Canada Beef Export Federation 235, 6715 - 8th Street, N.E. Calgary, Alberta CANADA T2E 7H7 Tel: (403) 274-0005 Fax: (403) 274-7275 E-mail: [email protected]
CONFIDENTIAL DRAFT 3
CANADA BEEF EXPORT FEDERATION
STRATEGIC BUSINESS PLAN
April 2006 - March 2007
February 2006 TABLE OF CONTENTS
I. EXECUTIVE SUMMARY 1
II. EVOLUTION OF SUCCESS
A. Vision 5 B. Mission 5 C. Mandate 5 D. Objectives 5 E. Goals 5
III. KEYS TO GROWTH
A. Industry and Its Capabilities 6 B. Export Readiness 7
IV. MARKETS AND PROGRAMS
A. Canada Market Development Program 8 B. Japan Market Development Program 12 C. Korea Market Development Program 20 D. Taiwan Market Development Program 29 E. China Market Development Program 38 F. Mexico Market Development Program 49
V. OPERATING BUDGETS
A. Projected Revenues 59 B. Projected Expenditures 60
VI. CONCLUSION 61
Appendix I: PROMOTION PROGRAM 2005-2006 to 2008-2009 Appendix II: COST-BENEFIT PERFORMANCE INDICATORS (VALUE) Appendix III: COST-BENEFIT PERFORMANCE INDICATORS (VOLUME) Appendix IV: MARKET SHARE PERFORMANCE INDICATORS Appendix V: EXPORT MEMBER SURVEY Appendix VI: 2006-2007 Spreadsheets I. EXECUTIVE SUMMARY
The Canada Beef Export Federation (CANADA BEEF) was established in 1989. CANADA BEEF is an independent non-profit industry association committed to improving export results for the Canadian beef industry. The Federation's mandate is to identify and develop markets to increase the sale of Canadian beef and veal products with the cooperation of all companies, organizations and institutions which will benefit from this success.
CANADA BEEF’s membership includes companies, organizations, and institutions, whose sights are clearly focussed on the development of new international markets for Canadian beef. The Federation's effectiveness and competitive advantage is created by all sectors of the beef industry - including producers, packers, processors, exporters, and governments - working together to carry out the mandate of the Federation and to fulfil the vision of the industry. CANADA BEEF represents the entire cattle and beef industry and works in partnership with government, taking responsibility for the future of Canada's beef exports.
The Federation's market development strategy works to create export success on behalf of our industry by pursuing five primary tactics. The first thrust is Market Identification. CANADA BEEF conducts an on-going market research program in order to identify markets or sectors that may present opportunities for the Canadian industry. These research studies quantify "found" opportunities, identify constraints to export success, and devise preliminary strategies for market penetration. Armed with this information, CANADA BEEF can prioritize markets in order to plan, develop programs and activities, and allocate human and financial resources. Market research in the current year will be limited to Competitive Intelligence Reports and Market Information produced and distributed by the Canada Beef Export Federation offices in Canada, Asia, and Mexico.
The second thrust is Market Access. CANADA BEEF, in cooperation with all members and governments, will continue to prepare industry positions and strategies to remove specific barriers to trade. Initial access will be pursued in South Korea, Taiwan, Mainland China, Taiwan, Indonesia, Russia and other key international markets. Comprehensive access will be pursued in Japan, Mexico, Hong Kong and the European Union. Specific bilateral trade access issues will continue to be addressed as they arise. Overall improvement in market access will be pursued through the current Doha Development Round of WTO negotiations.
The third thrust is Generic Promotion. The Federation's goal is to raise the image of Canadian beef to the "highest quality internationally traded grain-fed beef" in key international markets. The Federation’s goal is to build the Canada Beef brand in key markets in cooperation with other industry sections and the government of Canada as part of the larger Brand Canada initiative. Sales performance (tonnage, market share and relative prices) of individual members will improve as a result of building the international knowledge and image of Canadian beef. The Federation will undertake Member Information and Liaison, CBEF Seminars, Market and Competitive Intelligence Reports, Trade Contact Facilitation, VIP Beef Awareness Missions, CANADA BEEF Seminars,
- 1 - Retail and Food Service Promotions, Promotional Materials, Newsletters, Market Research and Advertising and Publication Relations. These activities are designed to increase the awareness, improve the image and increase the demand for Canadian beef demand in markets which Export Members intend to initiate or expand their business. This is achieved by activities that serve to improve product knowledge, industry awareness, and Canadian profile in the eyes of current and potential clients of Canadian beef. These generic initiatives will be undertaken in Japan, South Korea, Taiwan, China, Mexico and selected other emerging markets.
