AS supermarkets continue to increase their dominance of retail beef and lamb sales, agrifood marketing experts say understanding the dynamics driving that places producers in the best position to identify opportunities.
The latest survey data shows supermarkets now account for 70.2 per cent of the fresh meat market.
Prominent market research company Roy Morgan's January-released Fresh Food and Grocery Report shows Woolworths has the largest share of the $13 billion annual spend on fresh meat in Australia, at 27.5pc.
Coles is second at 22.6pc, followed by specialist butchers at 20.9 and Aldi at 10.6.
Roy Morgan boss Michele Levine said while Woolworths' share had remained steady over the past eight years, a notable change was butchers' share declining with the big winners in scooping up their customers being Aldi and Coles.
Woolworths head of livestock buying and processing Brett Thompson said the company was fortunate to work with some of Australia's best meat producers and processors.
"It's only through these partnerships, many of which are decades long, that we've been able to maintain such a high quality and consistent supply of fresh meat for our customers," he said.
"We believe this is the key reason we've been able to earn the right to our customers' repeat business over the years.
"As retailers, we have an important role to play in upholding the quality of fresh Australian meat from paddock to plate. We continue to invest in developing a fresher and faster supply chain to this end."
Competitive business
Dr David McKinna, from Melbourne-based agrifood strategy consultants McKinna et all, said the reason supermarkets were so keen on the fresh meat sector was that it allowed for differentiation.
The grocery market in Australia was the most competitive in the world and fresh food was one of few areas to build in higher value, he said.
However, supermarket dominance of retail beef sales is far less a concern for producers than it might seem, given the strength of export markets, according to Dr McKinna.
More than 70pc of Australia's red meat production is exported and international demand is very strong.
"Today it is effectively the restaurant in Shanghai setting the price because they are prepared to pay a certain amount per kilogram and the supermarkets have to match that to secure supply," Dr McKinna said.
"Australia's beef industry is not reliant on the domestic market.
"Woolies, Coles, even McDonald's, are on the backfoot."
An interesting change in the last three years that had come largely on the back of this dynamic was the supermarkets' move towards partnership branding in red meat, Dr McKinna said.
Along with looking to secure long-term supply, supermarkets were conscious of the consumer trend towards 'paddock-to-plate' and were also seeking to establish good will for farmers in consumers' eyes, he said.
"The typical partnership model is an agreement with a group of producers who then organise a service kill, or with a processor. The supermarket sets specifications and pays a premium but retains ownership of the brand," Dr McKinna said.
Australia's grading system Meat Standards Australia had allowed confidence in consistent quality, which meant supermarkets were far more willing to be involved in brands, he said.
Meanwhile, while butcher numbers were declining, the sector had reinvented itself to be meal solution shops.
"Butchers are very good for the beef industry because they are giving consumers a good experience with beef. They don't just sell beef, they tell you how to cook it, the story behind it and they are trusted," he said.
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