AS supply pressures continue to build on the global meat market, the ability to drive demand towards product that plays to Australia’s strengths will be crucial.
For progressive beef exporter NH Foods, which has three Eastern States processing plants and a feedlot, that means drilling right down into consumer trends.
Export sales manager Andrew McDonald gave a candid overview this week of where and how his company is looking to set itself apart as competition intensifies on the global market.
Speaking at a packed Queensland Rural Press Club lunch in Brisbane, he said widening the customer base, educating consumers and building in the highly-valued attribute of transparency should be the plan of attack for Australian beef.
The overall message: We can not be everything to everyone. Rather we have to be strategic and shift towards a “one sizes fits one” way of thinking.
Australia is the largest overseas arm of NH Group, Japan’s leading fresh meat company. Processing happens at Oakey and Mackay in Queensland and Wigham in NSW, while NH Foods also runs the 70,000 head Whyalla Feedlot at Texas.
Mr McDonald said Australia was a small but relevant part of the global beef landscape.
Our share of the beef pie sits at just 2.7 per cent, given our recent mass herd reduction, but even in the years of bigger numbers, say 2013, it was still just 3.1pc.
A bad day for us registers nowhere, was Mr McDonald’s blunt assessment.
Our biggest global competitors - the likes of Brazil, the United States and Argentina - are all on a growth path and have substantially larger herds, he said.
Of course, beef production is the more pertinent factor than herd size and the US is the dominant force there.
A “mountain of protein” would be drifting on to international markets in coming years as the US looked to secure a home for its ramped up production across beef, chicken and pork, Mr McDonald said.
The thing to note, however, is that most of the big beef producing countries are also big consumers - and demand, like supply, is growing.
“All the countries where the best economic growth is occurring are importers of our product and the statistics clearly show a correlation between wage growth and spending on beef,” Mr McDonald said.
In the US, even against a background of Meatless Monday campaigns and growing publicity around vegan lifestyles, protein consumption was fast growing.
NH Foods has its eyes on three key trends - transparency, branding and education.
Meat with claims like organic, free range free, no hormone growth promotants, natural or organic, were recording a 5pc value and volume lift against traditional product, Mr McDonald reported.
Branding was the second largest area of growth.
As beef prices have moderated with greater supply, consumers have shifted back to brands and the premiums they command but the move was also tied into generational change.
“Millennials are hopeless at putting a meal together but have a real taste for brands,” Mr McDonald said.
Meanwhile, data shows 83pc of shoppers buy just a handful of cuts but education can play a role on changing that, he believes.
“Greater knowledge of beef products prompts greater variety in purchases and variety is the key to cooking more often with meat,” he said.
What does that mean?
“There are 120 million households in the US. If we’re conservative and say 100m a week eat meat and we can add one 200 gram meal per household, that equals 20m kilograms a week of extra sales or a billion kilograms a year,” Mr McDonald said.
“It might mean they buy more American or Brazilian product but that is still taking more beef out of the world pie - that drives up prices for us and in turn cattle prices.”
Australia has some of the best market access - trade deals which are the envy of most of our competitor nations, according to Mr McDonald.
“We are the benchmark everyone is copying and they are slowly but surely nibbling away at some the markets we have long had the king’s chair in,” he said.
“As a result, we are seeing a greater range of markets we have a smaller share in.”
Traditionally, the top seven countries NH Foods supplied accounted for 93pc of business and overall, the company worked with 15 countries.
“Now we have more than doubled the countries we are working with,” Mr McDonald said.
“Being able to extract maximum value over a range of mkts - ones with a small number of people but the right money to pay for our programs - is what will drive returns all the way through as we see other countries catch up to us with market access.”