Argyle Case study for the development and China launch of chilled retail ready Australian meat (Stage 2)

Summary

Argyle Foods Group Pty Ltd a producer led brand owner, has developed a ‘Farm Gate to Plate’ supply chain model for an initial 30 product range offer into China, Taiwan and Hong Kong. 

The purpose of this stage 2 project is to capture key lessons learned in the development and sustainability of an end-to-end supply chain for the Australian red meat business into China.  

A design led innovation method was adopted to:

• explore the problem regarding supply, range and storage conditions using freeze-thawing
• converge on practical business outcomes regarding traceability from farm and on-pack to share with the Australian red meat industry.  

Objectives

The overarching project was intended to create value for the red meat supply chain by: 

• demonstrating a digital traceability system for the red meat industry
• building a highly efficient retail ready range of beef products and improving the value chain to expand current meat offer with premium value-added suite of products
• securing several customer product ranges across China in over 400 stores
• demonstrating iterative learning by presenting a case study that investigates how to validate the Australian origin products and service value propositions and its product-market fit 
• determining the value created and captured along the supply chain with a cost benefit analysis.

Key findings

• Argyle successfully launched over 30 beef products - completing the requirements of securing six customer product ranges across China in over 400 stores. 
• Projected sales in 2021 of 2,000 head ($3m) are forecasted to grow in 2025 to $115m with 15,000 head (2,400 MT) – whilst taking into consideration the negative impacts on business from the Covid-19 pandemic. New Business channels have arisen as a reaction to the pandemic, namely online platforms. 
• There was strong growth in Carrefour Taiwan and Home + (e-commerce platform in Hong Kong) following imposed China restrictions during the project delivery timeline and impost in supplying China Walmart.
• Increased supply chain efficiency, reduced wastage (Markdowns and dumps were ~25% of sales) which the Australian vertical producer must pay for to maintain ranging in retailer and increased market penetration (competition against other country products) were the keys to success from the project
• When educating the consumers, the demand of the products grows.
• With the correct development programs, more commercial opportunities for the brand arise. 

Benefits to industry

The benefits and implications to the Australian red meat industry from this project include:  

• a case study describing the value, provenance, safety and authenticity of Australian meat in export markets
• a product range and supply program underpinned by Biosecurity improvements through animal traceability and movements linked to an improved National Livestock Identification System (NLIS) 
• asset value measurement and protection in the supply chain to enable access to alternative and more efficient trade finance
• with imminent herd rebuild following sustained drought and negative cash flow implications on ability of producers restock – a demonstration linking a digital framework of production and sales demand 
• a case study demonstrating market interest for protected and improved market access for Australian red meat exports
• the initiation of a producer led model for livestock trading, management, marketing and financing for net improvements across industry efficiency, value and sustainability. 

MLA action

MLA is using this case study to demonstrate the benefits and promote data culture for other producer-led brand owners and highlight the opportunities that exist for high value exports.

MLA will continue to monitor sales performance and key insights derived from international markets for Australian branded products – including the ‘Food without Fear’ driver in China.

Future research

Implementation steps have been identified by Argyle to work with red meat supply chains to scope the development of a digital integrity system from uniquely identified cattle to final retail products.  

This includes roll out of improved finance on KPMG Origins platforms that underpin blockchain for the traceability platform providing financiers (or insurance) with increased visibility to standardised and trusted inventory information.

Related resources

• Argyle Meat case study, video
• Farm Gate to Plate – Preliminary study of Argyle’s China Retail Ready Solution, MLA final report, 10 February 2020
• China market, MLA fast facts