Targeting premium opportunities Adam Cheetham Global Market Analyst - Industry Insights & Market Intelligence
Demand for red meat Beef consumption Sheepmeat consumption
Demand for red meat 5% 4% Beef and veal Sheepmeat Forecast 3% 2% 1% 0% -1% -2% -3% -4% 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 Global consumption is forecast to continue to grow Source: OECD- FAO
Beef consumption World beef consumption Australia s growing diversification Million tonnes cwe 30 25 20 15 10 5 0 2007 2012 2017e 2022f 2027f In 1994, top two markets accounted for 78% of exports Asia Europe North America Latin America MENA In 2017, top two accounted for 54% Almost all regions are expecting some level of growth with continued diversification for Australia Source: OECD-FAO, GIRA
million tonnes cwe Sheepmeat consumption World sheepmeat consumption 12 10 8 6 4 Developed >60% of consumption growth from Asia Developing Forecast Asia Middle East Australia s growing markets (Share of Australian sheepmeat exports) 1994 2017 21% 41% 19% 27% 2 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018f 2019f 2020f 2021f 2022f 2023f 2024f 2025f 2026f 2027f North America 11% 20% Sheepmeat consumption growth is expected from developing markets Source: OECD-FAO
Global red meat consumption is forecast to grow in a changing marketplace
Australia Snapshot Global Competition Importance of Premium
Beef: Snapshot Global production (62.9 million tonnes cwt) Exports (10.9 million tonnes cwt) Other US Other US Mexico 3% Brazil Mexico 14% Brazil Argentina India China China EU Argentina India EU Australia is a small producer that plays a big role in global exports
Beef: Global Competition Annual changes in production 000 tonnes 1,000 800 600 400 200 0-200 -400-600 -800-1,000 US Brazil India Forecast 2012 2013 2014 2015 2016 2017e 2018f 2019f 2020f 2021f 2022f Beef production is forecast to increase for all major competing beef exporters
Beef: Premium Supplier Importer share and value in China Vol Share % 50 40 30 7.3 Average value A$/kg 6.3 5.9 5.6 8 7 6 20 4.3 5 10 4 0 Australia NZ Brazil Argentina Uruguay China imports commodity and premium beef, making it a good example of the consumer differences 3
The focus for beef is on premium growth opportunities
Leading exporter Supply shift Increase consumer awareness
Sheepmeat: Australia s place in the world Australian Share of World Exports (Volume) 40% 38% 36% 34% 32% 30% 28% 26% 24% 22% 20% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018* Australia has established itself as a leading exporter of sheepmeat over the last 15 years *2018 YTD (Jan-Sept) Source: OECD-FAO, DAWR
Lamb supply equation has changed Slaughter versus Price Rolling Avg Monthly Slaughter 2,100,000 2,000,000 1,900,000 1,800,000 1,700,000 1,600,000 1,500,000 Lamb Slaughter Trade Lamb Price 700 600 500 400 300 200 Rolling Avg Trade Lamb Price 1,400,000 100 1,300,000 Jan-01 Aug-01 Mar-02 Oct-02 May-03 Dec-03 Jul-04 Feb-05 Sep-05 Apr-06 Nov-06 Jun-07 Jan-08 Aug-08 Mar-09 Oct-09 May-10 Dec-10 Jul-11 Feb-12 Sep-12 Apr-13 Nov-13 Jun-14 Jan-15 Aug-15 Mar-16 Oct-16 May-17 Dec-17 Jul-18 0 Will demand continue to outstrip supply? Source: ABS, MLA
Sheepmeat: consumer awareness 1. Awareness 2. Education 3. Competition Korea Japan 29 27 27 US 18 China KSA Australia 0 88 Don't know how to cook 1. % of consumers who bought lamb (source: MLA Global Consumer Tracker 2018 2. Reasons why not buy lamb global average (source: MLA Global Consumer Tracker 2018) 3. Sheepmeat exports by country (source: ABS, StatsNZ, GIRA, ADHB Beef & Lamb) Not familiar Don't buy but eat out Not available
The focus for sheepmeat will be on building awareness, education and differentiation
Global markets opportunities & challenges 1.1. Global red meat consumption is forecast to grow in a changing marketplace 2.2. The focus for beef is on the premium opportunities for growth 3.3. Sheepmeat momentum will focus on awareness, education and differentiation Targeting Premium Opportunities