Maintaining a competitive advantage in the Middle East

24 May 2017

MLA’s International Business Manager for the Middle East and North Africa (MENA), Dr David Beatty, discusses how Australia maintains a competitive advantage beyond price in this large and complex region.

With Australia set to process 2.7 million fewer sheep and lambs in 2017 (compared to 2016) the supply squeeze makes it critical to maintain a competitive advantage in one of our most valuable export markets, the Middle East and North Africa (MENA).

Supply and demand dynamics

Australia is the biggest sheepmeat exporter to the region, supplying around two-thirds of all sheepmeat imported by MENA’s 29 countries. In 2016, Australia exported 111,016 tonnes shipped weight (swt) of sheepmeat to the region, valued at more than $636 million.

Sheepmeat is an important part of MENA diets, and is the most loved protein by consumers, particularly in the Gulf States. In Bahrain, for example, annual sheepmeat consumption is more than 25kg per person. To put that into perspective, Australians consume just under 8kg of sheepmeat per person a year.

Within MENA is the Gulf Cooperation Council (GCC), a political and economic alliance comprising Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman. GCC countries rely on imports for up to 90% of their food, making the region an attractive prospect for our global competitors.

We are seeing some importers in the region look to other countries including South America and parts of Europe to supply cheaper meat. Mutton from Argentina, Paraguay and Spain is appearing in Bahrain and Kuwait, along with lamb from Ukraine. Lamb from Romania has been seen in retail outlets in Jordan.

While they might be able to supply cheaper, lower quality product, many of these countries are in export infancy - they don’t have the established integrity of their supply chains.

A long-term relationship

When we can’t compete on price, we can rely on our quality, integrity and consistency of supply to keep Australian red meat moving into a region where long-term relationships and trust are paramount in business.

Australia has been in this market for close to 50 years and the message we must keep reinforcing is that our customers should stick with us, because while prices may go up and down, our product and quality remains consistent.

To do this, MLA continues to focus on education and training in the region, and promoting our red meat under the 'True Aussie' brand. This includes education of retail and trade on Australian systems, Halal integrity, food safety and security.

We continue to educate customers about why supply is tight, and attempt to shift the focus from viewing sheepmeat as a commodity to a high value product.

Up to 70% of Australian sheepmeat imported into MENA arrives as a carcase, and we need to get the market  thinking about high value, vacuum-packed chilled cuts and diversifying their product selection.

With education comes challenges to get consumers to understand differences in price, quality and consistency, and that includes in-store, point-of-sale promotion and educating butchers, as well.

Consumer trust is among the key factors which influence buying decisions and Australian lamb ranks very highly. The Global Consumer Tracking MLA undertakes indicates that in Saudi Arabia and the United Arab Emirates (UAE), the two largest import markets within MENA, 65% of consumers have a 'very positive' view of lamb. That’s significantly higher than consumer sentiment towards chicken, which was 50% and 46% in Saudi Arabia and UAE respectively.

Australia’s reliable and reputable Halal processing system is crucial for trade access into the Middle East. The Australian red meat industry has adopted strict procedures to ensure only certified Halal meat products are available for export, and all Australian red meat is branded as Guaranteed Halal. The Australian Halal Marketing Brand logo is used to relay this message.

Selling our story

Master Chef Tarek Ibrahim is MLA’s Corporate Executive Chef in MENA and the face of Australian lamb and beef in the region. Besides appearing in the media, he provides training to executive chefs and food services professionals on meat handling and cooking methods.

In the lead-up to the Muslim holy month of Ramadan this year (from 26 May), MLA is running strong Halal messaging with Chef Tarek as our face. The campaign is more than just about point of slaughter – it’s about promoting Australia’s high animal welfare standards and value chain systems, in the face of current uncertainty and mistrust of Brazil and other markets.

For the third consecutive year, MLA has a master butcher, Greg Butler, travelling through the region and working with trade and retail to pass on skills about cutting and displaying our 'True Aussie' product and branding, and how they should be conveying messages to the supply chain about why they have to pay a premium for Australian product.

We also continue to maintain a strong presence at trade shows including Gulfood, the world’s largest annual food and beverage exhibition. At Gulfood, MLA brings red meat exporters together under the 'True Aussie' brand. This year we featured 27 exhibitors. MLA is seen in the region as an independent source of knowledge for key stakeholders about supply, Australian production systems and outlooks.

The outlook

While economic growth prospects in the MENA region are strongly impacted by external factors such as oil prices and conflict, increasing urbanisation, growing disposable incomes, westernisation, population growth (currently around 2% per annum) and a large expatriate population are key growth drivers for imported red meat demand.

Global events including the UAE hosting Dubai 2020 - the World Expo, and Qatar hosting the 2022 FIFA World Cup will create renewed interest in the region.

2017 will be challenging, but the outlook beyond this year to 2021 is positive, and will coincide with sheepmeat supply from Australia becoming more reasonable. Economic growth and, in turn, consumer demand for sheepmeat in the region will depend largely on the direction oil prices move in the future – the IMF, World bank and Economist Intelligence Unit all expect a recovery in oil prices from the 2016 low.

More information

David Beatty
MLA International Business Manager, Middle East/North Africa

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