Foreign Marketing Program Update AR 1713-FM

Transcription

1 Foreign Marketing Program Update AR 1713-FM January 2017

2 FY2017 is providing a multitude of opportunities for U.S. beef in the international markets and exports are increasing at a rapid pace. After challenging marketing and access issues and low U.S. production which underpinned higher prices in 2015 and through part of 2016, U.S. beef is again gaining the upper hand. As production has increased, USMEF export programs have focused on moving more product volume to markets overseas. In November 2016, the percentage of beef exported reached 15% of total production, the highest level since Now is the opportune time to launch and maintain aggressive international campaigns and activities, especially as the U.S. and Australia have traded places on the production front. While beef production continues to increase in the U.S., Australia s drought-induced production surge has finally ended and its herd is at the lowest level in decades. They are now in a rebuilding phase. At the same time, Canada s rebuilding is stalling and there are tight domestic supplies in most of the main import markets. Though the U.S. dollar is still strong, it is off its peak and these factors are converging to put the U.S. in a very competitive standing on a wider variety of cuts. Marketing efforts continue to develop and encompass a three-pronged strategy of defending share, displacing competition and developing new opportunities in an effort to further expand U.S. beef s market presence and export volume. Chilled U.S. beef is also playing a more significant role in advancing market share and increasing premiums in many of the targeted export markets. November 2016 (the most recent statistics) was a very strong month for beef exports, which totaled 115,535 mt up 20 percent year-over-year and the largest since July Export value increased 21 percent to $619.1 million, the highest since December This pushed January-November export volume to 1.07 million mt (up 10 percent year-over-year) valued at $5.72 billion (down 1 percent). November exports accounted for nearly 15 percent of total beef production and 11.7 percent for muscle cuts only. January-November exports accounted for 13.5 percent and 10.3 percent, respectively up from 13 percent and 10 percent during the same period in Beef export value per head of fed slaughter reached a 2016 high of $ in November, up 5 percent from a year ago. For January through November, per-head export value averaged $ JAPAN Following a down year in 2015, U.S. beef exports to Japan continue to stage a very impressive rebound. November exports to Japan surged by 63 percent in volume (23,598 mt) and 58 percent in value ($149.5 million) from a year ago. For January through November, export volume increased 24 percent to 237,234 mt. This included a 44 percent increase in chilled exports to 102,090 mt. January-November export value to Japan increased 16 percent to $1.39 billion. With 40 percent of Japan s total beef market dominated by domestic (followed by 40 percent Australian), USMEF sees tremendous growth opportunities to displace the competition. This is being accomplished with new aggressive and intensified demand initiatives. USMEF s push for U.S. thick cuts with innovative cooking and merchandising promotional initiatives has made significant inroads in all sectors and is helping to drive larger volumes, especially at retail, compared to traditional thin sliced beef cuts. This is also succeeding in displacing Australian round cuts. Additionally, training and support programs highlighting new merchandising techniques and cooking styles, including Thick Cut American Beef and American BBQ have greatly expanded sales of U.S. beef in regional supermarket chains, displacing domestic product as well as foreign competition. These regional retailers continue to work with USMEF in adding more beef cuts and utilizing new merchandising ideas, which is helping the U.S. industry win back market share in Japan. In September 2016, Japan s imports of chilled U.S. beef outpaced Australian chilled beef for the first time ever. Japan s October imports of chilled U.S. beef exceeded chilled imports from Australia for a second consecutive month.

