36.7%, compared to 13.1% for all other occupations.

 

There are now 22,888 fitness instructors operating in Australia, and that number is likely to increase by 252% to an additional 57,592 instructors by 2020.

 

Happily for potential new entrants to this market, the trend seems to be moving away from the large, contract-binding chains and more towards leaner, more user-friendly operators.

 

3. Preschool education

 

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Over the coming financial year, IBISWorld expects the preschool education industry to grow by 26% and to be worth $1.1 billion.

 

Growth is expected to be driven primarily by additional funding, equating to $297 million over 2012-13, from the Federal Government to support reforms aimed at standardising preschool education.

 

The Federal Government’s universal access policy is expected to increase demand for preschool services and increase total childcare hours.

 

All state governments have agreed that by the end of 2013, all four-year-old children will have access to 15 hours of preschool per week, 40 weeks of the year.

 

These services are to be delivered by an early childhood teacher with four years of university training.

 

All in all, pre-schoolers look set to be a fruitful target demographic for entrepreneurs in the coming years.

 

4. Artisan food

 

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Australia may have a supermarket duopoly that is allegedly squeezing suppliers, but that doesn’t mean there aren’t opportunities for the right kind of products.

 

Over the past five years, Australia’s organic farming industry has grown at a robust pace of 11.6% per annum and IBISWorld expects the industry will continue to soar, increasing its revenue by 14.9% over 2012-13 to be worth $578.9 million.

 

Demand for organic produce has been mainly driven by growing consumer interest in sustainable food production and rising disposable incomes.

 

Supermarkets have responded quickly to increasing demand for organic products by increasing organic product ranges to improve accessibility.

 

This has resulted in supermarkets accounting for around 60% of all organic sales, although supply chain challenges remain an issue for organic producers.

 

Traditional food retail should survive and prosper too, albeit in a different form. For example, the recent financial woe faced by chocolate retailer Darrel Lea shouldn’t deter start-ups from this area.

 

“In the chocolate bar segment, you’re going up against heavyweights – the Nestlés and Cadburys of the world,” says IBISWorld analyst Naren Sivasailam. “It’s going to be very hard to compete with those given their brand recognition.”

 

“But in the premium high end – fine chocolates made experientially by expert chocolatiers – that market has been growing by about 14-15% a year.”

 

“Fair trade chocolate is the biggest growth segment – it has experienced growth of about 11,000% in the last five years but that’s going off a base close to zero.”

 

“It doesn’t mean it’s premium, but it’s appealing to certain ethical stances of consumers. Consumers care about this, and producers will lose out if they don’t tap into it.”

 

5. Data and analytics

 

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OK, so it isn’t quite as glamorous as the likes of Quora or Pinterest, but “big data” and analytics looks set to be the next major tech trend to land in Australia.

 

There is a large market opportunity with the number of big companies that want a better way to store, sort and analyse their data and start-ups could fill the gap.

 

Entrepreneur and angel investor Sidney Minassian recently returned to Sydney from a spell in the US to launch his own big data firm, Contexti.

 

“I was looking for something that revolved around enterprises that was in a growing market and I realised that there was still a huge pain point around data capture and analytics,” he told StartupSmart.

 

“Big data is going gangbusters in the US and Europe and we’re about 12 to 18 months behind here. No one has mastered this area. Some companies dabble in advising about it, but not the whole implementation from a strategy.”

 

If you’re a subscriber to the view that the big trends taking hold in the US will eventually filter through to Australia, you’ll be heartened by the recent analysis by the Pew Internet Center.

 

As part of the US-based study, Sean Mead, director of analytics at Mead, Mead & Clark, Interbrand, suggested that big data is set to be the next tech boom.

 

"Large, publicly available data sets, easier tools, wider distribution of analytics skills, and early stage artificial intelligence software will lead to a burst of economic activity and increased productivity comparable to that of the internet and PC revolutions of the mid to late 1990s," he said.

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