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Australian Industries Set To Fly and Fall in 2018-19

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by Kim Do
Jan 08 2019

As Australian businesses enter a new year, industry analysts at IBISWorld have revealed which industries are set to boom in 2019, and which are likely to struggle.

“This year the standout industry performer is expected to be Ridesharing Services, with forecast revenue growth of more than 80%. Other anticipated strong performers include Liquefied Natural Gas Production, Organic Farming, Software Publishing and Foreign Banks,” said Kim Do, IBISWorld Senior Industry Analyst.

“Industries expected to decline over the period include Diamond and Gemstone Mining – for which revenue is anticipated to fall by nearly 25% – Hydro-Electricity Generation, Toy and Game Retailing, Black Coal Mining and Butter and Dairy Product Manufacturing. These contractions reflect the changing landscape of the Australian economy and are in response to issues such as changing consumer behaviour, diminishing resources and environmental awareness,” explained Ms Do.

Industries set to fly in 2019

Ridesharing Services in Australia

According to IBISWorld, the sharing economy is playing an increasingly important role in the Australian marketplace. A key example of this is the Ridesharing Services industry, which is expanding rapidly due to strong demand for convenient and cost-efficient inner-city transport. Rising smartphone penetration in Australia is increasing the number of active ridesharing service users, boosting industry revenue growth. In addition, the industry has benefited from decreasing regulation over the past five years, with the Northern Territory becoming the final state or territory to legalise ridesharing services in 2018.

Strong demand growth and relaxed regulations have encouraged many international ridesharing companies – such as Ola, Taxify and DiDi – to enter the domestic market and compete aggressively with Uber.

“To compete with Uber, these companies have offered heavily discounted rates for consumers and attractive commission rates for drivers. Despite rising competition, revenue for the Ridesharing Services industry is still expected to grow by 81.7% in 2018-19, to $286.3 million,” explained Ms Do.

OD5536 Liquefied Natural Gas Production in Australia  

IBISWorld expects revenue for The Liquefied Natural Gas Production industry to grow by 39.3% in 2018-19, to $43.5 billion, as two LNG projects under construction begin operating. Upon completion, the Ichthys and Prelude LNG projects will bring the number of LNG facilities in Australia to 10 and represent the end of the investment boom in the industry over the past decade.

These two projects are anticipated to boost industry exports from 61.7 million tonnes in 2017-18 to 74.9 million tonnes in 2018-19, with all industry revenue generated through sales to foreign markets.

“The major markets for Australian LNG are Japan, China, South Korea, and Singapore. Australia is expected to edge past Qatar as the world’s largest LNG exporter over the next two years, with Australia exporting more LNG than Qatar on a monthly basis for the first time in November 2018,” said Ms Do.

X0013 Organic Farming in Australia

IBISWorld expects the Organic Farming industry to record revenue growth of 18.2% in 2018-19, to $2.2 billion, as consumer preferences continue to shift towards organic produce.

“We expect demand for organic products both in Australia and internationally to continue growing strongly as consumers increasingly consider the health benefits and environmental effects of their food choices. In addition, improved presentation and product quality, particularly of fresh produce, will further boost demand for organic products over the year,” explained Ms Do.

Historically, fruit and vegetable growers have dominated the Organic Farming industry compared with organic livestock and poultry farmers. However, the industry’s structure has changed dramatically over the past decade as organic meat products have become mainstream, with demand for organic livestock and poultry products soaring over the past five years. 

“This surge in demand is expected to continue, with revenue for the Organic Livestock and Poultry Farming industry expected to grow by 26.3% in 2018-19, outpacing anticipated revenue growth of 15.7% for the Organic Crop Farming industry over the same period,” said Ms Do.

J5420 Software Publishing in Australia 

According to IBISWorld, revenue for the Software Publishing industry is expected to rise by 11.5% in 2018-19, as companies continue to benefit from greater adoption of Software-as-a-Service (SaaS) distribution models.

“Greater reliance on cloud computing has boosted the popularity of SaaS distribution models, as they allow publishers to offer interconnected systems on the cloud, giving clients access to services anywhere they have access to an internet connection. Atlassian Australia 1 Pty Ltd is the largest player in the industry and develops issue-tracking software and collaboration software used by enterprises and software developers globally,” explained Ms Do.

The recently passed Telecommunications and Other Legislation Amendment (Assistance and Access) Bill 2018 is expected to dampen industry growth, as some clients may become wary that Australian software publishers are no longer able to guarantee secure environments for databases and communications.

K6221b Foreign Banks in Australia          

IBISWorld expects revenue for the Foreign Banks industry to rise by 10.0% in 2018-19, largely on the back of an anticipated rise in interest rates on retail and business loan products, with an overall tightening in lending standards across the banking sector, especially in the wake of the Financial Services Royal Commission.

“Interest rate hikes are expected to be driven by funding cost pressures both locally and abroad. The gap between the Bank Bill Swap Rate and the cash rate has widened since the start of 2019 on the back of pressure from rate hikes overseas and a weaker Australian dollar. In particular, higher interest rates in the United States have pushed up funding costs for banks in overseas bond markets,” explained Ms Do.

