AUSTRALIAN beef and sheepmeat is far less exposed to a narrow basket of worldwide markets than other Australian ag products, or certainly, contending red meat export markets overseas.
That was among the indicate emerge from a marketing webinar held this afternoon by Meat & & Livestock Australia, under a series constructed around the idea of market durability.
General supervisor of worldwide markets Andrew Cox stated from a markets viewpoint, durability was specified by concentrating on the consumer and the customer– competitors from end-users, consisting of merchants, food serviced operators and customers– for offered beef, lamb and goatmeat that drives meat and animals costs.
“Without the money that is coming into the top of the funnel from these people, our industry doesn’t exist,” he stated.
MrCox stated one easy method to determine durability was figuring out just how much competitors we have for our item.
On the graphic listed below, Australian beef and sheepmeat export locations and split are compared to other Australian export products, consisting of barley, wool, cotton, red wine and iron ore.
“Taking sheepmeat as an example, there are 19 export destinations that together account for 95pc of Australian exports. Sure there is a large market share for sheepmeat in China (marked in red on the circle), but there are a host of other markets across the world, from the Middle East to Asia and elsewhere. It’s a diversified wagon-wheel,”Mr Cox stated.
“Beef is somewhat similar, with 12 export destinations accounting for 95pc of exports – with the top three (US, Japan, China) all very close in terms of size. With a host of smaller markets, it means we have great diversification in beef exports.”
This contrasts with the products represented on the right-hand side of the graphic, which are all far more reliant on a single market–China Iron ore depends on simply 3 export consumers for 95 pc of its exports, with barley, 5, and cotton/wool, 6 each.
“Their wagon-wheels are a lot less diversified,”Mr Cox stated. “Arguably that opens up a lot more reliance on a single market – therefore, higher risk.”
He stated among the fantastic advantages for Australian beef and sheepmeat exports was that they had actually had the ability to grow markets throughout the world regularly, and diversify the export mix, for years.
In a 2nd contrast, Mr Cox compared Australian beef and sheepmeat (this time consisting of domestic sales marked in green, along with exports), with other significant exporting countries consisting of Brazilian, Argentinean and United States beef, and NZ sheepmeat, in regards to market concentration/diversification.
“In those three major beef exporting nations, they have a strong reliance firstly on their domestic market (green), which obviously exposes them to political and economic risk within that market. But even when you look at these countries’ export markets, they tend to be much less diversified than Australian beef. Both Argentina and Brazil have a heavy reliance on China (red).”
In sheepmeat contrasts, NZ has a comparable varied market spread as Australia, however without a big domestic market at its disposal.
“Under a classic definition of resilience, Australian red meat actually looks quite good, in terms of market diversification, with less risk on a single market,”Mr Cox stated.
Similar concepts used to consumer diversity. No one consumer had the capability to determine to our market, so on this step of durability, we looked rather great, he stated.
He recommended there were 4 elements the Australian red meat market needed to take a look at, in developing future market durability in the worldwide market area.
The initially was customers and competitors.
“We really need to make sure we understand consumers globally, but we also need to look closely at our competitors. Pork and chicken, for example, remain very popular globally, and both industries have the ability to increase production rapidly, efficiently and cheaply if the market demands it. We need to make sure we are well positioned against those products, and understand what our benefit and proposition for purchase are.”
The second was trade impacts.
“It’s something we have no direct control over, but of course we need to make sure we are continually monitoring the trade dynamic and are aware of it. As an industry we’re always advocating for free and fair trade – open access to markets and consumers globally. We’ve had tremendous success with that over the past decade, but of course the future remains somewhat unclear in certain markets, and we need to make sure that we are together, as an industry, in advocating for access to these markets,”Mr Cox stated.
The 3rd element was the economy, and financial impacts.
“Even before COVID set in in March, the global economy appeared to be slowing down, but obviously the pandemic has now brought whole sectors of the economy to a halt. For us, that means customers who are exposed to events, like hospitality and tourism, are struggling badly, but also many consumers globally have less money in their pocket and are worried about their financial security. When it comes to resilience, we know Australian beef and lamb is not the cheapest product – so if consumers are looking to save pennies they might drop imported beef. So we need to make sure we continue to demonstrate the equity that we have in our brand, why our products are worth paying more for, and helping customers make money from our products via education over use of alternate cuts or novel techniques.”
The 4th element had to do with durability in supply.
“Resilience in our supply is also of vital importance to international customers, who want consistent access to a product. We need to make sure that we have resilience in terms of our systems, and are always focussed on providing a high quality item into international markets.”
MrCox stated as soon as details was collected on what would determine future durability, the market required to understand what to do with that details.
An example was the emerging middle class in Asia, which has actually driven our market for the previous number of years, and will continue to do so– and not simply in Japan, Korea and China, however Indonesia, Malaysia, Thailand, Vietnam and the Philippines.
“We need to understand those consumers, what makes them tick, and how our product might fit into their lives,”Mr Cox stated.
There was likewise a requirement to take a look at worldwide patterns that were affecting customer getting.
“An example is the huge explosion that’s occurred over the past few years in Japanese and Korean barbecue restaurants across Asia, and globally. That’s actually become a wonderful driver of Australian beef and lamb exports, so we need to understand consumers, and what makes them tick.”
Understanding innovation was likewise crucial. Marketers required to be familiar with innovation patterns, and how this was engaging with consumers. MLA had actually just recently utilized the Tic-Tok social networks platform to engage with customers, for instance, and had actually just recently run digital trade workshops with abroad consumers, to continue to engage and interact with consumers while travel limitations remained in location.