3 KOREA Beef exports to South Korea have already set a new value record ($929.3 million, up 25 percent), breaking last year s mark of $847.4 million in just 11 months. When 2016 results are final, Korea will become the fifth market (joining Japan, Mexico, Hong Kong and Canada) in which U.S. exports have exceeded $1 billion in a single year. January-November export volume to Korea was 158,947 mt, up 38 percent year-over-year. This included a 37 percent increase in chilled beef exports to 20,325 mt. The increase of U.S. beef s share at the key retail chains is the most prominent ongoing success of the past and current fiscal years. U.S. beef has taken the lead for chilled and frozen. For example, the sales volume of U.S. chilled beef in Korea s top three retail chains Emart, Homeplus and Lotte Mart increased 101 percent year-on-year during FY2016. Starting with a few Korean BBQ items such as Chuck eye roll, top blade, chuck flap tail, boneless short rib, boneless chuck short rib, retailers shifted the origin of fast these selling, high volume items (especially, bone in chuck short rib) from Australian to U.S. Retailers also expanded the value-added mix, with pre-packed sliced fresh U.S. beef items as well as the marinated Bulgogi items using U.S. chuck roll and clod. Additional, U.S. steak items such as strip loin, rib eye and prime grade chuck flap tail merchandised in thick steak cuts were also launched in retail cases. Leading national retailers have also debuted several private label and branded programs with U.S. beef as a means of further differentiation. This will ensure a solid place for U.S. beef in the meat case for the foreseeable future. Similarly, after much work by USMEF, Costco has committed to shifting to 100 percent U.S. beef. These 13 stores sell roughly 100 mt of beef per store per month, which translates to an additional 10,000-14,000 mt annually. With the increasing number of U.S. beef end users in the market and the rate of consumer confidence in the product now at 54 percent, Korea s imports of U.S. beef will finally surpass imports of Australian beef. In fact, for the month of November, Korea s imports of U.S. beef (14,759 mt) exceeded Australia (11,681 mt). MEXICO Despite a persistently weak peso, beef exports to Mexico continue to strengthen in volume, which was up 8 percent through November to 217,790 mt. Export value to Mexico has trended lower this year, and through November was down 10 percent to $891.1 million. Despite challenges with the weak peso exchange rate and higher U.S. prices, U.S. beef is performing well in Mexico. In FY2016 Mexico remained a key market for U.S. beef, with export opportunities enhanced by declining domestic production as the local cattle industry rebuilds after years of devastating drought. USMEF has leveraged these market factors with the improvement in U.S. beef s supply and moderating prices to win back customers in Mexico especially by promoting economically priced alternative cuts such as rounds, which add quality and variety to menus and meat cases. Driving further growth, USMEF collaborated with in-market partners to tap into new market segments and channels with major importer/processor/retailer accounts. For example, working with a newly established account, Grupo Bafar (a major importer and further processor which also owns about 250 small convenience stores throughout Mexico), USMEF set up a joint promotion in 87 Carne Mart meat boutique stores located primarily in the Yucatan and Chihuahua regions. Promoting a product mix of nine different U.S. beef cuts, results were outstanding with year on year U.S. beef sales up 37 percent in volume. TAIWAN November was another very strong month for beef exports to Taiwan, pushing January-November results 22 percent above of the 2015 pace in volume (39,299 mt) and 10 percent higher in value to $319.5 million already setting a new full-year value record. The U.S. holds two-thirds of the chilled import beef market in Taiwan, the highest share of any Asian market.

4 USMEF s promotion of U.S. beef in various dining cultures including beef bowl, burgers and BBQ to develop greater opportunities for more new cuts had a clear carryover effect for U.S. chilled beef in Taiwan s retail sector. For example, USMEF worked with the major supermarket chains (1,255 outlets) to further reinforce consumers association of the summer BBQ season with chilled U.S. beef. Sales of popular U.S. beef BBQ items at participating outlets jumped 149 percent compared to the same period last year. U.S. beef s presence at Costco also strengthened as U.S. beef sales at the retail giant continued to grow. Through August 2016, Costco saw a 30 percent uptick in U.S. beef sales compared to the same period last year. CENTRAL AMERICA/DR U.S. beef exports to the Central America region, including the DR increased 6 percent in volume to 16,575 mt, with value up 1 percent to $114.4 million. Robust sales to Guatemala (3,980 mt/+25 percent), Panama (2,023 mt/+26 percent), Costa Rica (1,969 mt/+ 14 percent), and Honduras (1,805 mt/+72 percent) helped propel this growth. USMEF s retail marketing efforts in this region, including efforts to educate supermarket customers on proper grilling and cooking methods for U.S. beef. Consumers in Central America have a strong preference for a few selected cuts, so USMEF is focused on education and promotion of additional beef items. U.S. beef has maintained a strong retail presence over the past year at Walmart stores in Guatemala, Costa Rica, Nicaragua, and El Salvador, with several new U.S. cuts being launched during this period, including tri-tip and the California cut. Further channel development involved the rollout of USMEF s new continuous improvement program at stores like Super Selectos, Supermercados (Paiz, la Union, Mas x Menos, Despensas de Don Juan) and Walmart. This included the introduction of affordable cuts of U.S. beef along with guidance on effective merchandizing strategies, proper handling and cold chain management. Similarly, newly targeted Ramos Meat Boutiques have been promoting U.S. beef since its launch there in May SOUTH AMERICA U.S. beef exports to South America through November 2016 were up 10 percent in volume (19,608 mt), led by strong growth in Chile (9,659 mt/+17 percent) and Colombia (3,622 mt/+102 percent). Value was up 1 percent at $82.3 million. Mutually beneficial partnerships with committed importers/distributors in South America proved to be invaluable as targeted accounts at all levels in the key markets of Chile, Colombia and Peru recognized the unparalleled quality of U.S. beef. USMEF partnered with these companies supplying the retail sector to devise strategies to differentiate U.S. beef at the point of sale. Throughout the year, targeted retailers, including Walmart, Cencosud, Tottus and Unimarc offered a wide assortment of U.S. beef and identified their U.S. sections at the point of sale at their premium outlets. In August 2016, Walmart (Lider stores) in Chile launched a U.S. beef promotion that ran through December. Sales results are pending. MIDDLE EAST U.S. beef exports to the Middle East through November 2016 were down 12 percent in volume (95128 mt) and 28 percent in value ($195.4 million). The United Arab Emirates (UAE) is the leading market in the region for beef muscle cuts, with Jan-Nov exports increasing 5 percent year-over-year to 5224 mt. Export value to the UAE fell 1 percent to $59.8 million. USMEF recently participated in an event celebrating the return of U.S. beef to Israel, where it is available for commercial distribution to restaurants, hotels and supermarkets following an agreement signed earlier this year between USDA and the Israeli Veterinary Services. Israel, which had been closed to U.S. beef since the December 2003 BSE case, re-opened in 2016 to U.S. beef

