Beef part of China's e-commerce surge

Beef part of China's e-commerce surge

Sales
DIRECT SALES: Hema supermarket chain is one of the bigger e-commerce players in China and has set up 400 community pick-up points in Guangdong region alone.

DIRECT SALES: Hema supermarket chain is one of the bigger e-commerce players in China and has set up 400 community pick-up points in Guangdong region alone.

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Ken Wilcock notes that e-commerce is set to become the new norm in distribution of fresh produce, including beef, in China.

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STRAIN in the China/Australia relationship which emerged after Australia's call for an independent inquiry into the origins of the coronavirus pandemic is a most unfortunate development for the beef industry at this point in time.

China became Australia's biggest beef customer in 2019 and was recovering from low beef trade volumes in February and March with a massive turnaround in April when Australia first drew the ire of the Chinese.

The export meat plant suspensions and a dangling threat of further possible retaliatory action has captured a lot of media attention and drawn focus away from some import market developments in China that have occurred as a consequence of the disease.

These developments are discussed in a report titled "The Impact of COVID-19 on Beef Industry in China" by Shanghai-based marketing, research and digital services business, China Skinny.

The report, thought to be published in April 2020 before the meatworks suspensions, contains recommendations for the Queensland beef industry and while the version I found on the internet was undated and made no mention of who commissioned it, it was linked to the TIQ (Trade and Investment Queensland) web site although not currently listed in its resource library.

TIQ is the Queensland government's dedicated global business agency helping Queensland exporters take their products to world markets.

Ironically the section of the report dealing with regulatory changes contained the following: "Chinese General Administration of Customs is said to have provided additional support to ensure fast passes for imported beef along with other fresh produce. As one of China's biggest beef import countries, regulatory policies might change again in favour of Australian exporters soon."

That statement was supported with a photo of Chinese Customs officials "working to verify imported Australian beef to ensure quick turnover".

If the authors of the report had reason to make such a claim, it may be that China had some intention of favouring Australian product through the system as it had demonstrated it was prepared to do for United States product.

But if that was the case it seems to have fallen from favour very abruptly.

If indeed Australia's statement on April 19 and the suspensions that followed on May 11 were connected, the fall from grace was a blindingly fast three weeks.

That aside, the real value in the report is contained in the section dealing with consumer behavioural changes brought about by COVID-19 and some new and possibly enduring buying patterns.

Increased stay-at-home time and health concerns have resulted in a behavioural shift with more people inclined to order their groceries online and cook at home instead of visiting a retail store to buy fresh produce, ordering prepared meals or dining in restaurants.

Fresh-produce e-commerce platforms sprang up and gained particular acceptance in the higher age-group demographics.

The report quotes an uptake rate of 48 per cent for 46 to 55-year-olds and 52pc for the over 55s.

But at the peak of the outbreak in China with online demand for fresh food at an all-time high, delivery became an issue because of critical understaffing due to the virus.

To address this problem, numerous e-commerce operators introduced group ordering programs to their business model.

Community e-commerce, as it became known, is a group buying and distributing model where a community leader oversees taking orders from residents, placing the orders on collaborating platforms and instructing residents for the pick-up.

The benefits are significant.

Users place an order by simply sending a text message in a community WeChat group and subsequently pick up the goods in the nearby community centre without any additional social contact.

The model also allows access to bulk sale prices without the individual need for bulk buying.

In the early stage of home quarantine, community e-commerce usage soared by more than 300pc.

Its rise in popularity has set it to become the new norm in distribution of fresh produce (including beef) according to the report.

One of the bigger e-commerce players, Hema, has set up 400 community pick-up points in Guangdong region alone while Miss Fresh received over 18,000 community requests within two weeks of introducing the feature.

Another trend taken up in the report is the booming market for premium children's food, particularly meat.

These higher-order marketing matters should be front-of-mind for Australian beef brand owners and exporters rather than the current more basic concern of some of our bigger players as to when they might be allowed to run back onto the field.

Victorian meatworks closed by COVID-19 outbreak

THE resurgence in COVID-19 in Victoria is now hitting meatworks hard.

Following on from the Cedar Meats outbreak, JBS Brooklyn, just a short distance down the road, had a single-case infection a week ago but by Sunday that had grown to five.

That was joined by an outbreak among 11 workers at Somerville Meats in Tottenham.

Both meatworks were shut down by Victoria's Department of Health on Sunday.

A third abattoir, Pacific Meats at Thomastown, is also reported to have closed after a single-case infection a week ago.

These works can be expected to be out of action for some time while deep cleaning, testing and staff quarantine take effect.

Meanwhile early sales this week affirmed the end of the saleyard price run for export-type cattle.

MLA reported heavy steers and bullocks 10c/kg easier at Wagga on Monday while heavy cows were quoted 15c back.

At Tamworth heavy steers were 45c cheaper and cows down by 10c.

Grid rates in southern Queensland remain unchanged at 650c/kg for 4-tooth ox and 570c for heavy cow.

Wagga and Naracoorte grids remain at 615c for ox and 560c for cow where they have been since mid-May.

At this point, saleyards and grid rates are more closely aligned than has been the case in recent weeks and despite the pressures faced by processors in global export markets, there would seem no immediate likelihood of grid adjustments due to the general state of supply.

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