Feasibility study for Australian Made Ready Meals for Multi Markets

Summary

Red meat and livestock exports totalled approximately $13.3 billion in 2016-17.[1] Fresh and frozen meat accounted for 89% ($11.9 billion) with the remainder being live exports and co-products. Australia is one of the leading exporters in terms of quality and value. Diversifying export markets has promoted competition among these markets and in turn, supported price negotiations. Global demand for red-meat is increasing at 2.1% which appears positive for Australia. However, competition in the international market place is intensifying with many countries seeking to grow their share in higher value markets. The need to enhance market intelligence and find new ways to maintain competitive advantage is increasing.

In contrast, the global prepared meals sector was valued at US$83.4 billion in 2016 and is forecast to record a CAGR of 3.5% during 2016-2021 to reach US$99 billion. More interestingly, demand for convenience and prepared meals is growing much faster than this throughout Asia at between 6.4 and 8% (CAGR) for countries Australia has existing market access to, and as much as 9.2% CAGR in countries like China that are yet to grant market access for value added meat products[2].

Several Australian meat companies have been actively growing their capacity as value added food processors including launch of several further processed meat products, delivered directly to domestic consumers. A recent initiative to build value-adding capability for export markets is a significant opportunity to increase the value of Australian red-meat.

Consumers demand for convenience and nutrition are increasing globally and so too are their expectations of red-meat. As higher value finished products are developed to meet consumer demands, there is an opportunity to shorten the supply chain and create much of that value in Australia where it is more likely to benefit the Australian industry. Recent work shows it is possible to increase profit from value-added meat products by between 2 and 3.5 times that of lesser value chilled and frozen meat cuts depending on the value chain.

This project has the potential to value-add a significant portion of fresh Australian red meat. However, detailed in-market intelligence and consumer insights are required, along with smart business models to support new initiatives like this. There are a few gaps in understanding how best to design a business that will meet the consumers' needs well beyond the next 5-10 years. Identifying where to play and how to win are critical to realising these value opportunities and was the focus of this project.

The main objective of the project was to increase the value of Australian branded red-meat products by creating a new business model that would enable more competitive connection with the end consumer. Ways of increasing the effectiveness of the supply chain through to the end consumer were considered. New delivery models were explored in conjunction with plant and product design. A robust design led method was utilised to uncover new value opportunities, coupled with a process that quantified the profit drivers in each section of the supply chain. This resulted in a business design aimed to deliver new value opportunities while reducing downside risks.

Desktop research was conducted, market data analysed and mega trends in the global food industry were considered. These data sets supported the in-depth market investigation and were used to populate the sales forecasts by product for each country and market segment considering the different business model opportunities. Business cases were developed with sensitivity modelling to identify best business design and to support strategy development to create greater increases in value for Australian red-meat.

This final report provides a summary of the activities undertaken and findings completed.