5 products that meet Israel s requirements for kosher certification. There is optimism that the U.S. can gain some of the market share in Israel. Distributors, retailers, and HRI establishments will need to be educated on the attributes of U.S. beef, and shown that there are high-value cuts like the flatiron that can be produced from the forequarter and successfully added to menus. Marketing will first focus on high-end butcher shops, restaurants and hotels, but could later expand to other vendors. RUSSIA & SURROUNDING REGION Russia remained closed to U.S. exports, however, USMEF remained active in the region, maintaining contact with key accounts in the market and expanding outreach to capitalize on opportunities for U.S. beef among the most promising countries in the region. Much of USMEF s work in markets like Ukraine, Uzbekistan, Armenia, involved both comprehensive entry-level education and collaborating with the small but growing pool of current loyal beef users to make the product visible to other players (especially among the trade and HRI sector) and accessible for many more consumers. Leveraging demand to drive supply, USMEF wants targeted consumers to be aware of what the U.S. has to supply so that they start asking HRI and retail outlets to provide it, thus increasing supplies to build further demand. Initially, many accounts in these target markets have been conservative with their U.S. beef orders, taking only primal cuts, until USMEF used educational seminars and workshops to make alternative cuts more popular. At the trade level, the ongoing series of courses and classes provided by USMEF has yielded results, with importers diversifying their U.S. beef portfolios with brisket, top blade, flap steak and sirloin. Some importers have also indicated a willingness to explore further opportunities with U.S beef at retail both traditional and online. CARIBBEAN With growth across much of the Caribbean, including the major markets like Jamaica (4,242 mt/+10 percent), the Bahamas (3,005/+ 1 percent), and Trinidad and Tobago (1,968/+5.8 percent), U.S. beef exports to the region through November 2016 were up 8 percent in volume (15,648 mt) and 5 percent in value ($102 million). One of the challenges of familiarizing Caribbean importers and their staff with the quality management system of U.S. red meat is that the actual sales call is made by staff once removed from the buying position. These frontline sales representatives usually lack the personal in-depth exposure to the actual products and the U.S. industry afforded those in the company s purchasing department. To tighten this connection, USMEF hosted a team of importer/distributor sales representatives, the people who actually do the downstream selling, from the Caribbean to the U.S. for a first-hand look at U.S. beef production processes and impactful marketing strategies. By exposing sales staff to the U.S. system for managing quality, introducing them to new cuts of beef, and helping them learn how to showcase the latest in merchandising ideas, the entire distribution team is part of the sales and marketing efforts for USMEF. ASEAN Fueled by a resurgence in shipments to Indonesia, January-November beef exports to the ASEAN region increased 32 percent in volume (26,003 mt) and 8 percent in value ($138.6 million). Exports also posted impressive gains in Vietnam, helping offset lower exports to the Philippines. U.S. beef exports to Indonesia are well-positioned for a strong finish in 2016 following the recent easing of import restrictions in an effort to address the tight beef supply situation. U.S. export growth also received a significant boost when variety meat items were added to the eligible product list. (After no exports of hearts to Indonesia last year, Indonesia is now the fourth largest export destination for U.S. hearts year-to-date, following Mexico, Egypt, and Hong Kong.) As more U.S.

6 cuts have been allowed in the Indonesian market, USMEF has partnered with targeted importers to leverage U.S. beef s growing strategic advantages with the many emerging opportunities. This ongoing outreach to food industry professionals has helped keep U.S. beef top of mind among key chefs and important retail buyers throughout the year. On a recent trade servicing trip to Indonesia, USMEF staff met with targeted accounts to discuss this exciting news and collaborate on the tremendous promotional opportunities for U.S. beef. As a result, many traders are buying as much U.S. cow steak cuts as they can. The only constraint is the limited number of approved U.S. cow plants able to ship to Indonesia. In addition to the cow cuts, Indonesia traders are purchasing for the first time in recent memory U.S. hindquarter cuts, such as knuckles. CHINA/HONG KONG January-November exports to Hong Kong were lower year-over-year (100,412 mt, down 6 percent, valued at $608.4 million, down 16 percent). U.S. beef exports to China are currently ineligible.