The winners and losers in business for 2015

BUSINESS information analysts at IBISWorld expect 2015 to be a boom year for a wide array of industries.

Coal seam gas extraction will provide the benchmark for others to chase, with online grocery sales, fast fashion, private equity and hydroponic crop farming also expected to soar in the coming year.

While some industries are set for a bumper year, there are many that will be dreading the year ahead.

Petroleum exploration is tipped to be the biggest loser in 2015 as oil prices plunge, while mining and construction machinery manufacturing, cigarette manufacturing, motion picture and video distribution, and electricity distribution are all expected to endure a difficult year.

Industries expected to fly

  1. Coal seam gas extraction
  2. Online grocery sales
  3. Fast fashion
  4. Private equity
  5. Hydroponic crop farming

Industries expected to fall

  1. Petroleum exploration
  2. Cigarette and tobacco product manufacturing
  3. Electricity distribution
  4. Mining and construction machinery manufacturing
  5. Motion picture and video distribution

Coal Seam Gas Extraction in Australia (source: IBISWorld industry report OD5529)

The coal seam gas extraction industry is currently undergoing a significant transformation. Industry revenue is forecast to rise by 148.0% over the next year, to reach $1.83 billion.

While coal seam gas projects have become more viable due to new and improving extraction techniques, it is the development of export capabilities that is expected to drive rapid industry growth.

According to IBISWorld senior industry analyst David Whytcross, "The opening of the domestic east coast gas market to the international market is expected to push gas prices higher - particularly as Australia is well-positioned to meet strong demand from Japan, China and South Korea, which are the world's three largest natural gas importers."

Supply to these markets from considerable coal seam reserves in Queensland will be boosted in 2015 as the Curtis Island LNG plant becomes operational.

"Once operational, the Curtis Island LNG plant will be the world's first project to turn coal seam gas into liquefied natural gas, which will be a boon to operators of newly developed coal seam gas fields in the Cooper Basin," said Mr Whytcross.

Online Grocery Sales in Australia - (source: IBISWorld industry report OD5527)

Online grocery shopping has been slow to catch on within the Australian market, even as local online shopping as a whole has exploded in popularity over the past five years.

"While grocery shopping is not a difficult undertaking as there are supermarkets scattered across all pockets of the country, time-conscious consumers are increasingly realising the benefits of online grocery shopping," said Mr Whytcross. 

"The increased prevalence of click-and-collect options and greater comfort with purchasing perishable items like fresh fruit online are expected to boost industry revenue over the coming year," added Mr Whytcross.

Fast Fashion in Australia - (source: IBISWorld industry report OD4172)

Fast fashion stores are expanding rapidly across Australia.

While the industry was previously dominated by Australian mainstay Cotton On, international operators including Zara, Topshop, H&M, Uniqlo and Forever 21 have taken the country by storm.

Zara is expected to continue its phenomenal growth, while 2015 will be the first full calendar year of Australian operations for H&M, Uniqlo and Forever 21, leading to projected industry revenue growth of 10.4% over the year.

"Zara posted exponential revenue growth with extremely high retail profit margins over its first three years of operation in Australia, and IBISWorld expects this growth to continue in 2015," said Mr Whytcross.

"The rousing success of the grand openings of H&M and Uniqlo in Melbourne in April 2014 is expected to result in similar growth for these stores, which will generate significant growth for the overall fast fashion industry."

Private Equity in Australia - (source: IBISWorld industry report X0020)

2014 was a highly successful year for the private equity industry, which is expected to achieve similar prosperity in 2015.

Private equity firms generate revenue from management fees paid by outside investors and the gains made on investing their own funds.

Mr Whytcross noted that merger and acquisition (M&A) activity is expected to rise in 2015.

As private equity firms will play a key role in upcoming M&A deals, this should result in growth in management fees earned and potential investment returns, ultimately leading to forecast industry revenue growth of 10.1% for the year.

"Growth in M&A activity in Australia coincides with greater global interest in M&A, as Europe and particularly the United States are emerging from a prolonged period of crisis and subdued growth," said Mr Whytcross.

Hydroponic Crop Farming in Australia - (source: IBISWorld industry report OD4155)

Hydroponic crop farming holds a relatively small place in the overall scheme of Australian agricultural production, but is undergoing strong and steady growth.

Water conservation is the driving force behind hydroponics, as hydroponically grown produce typically uses only one-fifth the amount of water that soil-grown produce requires.

"In addition to water conservation, hydroponics allow for higher production yields of high-quality produce," said Mr Whytcross.

"Vertically tiered plants enable greater productivity, while greater quality control, faster plant growth and longer growing seasons offset the added cost of hydroponic systems over conventional agricultural practices."

According to Mr Whytcross, rising capacity in the hydroponic crop farming industry will meet sustained demand from retailers and consumers in 2015, and lead to revenue growth of a forecast 5.6% for the year.

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