Signs of COVID healing provides ‘great platform’ for domestic market in 2021
In a different address in today’s webinar, MLA’s recently-appointed basic supervisor for marketing and insights, NathanLow, stated 2020 had actually been a ‘year like no other’ for customers in the face of the COVID pandemic, which had actually controlled over the previous 6 to 8 months.
“COVID has definitely changed us all, and changed consumer mindset,”Mr Low stated.
“Prior to the pandemic, top of mind was constantly the economy– whether that be home costs or rates of interest. Now, our minds are quite controlled by ideas associated with healthcare, whether that be COVID straight, or just health and wellness and living healthy way of lives.
“Health is now very much top of mind. Economic concerns now tend to relate to unemployment and what that means for long-term economic recovery.”
As individuals invested a lot more time in your home, through lockdown and travel limitations and border closures, usage behaviour had actually altered, Mr Low stated.
“Spending more time in your home, customers were searching for methods to amuse themselves. Within the food classifications, that implies customers were attempting more brand-new foods than ever in the past, attempting brand-new dishes, and making use of online purchasing and shipment increased considerably, with many individuals attempting it for the very first time (see chart).
“But equally, consumers’ mindsets was around belt-tightening, with budgets during shopping,”Mr Low stated.
“What we bought also changed. For the 12 weeks to early September (post the initial panic buying phase), quite remarkably, fresh meat was the fastest growing category at retail – significantly higher than all other segments in the supermarket. That’s even more impressive, and cannot be under-estimated, because we are also the biggest category in the retail space. Invariably, the bigger you are, the harder it is to grow faster than smaller categories. That’s a vote of confidence in the fresh meat category, and the role it plays in a healthy diet, in that they voted with their wallets when they did their shopping.”
“Where we went shopping did modification, however, as an outcome of COVID. Total retail sales for fresh meat revealed double digit development, however customers really went shopping regional a lot more.
“Local IGA’s and independents out-performed the majors in Coles and Woolies. And the trusty local butcher – a channel that’s been declining for a number of years on fresh meat sales, actually saw really significant growth, above 20pc, as people became increasingly concerned about supporting local businesses, as well as looking for environments that held a lot of ‘trust and information’.”
Total food service sales (dining establishments hotels and coffee shops) was considerably down, nevertheless, however within the higher food service sector, online shipment did increase considerably, increasing 12 pc. It is now a section of the market worth $750 million yearly.
As an effect of the customer modifications detailed above, MLA had actually moved its marketing focus– specifically as a portion of the 2020 project was tailored around the delayed Tokyo Olympics, Mr Low stated.
“We had a strong opportunity to tap into that home-cooking trend. We leveraged the number one rating TV show, Masterchef, which gained even higher ratings than usual, because more people were at home, watching TV. We gave them an education about new and innovative ways with affordable beef cuts to use in their increased home cooking repertoire.”
MLA likewise utilized the ‘star power’ of TELEVISION host Jessica Rowe to display and raise the dependable regional butcher as a hassle-free source of red meat, know-how and cooking pointers, driving the advocacy of beef and lamb’s quality qualifications to customers.
Demand, costs increase
As an outcome, with whatever that was taking place under COVID, need for red meat stayed extremely strong in retail, with beef (blue line) growing in line with the overall classification (black line), and lamb (orange) growing somewhat much faster.
“Interestingly, people were not so excited to be eating chicken during COVID – so relatively, a great result for beef and lamb,”Mr Low stated.
Even more exceptional, provided the historical greater rate premiums for beef and lamb over other proteins within the retail channel, has actually been rate efficiency. Chicken considering that COVID has actually stayed fairly steady, while lamb and beef have actually tape-recorded growing premiums this year, with need staying strong, in spite of greater ‘budget consciousness.’
“That’s a further vote of confidence in red meat and show the resilience in the marketplace,”Mr Low stated.
“Those results meant red meat held and grew market share this year. Beef has remained sold at a 36pc share of retail fresh meat sales, while lamb grew slightly to 12pc,” he stated.
Positive outlook for 2021
MrLow stated as the market specified to seek to 2021, the economy was currently beginning to enhance, with the expectation that by the end of next year, the Australian economy will be nearly back to pre-COVID levels.
“In certain states, economies have already started to recover. Retail spending is up, across the board in Australia. It’s really only been the impact of prolonged lockdowns in Victoria that has subdued some of the growth in retail environments,”Mr Low stated.
Despite the effect of extended closures in Victoria, retail costs in coffee shops and dining establishments is currently back to 80 pc of what it was pre-COVID.
“As borders start to open, Victoria starts to normalise, business and holiday travel starts to resume, we will see continued growth and recovery in the food service channel,” he stated.
Despite all this, Australian customers were ‘forever changed’ by the COVID experience, Mr Low stated.
“Health and wellness is quite at the leading edge of individuals’ minds, which provides fantastic chances to display the function that red meat plays in a healthy and well balanced diet plan.
“Importantly, consumers are also much more considerate about empathy and inclusion, and they are looking for marketers and brands to reflect that.”
“As we move into 2021, consumers are looking for us to come together a lot more than we have, and that is an opportunity for brands to showcase some of the great Australian values that we all know and love, which make us proud to be Australian.”
A Christmas “like no other”
Given the sense of seclusion that has actually taken place, Christmas 2020 was most likely to be a “Christmas like no other,” Mr Low stated, as numerous households come together around a table for the very first time in a ‘very, very long time.’
“It’s an opportunity for marketers and brands to tap into that sense of togetherness that people are looking for – and MLA’s upcoming marketing campaigns tap into that sentiment, in one way or another,” he stated.
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