Positive outlook for Australian beef exports to Korea

23 June 2017

Key points:

  • Korea is Australia’s third most valuable beef export market
  • Australian exports to Korea hit a record 180,000 tonnes shipped weight in 2016, worth A$1.36 billion FOB
  • Short-term factors impacting Korean beef import market in 2017
  • Long-term outlook for Australian beef exports to Korea is positive, underpinned by consumption growth, limited local production and tariff and quota free access by 2029.

Korea is the largest per capita consumer of beef in Asia and the third most valuable beef export market for Australia, a position it is expected to cement as it becomes increasingly reliant on imported product to fill the domestic production shortfall.

That’s one of the key insights from Meat & Livestock Australia’s (MLA) new report The Korean beef market: Insights and prospects from an Australian perspective, released this month as the second in a series of in-depth research papers analysing specific aspects of the global red meat industry.

This report analyses the key drivers of increasing beef consumption in Korea and outlines the implications of a rising but ageing population; falling tariffs on beef imports from all major suppliers; a recovering Korean cattle herd; and increasing competition from the United States.

Supported by short-term tight Korean beef supplies, high prices and enthusiastic buying from the Korean trade, Australian exports to the market moved to a record 180,000 tonnes shipped weight (swt) in 2016, worth an estimated A$1.36 billion FOB (free on board).

MLA Global Market Analyst, Tim Ryan, who co-authored the report with fellow analyst Adam Cheetham, said while a number of short-term factors would impact the Korean imported beef market in 2017, the long-term prospects for Australian beef exports to Korea were positive.

“The report closely examines long-term macro drivers, but there have been a number of factors, including new anti-graft legislation, the impeachment of President Park Guen-hye, concerns around import financing and job market uncertainty, that are impacting the Korean imported beef market in 2017,” Mr Ryan said.

“Combined with those factors, Australian beef production is forecast to contract again in 2017, when at the same time US production and competition is on the rise, meaning Australia may not be able to grow its share of the imported beef market in Korea in the short-term.

“The Korean Hanwoo beef herd has recently recovered from the bottom of a cyclical trough, registering the first year-on-year growth since 2013. Local beef production is expected to peak at almost 355,000 tonnes cwt by 2026, before receding towards 2030.

“Underpinned by economic growth and tariff reductions on imported product, per capita beef consumption is forecast to grow from 15.5kg carcase weight equivalent (cwe) in 2016 to 17.2kg cwe in 2030.  

“If Australia is able to defend existing market share, this will place beef exports to Korea at 180,000-200,000 tonnes shipped weight (swt) over the next decade but with prospects of 230,000 tonnes swt by 2030 – all of which would still exceed the record 2016 volume.”

To offset pressure from US beef in Korea, MLA has been working with exporters, distributors and Korean retailers to grow sales of Australian beef through a series of ‘True Aussie’ promotional campaigns.

MLA’s International Business Manager for Japan and Korea, Andrew Cox, said the front foot campaigns included working closely with Korean retailers, Homeplus and E-Mart Traders.

“Homeplus has 142 stores and is a loyal customer of Australian beef, with sales doubling over the past year,” Mr Cox said.

“To formalise the cooperative relationship, MLA and Homeplus signed a new Memorandum of Understanding in April, with both parties making a commitment to supporting each other to grow sales.”

Following the signing, Homeplus and MLA ran joint ‘True Aussie’ beef promotions in April and May.

MLA also facilitated a ‘True Aussie’ beef spring promotion event at all 11 stores of E-Mart Traders in April and May.

“E-Mart Traders offered 13 cuts during the promotion period, including steaks such as sirloin, tenderloin and striploin as well as selections for grilling and braising,” Mr Cox said.

“Sales of the 13 promotional Australian beef cuts reached A$3.7 million, up by 500% above regular sales.

“MLA has also recently activated new ‘True Aussie’ beef promotions at other large Korean retailers including E-Mart supermarkets, LotteMart and Lotte Vic Market.”

Read the full report here - The Korean beef market: Insights and prospects from an Australian perspective.

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