THE Middle East is one of the more challenging markets for Australian beef.
At the same time, it presents substantial opportunities.
Increasingly high incomes, growing retail sophistication and a trend towards gourmet burger stores is combining beautifully with the very high profile and brand awareness of Australian beef to create plenty of potential.
This was the message from Meat and Livestock Australia’s Middle East and North Africa business manager David Beatty, speaking at a Global Markets Forum in Brisbane this week.
Last year, Australia shipped 30,000 tonnes shipping weight of beef to the region, down 23,000t on year before.
Of that, 56pc was frozen grass fed, 6pc frozen grain fed and the rest chilled product.
The value was in that chilled component, according to Dr Beatty. It makes up 55pc of our exports to the Middle East by value.
Australia’s aim should be to “maintain and defend” the premium, high value area around chilled beef, he said.
The Middle East was a large, complex region with varied consumer markets, that was particularly exposed to external drivers, Dr Beatty told the forum.
“Over the past two to three years, we’ve seen record low oil prices and that impacts government spending and confidence,” he said.
“For example, the Saudis have had to draw down on international revenues by $53 billion - it’s the first time in a very long period they have had to do that.”
Throw in regional conflict - Saudi Arabia spends more money on defence than they do on education and health combined - and the fact tourism is down and there has been a sizeable impact on consumer spending that has affected Australian beef.
Brazil has also gained re-entry to the market.
Technical barriers, meanwhile, continue to pose hurdles.
Dr Beatty said the Middle East would be close to Australia’s toughest battle on the non-tariff barrier front.
However, it’s not all bad news.
Households earning US$35,000 per annum, the benchmark income level to afford beef, are on the rise.
Forecasts are for that sector to jump from 3.8 million households last year to 7.3m in 2020.
“The other thing we see as a positive is that Australia represents only a small proportion of the beef that goes into this part of the world,” Dr Beatty said.
“About 80pc of beef into the Middle East comes from the big commodity players, Brazil and India. Australia is ranked third but only represents 6 to 13pc, depending on country.”
Dr Beatty said consumer insight research in the region, combined with what was being witnessed ‘on the ground’, was painting an optimistic picture.
One trend of particular note was the growth in the burger and quick service restaurant space.
“I recently counted 20 gourmet burger shops on the drive from the airport into Saudi,” he said.
Smaller, convenience shops are becoming more prolific.
“It’s a hot part of the world so getting shops closer to community is high on agenda,” Dr Beatty said.
And as cold chain infrastructure develops, it is likely continued growth in high-end retail will flow.
All that adds up to driving imported beef demand, particularly from a country where quality and halal integrity are well-recognised.
“Our brand recognition here is just superb,” Dr Beatty said.
“I can’t emphasise enough the importance of halal integrity.
“The halal industry here is now worth 1.4 trillion dollars and continuing to grow and Australia is seen as a leader in halal integrity.”
MLA marketing activities in the Middle East last year notched up some big wins in the social media arena, Dr Beatty said.
A retail promotion in partnership with Carrefour, one of the largest hypermarket and supermarket chains in the world and the largest regional beef retailer, resulted in a 17pc increase in Australian red meat sales across parallel periods.
A television series featuring personality Chef Tarek had a cumulative reach of more than 50m viewers.
“Another key focus over past 12 months was training and education with trade and retail,” Dr Beatty said.
“This is about letting people know what’s going on in Australia - why they were having to pay more for beef, along with getting our key messages out and talking about how best to cut, cook and display.”