The fourth thrust of the Federation is Brand Development. The Federation will work with individual Export Members to build their corporate and co-brands within a Canada Beef brand environment. Delivered through the Partner Market Development Program, these initiatives will target key clients who have committed to merchandising the intellectual property of the Federation’s members. Strong corporate brands in key markets will serve to strengthen and deepen the generic country-brand.
The fifth thrust of the Federation is Export Member Development. Through the use of our Partner Market Development Program, individual Export Members are encouraged to become familiar with priority export markets and develop new international seller-buyer relationships. These relationships are vital in international markets and are a required prerequisite for sales. With the Federation's assistance, Canadian beef and veal exporters are obtaining knowledge and forming trade alliances much faster than would otherwise be possible. This approach is efficient and effective.
The Federation's export vision is that Canadian high quality beef will become the symbol of excellence by our global customers. Our industry's goal is to export 354,000 tonnes ($1.5 billion) of beef products to Asia and Mexico annually by the year 2015 (See Table 1) - becoming the second largest supplier of high quality beef in each key market. Further, our industry has a number of country-specific and sector-specific export goals.
Table 1: Export Volumes in Targeted Markets
Tonnes Country 2003 2004 2005 2005 2006 2010 2015 (Actual) (Actual) (Forecast) (Estimate) (Forecast) (Goal) (Goal)
Japan 8,501 0 16,908 10 6,000 48,000 70,000
South Korea 6,368 0 10,770 0 12,000 35,000 50,000
Taiwan 3,672 0 6,400 0 4,000 12,000 20,000
China/HK 1,380 10,214 14,720 20,000 15,000 34,000 57,000
S.E. Asia 2,228 2,358 3,150 500 2,000 5,000 7,000
Mexico 29,442 87,067 88,574 53,000 100,000 134,000 150,000
TOTAL 51,591 99,639 140,522 73,510 139,000 268,000 354,000
- 2 - The Federation’s 2015 export goals include earning: 26% of Mexico's 580,000 tonne imported beef market, for a total of 150,000 tonnes ($600 million); 8% of Japan's 900,000 tonne imported beef market, for a total of 70,000 tonnes ($350 million); 12% of South Korea's 430,000 tonne imported beef, for a total of 50,000 tonnes ($230 million); 16% of China’s (incl. Hong Kong) 366,000 tonne imported beef market, for a total of 57,000 tonnes ($157 million); 22% of Taiwan’s 90,000 tonne imported beef market, for a total of 20,000 tonnes ($105 million); and, South East Asia to reach 7,000 tonnes ($19 million).
Our optimism for future sales increases to Asia and Mexico is based on four basic principles and two supporting factors. Economic growth in the regions is expected to continue for at least the next two decades - creating new demand for high quality food products. Market access for imported beef will continue to improve as a result of WTO negotiations - opening that demand to our industry. Capacity expansion and process enhancement in the Canadian beef industry will continue - improving our ability to serve.. New service standards are being developed by our industry to meet the needs of key international clients - closing on new opportunities. International clients and consumers remain confident in Canadian beef products - even after the diagnosis of BSE in three Canadian cows. American protectionism does not work in Asia and Mexico.
The Canadian cattle and beef industry is implementing a significant and coordinated market access and market development strategy to recover from the BSE crisis. This strategy is being coordinated through the Beef Industry Value Chain Round Table and the Global Markets Advisory Group. This strategy includes the completion of specific market access efforts in the United States, Japan, South Korea, Taiwan, Indonesia, Russia and other key international markets. Augmented market development efforts are also being completed in those markets open to Canadian beef - domestic, the USA, Mexico, Japan and China (Macau and Hong Kong). The Federation currently estimates that all major Asian markets will open during 2006.
The 2006-2007 business plan of the Canada Beef Export Federation is designed to facilitate the growth of trade in Mexico, stimulate the resumption of trade in Canadian beef to major Asian markets and to explore opportunities in emerging markets. Once access is established, augmented market development programming is scheduled to regain lost export sales and market share.
Private sector revenues include memberships, cattle producer financial contributions, and Export Member contributions through the Partner Market Development Program. Public sector revenues include Agriculture and Agri-Food Canada, Alberta Economic Development, and Saskatchewan Agriculture and Food.
Private sector contributions and the total budget have increased from 2005-2006 levels. The largest increase is created by higher estimated marketings within the national cattle check-off fund. The Federation is estimating the marketings will return to 100% of 2002
- 3 - levels, with no change in % allocation to CBEF. The Federation is budgeting significantly increased federal government funding as part of the Canadian Beef & Cattle Market Development Fund (CBCMDF) and Alberta International Beef Market Development Fund (AIBMDF) initiatives. The Federation's budgeted revenue is $9,005,000 for the 2006-2007 fiscal year.
