Global Markets Forum highlights
31 May 2018
Australia is well placed in the global beef market but competition is intensifying, with all major beef exporting countries entering a unique period of forecast production growth.
That was among the key messages delivered at MLA’s Global Markets Forum at Beef Australia 2018, where MLA’s market specialists from around the world shared their insights with 200 beef producers and industry stakeholders.
MLA General Manager – International Business, Michael Finucan, highlighted the challenges and opportunities for Australian beef globally, and MLA’s global markets strategy.
He cited growing competition from South America, India and the United States as a threat, while other challenges included protectionism, particularly in the US, market access and changing consumer demands.
On the upside, Michael said the growing middle class in Asia presented great opportunities, with the number of households in the south-east earning more than US$35,000 expected to double in the next four to five years. Households that earn over US$35,000 is used as an indicator of those consumers that can afford Australian beef.
MLA has just started a major market research study in South East Asia covering eight countries and 29 cities, to identify the most attractive future growth cities, the profile of these cities, who our future Australian beef customer is and what they want.
Japan & Korea
With increased production, the US is aggressively targeting our traditional strongholds of Korea and Japan. Japan is the biggest beef market for both Australia and the US.
In both Japan and Korea, country of origin is the number one decision driver for consumers when buying beef. However, Australian beef remains a clear favourite among consumers, and is ranked higher than the US in terms of preferred country of origin, guaranteed safe to eat, and consistent quality standards.
In China, the economy remains strong with growth ambitions as it shifts to a consumption-driven economy and discretionary spending rising fast. Regardless of wealth, purchase behaviour is still driven by price, familiarity and availability. Beef is China’s most import-reliant protein, and beef import demand in China is forecast to grow from just under 2 million tonnes carcase weight equivalent (cwe) to over 2.5 million tonnes cwe by 2027.
EU & UK
In the EU, negotiations on an Australia-EU FTA will start in the next couple of months, providing a once-in-a-generation opportunity for Australia to improve market access. The EU offers huge potential - Australia’s current export quota is 7150 tonnes in a market that consumes 8 million tonnes of beef. Households earning a disposable income above US$35,000 is expected grow by 7% to more than 105 million households by 2021.
And with the Brexit process underway, Australia will start negotiating a trade deal with the UK from April 2019.
In parts of the Middle East and North Africa (MENA) region, some stabilisation – both economic and political – is occurring, providing a greater opportunity to build the premium end of the market. With stabilisation comes growth in tourism, and tourism numbers are forecast to grow across many cities. In Dubai alone, numbers will grow from 16.8 million in 2018 to 20.6 million in 2022. Urbanisation in most countries means that modern retail is on the increase and consumers are more prepared to purchase from organised retail channels. Exposure to western styles of cooking and consuming is also increasing the number of steak restaurants in the region.
In North America, where foodservice is a key target for MLA in promoting Australian beef, retail opportunities are growing. Chilled grassfed exports have increased in the last decade and now account for 25% of total beef exports to the region. Millennials and urban eclectics is a target market in North America – they’re wealthy, healthy and digital-savvy, and most likely to be 25 to 49-year-old women. Awareness of ‘country of origin’ remains a challenge - origin is not considered as important by consumers compared to themes such as freshness, safety, value and nutrition.
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