Wholesaler's coronavirus story

Wholesaler's coronavirus story

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SHUTDOWN: Andrews Meat Industries CEO Peter Andrews said they were left with $19-20 million of stock on hand that had to be dealt with as well as the difficult task of turning off the supply chains.

SHUTDOWN: Andrews Meat Industries CEO Peter Andrews said they were left with $19-20 million of stock on hand that had to be dealt with as well as the difficult task of turning off the supply chains.

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When coronavirus struck, Andrews Meat Industries had to adapt its foodservice business - and quickly, writes Ken Wilcock.

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SINCE coronavirus first hit China in the early part of this year much has been written in the wider market sense about the respective impacts on foodservice and retail globally.

In Australia we have tended to talk about how this has affected our major beef export markets but apart from some media coverage about panic buying of beef mince in supermarkets, not a lot has been said about the impacts domestically, particularly at wholesale level.

In reality the wholesale players who straddle the activities of portion control, value adding and branded product sales to hotels, restaurants, institutions, cruise lines, airlines and the like are almost invisible in a game whose public focus has traditionally been producers on one side and processors on the other.

But thanks to a new podcast initiative released last month by JBS Australia under their Great Southern program, we have gained some insight into this area.

One of the two presenters of these weekly Grass Matters podcasts is Andrea Crothers, well known to QCL readers from her early days as a rural journalist.

In the first podcast Andrea spoke with Peter Andrews, CEO of Andrews Meat Industries (AMI) based at Lidcombe, not far from the historical Homebush abattoir and saleyards site which made way for Sydney's Olympic Park.

Peter spoke of the early days when he joined the family business in 1989 and its growth and development with support from brothers Harry and Michael.

He touched on their move into portion control and value-adding in the mid/late 1990s, the impact of the 2000 Olympics on the hotel and restaurant scene and their step-up of export activity in 2004 partly in order to supply their foodservice business with brands they could control.

Back then we did not know how long this would go on for or what this really meant. It was a feeling of all our business had been taken away and when were we going to get it back. - Andrews Meat Industries CEO Peter Andrews

A partnership agreement with JBS Australia followed in 2014, which contributed to more security and consistency in supply particularly through the farm-assured model which backed the pasture-fed brands.

That in itself is a topic to return to another time but for now the interest is in how this business coped with the impact of coronavirus.

Since 2000, the business had seen year-on-year growth so losing 80 per cent of their foodservice business overnight was a big hit emotionally.

Peter said they saw what was unfolding overseas and knew something was coming but did not know how it would affect them. It was something they could not really prepare for.

On Sunday night March 22, 2020, they heard that everything would shut down by the next Monday evening so basically nobody from their 2000-strong client base ordered anything the next day.

All that was left was supply to nursing homes, hospitals and vulnerable care.

Peter said: "Back then we did not know how long this would go on for or what this really meant. It was a feeling of all our business had been taken away and when were we going to get it back."

On the practical side there was $19-20 million of stock on hand that had to be dealt with as well as the difficult task of turning off the supply chains. They deferred a lot of product and cancelled what they could, which resulted in some difficult conversations with suppliers, but they were fortunate at the same time that retail was booming.

With people stripping the shelves every cut that could be minced, such as topside, round, silverside and chuck, was commanding a high price.

There was also a surge for some steak cuts and expensive primals, even a rush on a bit of Wagyu but a lot of higher-value product was heavily discounted.

After restrictions were lifted there was some pick-up in business but also another downturn.

It seems the problems in Victoria are inducing caution elsewhere, with people staying away from areas where spikes are occurring.

Looking forward, Peter said they know now it will be a slow road back.

He estimates there is about 30pc of their market tied up in airline trade, cruise ships, international hotels, convention/function centres and the like which they do not know when they will see again.

But while their foodservice has been hit hard, the diversification they created into export and cooked value-add will carry them through.

For now it is about survival, keeping the business as strong as possible, regrouping, retraining and planning for the future.

Cows ease in early markets

FURTHER good falls of rain in the Darling Downs and south-east border regions, New England Tableland, central and south-east NSW and eastern Victoria have strengthened the spring outlook but brought mixed results in fat and store markets.

At Wagga on Monday numbers improved by 200 but are still in the seasonal low at just 1700 head.

A limited number of heavy steers were 12c/kg cheaper but nevertheless still hit a high of 400c and averaged 383c. Good heavyweight cows were 7c cheaper at an average of 293c.

At Toowoomba, export descriptions were too few in number to trend but restocker interest pushed light yearling steers 22c higher and heifers up by 36c. Warwick on Tuesday saw cows 7-13c cheaper. In southern Qld, grid rates remain unchanged at 640c for 4-tooth ox and 560-580c for heavy cow.

Dinmore will tidy up this week before a two-week break with an intention to resume on Monday, September 7.

Published grids for Wagga and Naracoorte have remained the same since the beginning of August at 615 for ox and 560 for cow.

On the export front, the US lean beef import market weakened further to US$227/cwt for indicator Aust/NZ 90CL blended cow FOB US East Coast. This brings lean beef prices back to within $2/cwt of where they were 12 months ago.

US analyst Steiner Consulting notes that seven Argentine meat plants (mostly thought to be beef) have temporarily suspended shipping product to China because of COVID-19 among workers.

It is thought this may divert product to the US regardless of quota availability and result in further downward pressure on imported values.

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