Overall, the Foreign Banks industry has grown over the past five years despite the low interest rate environment for the majority of the period. Increasingly globalised businesses and investments have driven the industry’s growth over the period, with several Asian banks establishing subsidiaries and branches in Australia. Industry revenue is expected to total $18.4 billion in the current financial year.

Industries set to fall in 2019

B0991 Diamond and Gemstone Mining in Australia

IBISWorld expects Diamond and Gemstone Mining industry revenue to decline by 24.2% in 2018-19, as the Argyle diamond mine in Australia winds down production ahead of its planned closure in 2020-21. The Argyle mine, which is operated by Rio Tinto, is the last operating diamond mine in Australia and accounts for over 80% of industry revenue. The mine produced 10.9 million carats over the nine months through October 2018, down 1.0% relative to the same period in 2017.

“The Argyle mine’s closure represents the beginning of an extended downturn in the industry, as Australia currently does not have any new diamond resources to develop,” explained Ms Do. “In the event of a new discovery, developing a new mine will take at least 10 years. Consequently, industry revenue is anticipated to remain well below previous highs for the foreseeable future.”

D2612 Hydro-Electricity Generation in Australia

According to IBISWorld, revenue for the Hydro-Electricity Generation industry is expected to decline by 20.9% in 2018-19 due to falling wholesale electricity prices. Industry revenue is exceptionally volatile, with revenue determined by fluctuations in electricity prices and water availability. Lower wholesale electricity prices in Tasmania are anticipated to be the largest contributor to declining industry revenue in 2018-19.

“Over 80% of Tasmania’s electricity generation output comes from Hydro Tasmania’s numerous hydropower stations across the state. The average price of wholesale electricity in Tasmania is expected to fall from $87 in 2018 to $59 in 2019 due to high water availability in dams. In addition, new generation capacity is anticipated to come online across the entire National Electricity Market, increasing supply and placing downward pressure on prices,” said Ms Do.

G4243 Toy and Game Retailing in Australia

According to IBISWorld, the Toy and Game Retailing industry is expected to decline in 2018-19, primarily due to major toy retailer Toys ‘R’ Us (Australia) Pty Ltd ceasing operations in August 2018. Intensifying external competition is accelerating the industry’s decline, as more consumers purchase toys and games through online channels. Consumers are also increasingly opting to buy toys and games from department stores as part of a broader shopping experience, further eroding industry revenue.

“Prior to its demise, Toys ‘R’ Us was the largest retailer in the industry, with a market share of over 20%. However, the company’s decline has accelerated the rate at which department stores and online-only retailers have captured market share, as consumers have shifted their spending away from industry retailers,” said Ms Do.

Revenue for the Toy and Game Retailing industry is expected to fall by 15.9% in 2018-19, to $740.0 million.

B0601 Black Coal Mining in Australia

IBISWorld expects Black Coal Mining industry revenue to decline by 14.2% in 2018-19, as global prices decline for both coking and thermal coal. Australia is the largest exporter of coking, or metallurgical, coal, which is used in steel production, and the second largest exporter of thermal coal, which is used for heat generation. Although production of coking and thermal coal is expected to increase in 2018-19, a decline in spot prices is anticipated to outweigh higher production.

“Coking coal prices are anticipated to decline due to an increase in global supply and softening demand from China. Thermal coal prices are expected to decline as global economies continue to transition away from coal as part of increasing efforts to reduce greenhouse gas emissions. In addition, Australian coal production capacity is anticipated to remain limited due to slowing investment in the industry,” said Ms Do.

As a result of this uncertain outlook, coal projects are forecast to face difficulties in attracting investment finance over future decades.

C1133c Butter and Dairy Product Manufacturing in Australia

According to IBISWorld, the Butter and Dairy Product Manufacturing Industry produces butter, butter blends, anhydrous milk fat, buttermilk, condensed milk, yoghurt, flavoured milk, casein and whey. Although the industry is expected to benefit from greater yoghurt and flavoured milk sales, declining prices and production in other product segments are anticipated to contribute to industry revenue declining by 7.7% in 2018-19.

“Butter and butter-related product manufacturing accounts for approximately one-quarter of total industry revenue. The amount of butter manufactured has decreased significantly over the past two years as demand for other dairy-based products, such as milk powder and full-cream milk, have reduced the availability of milk fat for the industry. To make matters worse, falls in the global prices of butter and anhydrous milk fat are expected to further erode industry revenue,” said Ms Do.

Drought in Australia has also reduced the supply of milk, with the industry facing the unusual and negative combination of both falling volumes and prices.


IBISWorld Industry Reports used in this release:


For more information, to obtain industry reports, or to speak with an analyst, please contact:

Kim Do

Strategic Media Advisor – IBISWorld Pty Ltd
Tel: (03) 9906 3641 Mobile: 0422 773 995