JAPAN and Korea’s powerhouse beef market status for Australia looks to be on solid ground despite aggressive United States’ interest and the impacts of local upheavals.
Insights from Meat and Livestock Australia’s international business manager covering the region, Andrew Cox, indicate there are some fantastic consumer trends boding well for Australian beef.
The value consumers in these two markets place on country of origin beef is still a dominant driver of purchasing trends.
The subject of Korean retail giant Costco, a client Australian beef has invested heavily in nurturing, switching its account to US beef was described as disappointing but probably not surprising by Mr Cox.
There was no doubt the Americans had earmarked both Japan and Korean exports as a key goal for their ramped up beef production and already they were aggressive and active in export price offers and marketing, he said.
Speaking at a beef global markets forum organised by MLA in Brisbane this week, Mr Cox said the US was able to put 48 per cent more chilled beef exports into Japan last year but their total value shrank by 10pc.
US beef is cheaper and those who use both Australian and US product can see they can make a bigger profit by going America’s way at the moment.
“Before BSE (Bovine Spongiform Encephalopathy or mad cow disease detected in US herds) the Americans had the lion’s share of the Japanese market and now that they are back, we have been able to maintain our share but we’re under pressure,” Mr Cox said.
“They have moved into a new phase in their marketing, away from trust towards quality - ‘If you think beef, think American’ is their typical message.”
Longer term, as Australia’s supply challenges start to ease, the brand that has been built for our product in these high-end markets will serve us well, consumer research - and trends - are showing.
“Australian beef dominates in Korean consumers’ hearts and minds. We have a very valuable brand,” Mr Cox said.
Japan has once again claimed the title of Australia’s largest beef export market by both volume and value but it would take a concerted effort to stay on top here, he said.
It boasts a large and wealthy population - 24.5 million households last year above the $35,000 per annum income threshold used as a benchmark for purchasing beef and by 2020 that is predicted to be 33.5m.
“Japanese consumers have developed a taste for beef,” Mr Cox said.
“It’s part of their culture. If you talk to any Japanese consumer they’ll be able to rattle off ten beef dishes they enjoy eating regularly.
“It is also a market that takes a lot of different cuts. There is strength in manufacturing beef - it’s McDonald’s second biggest market - but Japan also takes over 40pc of our chilled beef and around 50pc of our total grain fed exports.”
We also have a tariff advantage in Japan, a rare thing for Australian beef.
A bilateral deal was signed in advance of Trans Pacific Partnership (TPP) negotiations and ahead of any US/Japan agreement.
As in all beef markets considered mature, MLA marketing efforts focus on country of origin programs.
In Japan, by last December, 73pc of Australian beef carried the True Aussie logo, up 15pc year on year.
“What we try to impress on retailers is that if you carry our True Aussie mark, you are clearly signposting country of origin and you will grow sales,” Mr Cox said.
In both Japan and Korea, local beef production is declining, which augurs well for imports.
Japanese Wagyu and dairy beef still accounts for the biggest share of beef consumed in this market, at 40pc, Mr Cox said.
“The Japanese government considers beef to be one of the five protected items,” he said.
“Wagyu farmers are usually high-cost family operations and can’t compete on price with larger international players.
“The government has set a goal that by 2020 local production will be at same level as 2014 but it’s unlikely they will be able to achieve that.
“Their herd size is decreasing. A Wagyu calf in Japan currently costs around A$10,000, so restocking is obviously being impacted.”
Consumer research is saying Australian beef is the most popular among imports.
“We’re trusted but we’re also considered tasty, suitable to family meals and consistent,” Mr Cox said.
“There is increasing interest in steaks, barbecuing, roast beef and more Western style cooking.
“Greater health consciousness is also in our favour. Consumers want lower fat. When the Japanese say lean they generally mean anything with a marble score less than five.”
These drivers are also firmly in place in Korea, which has probably been even more of a success story for Australian beef in the past year.
Two record size shipments have gone Korea’s way in a row.
“Korea is a smaller country than Japan but they eat more beef, nearly double the amount,” Mr Cox said.
In Korea, Australian beef has a Free Trade Agreement in place but it was signed after the Americans so we are about 5.4pc behind them in terms of tariffs.
It will, however, go down to zero, whereas in Japan it will only go to 20pc.
There is one key difference in trends affecting the Korean market - the effect of upheavals and scandals, according to Mr Cox.
They are impacting the consumer psyche and building in a level of unpredictability.
New anti-bribery laws, which make it illegal to purchase meals for clients valued above a set level, have also put a dampener on the Korean food service industry in general.
“Gift giving is a big part of the business culture in Korea and they often give beef,” Mr Cox said.