Growing number of consumers can, and will, pay a premium for beef

Growing number of consumers can, and will, pay a premium for beef

Beef
BIG OPPORTUNITY: The forecast number of people who will have a disposable household income allowing them to buy premium beef in 2023.

BIG OPPORTUNITY: The forecast number of people who will have a disposable household income allowing them to buy premium beef in 2023.

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2021 Wagyu conference: MLA's Jason Strong on global beef demand

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SHIFTING consumer priorities on the back of the global pandemic make a compelling case for Australian beef to focus on value, rather than volume consumed, going forward.

Meat & Livestock Australia's managing director Jason Strong puts it this way: "Our job is to find the richest, hungriest consumers and make sure they are excited about Australian beef."

He told delegates at this week's Australian Wagyu Association annual conference, held on the Gold Coast, the world had significantly changed as far as red meat demand was concerned.

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Mr Strong's summary of why the global foodservice crash wasn't as disastrous as anticipated for Australian beef painted a very optimistic outlook for the sector.

It also put into perspective concerns about declining red meat consumption on home soil, and squashed the notion humankind is ditching beef in droves.

THE FACTS: MLA's managing director Jason Strong speaking at the Australian Wagyu Association conference on the Gold Coast this week.

THE FACTS: MLA's managing director Jason Strong speaking at the Australian Wagyu Association conference on the Gold Coast this week.

Mr Strong said it was understandable there was panic when food service fell off a cliff last April, given 76 per cent of Australian beef is exported and 66pc of that goes into food service.

Pre-COVID, the luxury segment of global food service was growing three times faster than total global food service and that was the target for so much of Australia's red meat.

Further, a big chunk of household spending on food service was led by the United States and China, two of our largest beef markets.

However, the flip side of the story is that Australia will export less than a million tonnes this year and globally 75m tonnes will be consumed.

And Australia sits in what could only be described as a privileged position as the new pandemic-fuelled priorities among consumers of safety, price and freshness dominate more and more.

That hasn't happened by mistake, Mr Strong said.

There had been a lot of investment go into making Australian beef a high quality, traceable, consistent product.

It now looks like that will pay off in a big way.

Can and will pay

Everything food service, apart from pizza, crashed on the back of COVID but the recovery has come somewhat faster than expected, Mr Strong said.

"The other thing that happened was a massive shift to retail and a willingness to pay for high quality at retail," he said.

In China, MLA consumer research conducted last year showed a primary driver for increasing consumption of beef was its links to contributing to immunity.

"There was a big difference between what we saw happening politically and what was happening on the ground," Mr Strong said.

"In the relationship between exporters and importers, the focus was on those traits of food safety, freshness and price."

As a result, the demand for our beef in China was consistent last year with what it has been for the past few years.

Australia sent 197,000 tonnes to China, the second largest shipment to that country ever for Australian beef.

Globally, the numbers of consumers who can afford premium beef products is growing.

"It's not total population we are interested in, it's those who have the ability to pay," Mr Strong said.

The household disposable income threshold to be a customer of premium beef is US$75,000.

The 2023 forecasts are for the US to have 54m of those customers, the EU 36m, UK 13m, Japan 10m and Australia 6m.

On consumption 

Most of the commentary about declining red meat consumption is overblown and commercially driven - coming from companies trying to promote alternative or plant based proteins and not based on fact, Mr Strong said.

Longitudinal consumer studies show the number of people identifying as vegan or vegetarian has been stable over the past decade at between 7 and 8pc.

"In the markets that are important to us, the ones growing in affluence and population, red meat consumption is projected to be flat or grow," Mr Strong said.

"And in countries where the consumption predictions are flat or slightly negative, such as Australia, the biggest driver is price."

Therein lies the catch.

"Yes, we'd like our friends to eat more beef - but not at half price," Mr Strong said.

Getting people comfortable with the fact beef is a high value, premium product should be more the focus than increasing consumption, he argued.

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