The Federation's budgeted market development program expenditures have increased from $6,218,000 in 2005-2006 to $8,096,000 in 2006-2007. Specific augmentations have been budgeted in the Federation’s key international market programs, with a special focus on increased Retail and Food Service Promotions, Promotional Materials, Market Research and Advertising and Public Relations. These enhanced resources will be used to rapidly gain market share as markets re-open to Canadian beef. The strategy allows for the geographic expansion of the Federation’s targeted market development programs in emerging markets. These expansions to the Federation’s basic market development program have been specifically endorsed by the Global Marketing Advisory Council, Beef Value Chain Round Table and the Federation’s membership (Strategy Review, September 2005). The Canadian cattle and beef industry has focussed its long term development targets on diversifying international sales - facilitating non-USA markets to absorb 50% of total processed beef exports. Further, the Canadian cattle and beef industry has also indicated that significantly increased beef export volumes should be produced in future years, as domestic beef processing capacity increases to near self-sufficiency levels. The Canadian cattle and beef industry is fully committed to limiting future dependence on the export of non-breeding cattle to any market.
The Partner Market Development Program budget has been maintained at $500,000 this year and in future years. This important program provides a tool for achieving the Federation's strategy and goals outside Canada and the United States. By harnessing the resources and expertise of our Export Members through the Partner Program, the Federation is well placed to assess and subsequently address the long term opportunities for our industry in newly emerging markets. This advance reconnaissance proves vital to the Federation in repositioning the industry's market development strategies in the long term. Without this dynamic form of market intelligence, information, and testing, the Federation and industry will be blind to those markets not yet demonstrating the importance to justify industry-wide attention.
- 4 - II. EVOLUTION OF SUCCESS
Strategies and business plans by nature are flexible, but must remain focussed on achieving stated goals. The purpose of this strategy is to focus the Federation's resources, and guide its detailed market development actions. The effectiveness and competitive advantage of the Canada Beef Export Federation is created by all sectors of the beef industry, including producers, packers, exporters, and governments - working together through CANADA BEEF to achieve a shared vision, mission and mandate.
A. Vision
Our vision for a dynamic, profitable Canadian beef industry is to have our high quality beef products recognized as the symbol of excellence by our global customers.
B. Mission
The Canada Beef Export Federation facilitates the expansion of strategic global markets for Canadian beef products.
C. Mandate
The Canada Beef Export Federation identifies and develops key export markets to increase the sale of Canadian beef products with the cooperation of all companies, organizations and institutions that benefit from this success.
D. Objectives
To secure and increase markets outside the USA for Canadian beef products in order decrease export dependence on the USA.
To prevent international price erosion with a mid term goal of achieving and sustaining US price equivalence.
To secure and develop improved access to international markets.
To create strategic partnerships and alliances in order to improve cooperation, coordination and information sharing.
E. Goals
The Federation has set the goal of exporting 354,000 tonnes ($1.7 billion) of Canadian beef products to Asia and Mexico by the year 2015. Specific country goals include: 150,000 tonnes to Mexico; 70,000 tonnes to Japan; 50,000 tonnes to South Korea; 40,000 tonnes to Mainland China; 20,000 tonnes to Taiwan; 17,000 tonnes to Hong Kong and 7,000 tonnes to South East Asia. These ambitious goals form part of Canada’s global beef export goal of 800,000 tonnes by the year 2015.
- 5 - III. KEYS TO GROWTH
A. Industry and Its Capabilities:
A typical cattle cycle in North America occurs about every 10 years. Larger cattle and beef supplies from the last expansion phase (1987-1995) caused cattle prices to decline in 1996. At that time, the Canadian cattle population peaked at 13.4 million head. Today, cattle numbers have recorded new record highs due to closed borders (BSE) and total 15.1 million in 2005.
Ranchers have been retaining more female cattle in their breeding herds since 2003. This decreased the supply of cattle for feedlots and beef processors. The supply of cattle to feedlots and beef processors has been increasing in 2005 and will continue to significantly increase in 2006 and 2007.
Canada has exported about a million cattle annually to the USA for the period 1997 to 2002. Canada has the ability to reduce our dependence on the USA through the reduction of feeder cattle and slaughter cattle. Due to Canada’s record high cattle population, Canadian beef processing establishments have the ability to increase their capability to self-sufficiency levels while leaving fewer for export to the USA.
Canada also has the ability to import cattle from the United States for feeding and processing. The number of cattle imported in any given year varies considerably, depending primarily on the supply and price of feed grain in Western Canada. Canada imported 195,000 cattle from the USA in 2001. The drought in Western Canada, and the resulting higher feed prices, caused these imports to drop to 49,500 head in 2002. Feed grain production has increased to traditional levels in 2004 and 2005 and it is expected Canada will begin increasing cattle imports again.
There are presently 5.98 million beef breeding cows and heifers in Canada (January 1, 2005). The total population of all Canadian cattle, including dairy, was 15.1 million head in January 2005, up from 10.7 million head in January 1987.
In addition to increased cattle numbers, the beef production per cow has increased significantly over the years. This is the result of increased carcass weights and increased weaning percentages (increased fertility and decreased mortality). Total beef production per cow has increased from approximately 170 kilograms in 1972 to approximately 253.7 kilograms in 2004. When both increased cow numbers and increased production per cow are combined, the effect on total beef production is very large.
Canada produced approximately 848,000 tonnes of beef in 1970. Total production is estimated at 1.6 million tonnes (measured in beef plus live slaughter cattle exports) in 2005, the same production as for 2002. This represents a 90% increase in Canada's beef production over the past 35 years. Canada’s production (beef plus live slaughter cattle exports) was estimated at 1.5 million tonnes in 2003 and 2004.
- 6 - A new international competitiveness has developed within Canada's beef and veal processing sector. Continued industry restructuring has produced newly invigorated companies with increased production capacities and efficiencies. Canadian beef and veal packers will process 4.2 million head of cattle in 2005. Companies across Canada continue to invest capital for processing capacity expansion and product quality improvements. Canada’s beef processing capacity is forecast to reach 5.2 million head per year in 2006. Over the next ten years, exports to Asia and Mexico will continue to grow as production increases.
In addition to increasing capacity, companies are also investing in technology. Coolers are being expanded to allow for longer and more intensive carcass chilling prior to fabrication. The resultant lower muscle temperatures are extending shelf-life. In addition to better controlling temperatures throughout the beef processing and transportation system, companies are also re-evaluating their operating systems in order to reduce bacteria numbers. By incorporating comprehensive monitoring and testing regimes under the name of Hazard Analysis Critical Control Points (HACCP), Canadian beef and veal processors are producing a safer and more stable range of food products.
B. Export Readiness:
The Canadian cattle and beef processing industry recognizes the required skills and commitment to develop international markets for Canadian beef. Many challenges lie ahead. A critical component of developing these new skills is the availability of information on new sales opportunities, and strategies to exploit them. The lack of prior experience in developing export markets must be directly addressed through a comprehensive communications and training program. The Canada Beef Export Federation is able to provide these services, both at the generic industry wide level, and at the company specific level.
The Federation will increase its emphasis on identifying and communicating specific export opportunities to its Export Members. These opportunities will be developed and delivered to individual members, based on their unique strengths and interests. The development of specific market opportunities will encourage creation of corporate branded beef programs - augmenting the already strong “CANADA BEEF” generic brand presence in each key market. This will require more direct interaction between the Federation, its Export Members, and international clients.
- 7 - IV. MARKETS AND PROGRAMS
A. CANADA MARKET DEVELOPMENT PROGRAM
1. Partner Market Development Program $500,000
The Partner Market Development Program is designed to allow Export Members to contribute funds and resources to the Canada Beef Export Federation for projects of interest to their companies and the entire industry. This program will be utilized to ensure the maximum exposure of the Canada Beef Export Federation (CANADA BEEF) as an association, Canadian beef as a brand name and finally to highlight each individual members* products and brands under these two symbols. The Generic Export Development component supports incoming and outgoing missions related to: exploring new market segments; developing new products or specifications, and; participation in Federation-led international promotional events. The Generic Export Readiness component supports technical training related to: Export Members understanding new markets, products, and/or specifications; international clients understanding Canadian beef and veal products and the merits of their use, and; international regulators and other market leaders understanding Canada’s product specifications, regulations (quality and safety), and trade practices. The Branded Promotion component supports Export Members’ response to competitors’ foreign-government sponsored initiatives in specific markets. This program is eligible for market development activities contributing to increased sales to all countries where Canadian beef is exported, excluding the United States.
These opportunities provide credibility, not only for individual members, but also for CANADA BEEF as an association and for the Canadian industry as a whole. CANADA BEEF represents the entire Canadian beef and veal industry and is primarily supported by cattle producers. Exposure of Canadian beef and veal before international market and regulatory leaders contributes vertically to all sectors of our industry. The true measure of success for this program is efficient, effective, and targeted Export Member activity. Increased activity will lead to stronger trade relationships and increased long term sales. This program is eligible for market development activities contributing to increased sales to all countries where Canadian beef is exported, excluding the United States. 1 (CAFI/CBCMDF)
i) Generic Export Development
Activities undertaken by Export Members in support of CANADA BEEF’s market development strategy may be supported.
1Sources of funding for specific programs are identified by acronyms in brackets at the end of each section. The key to these acronyms is as follows: CAFI is Canadian Agriculture and Food International Program; CBCMDF is Canadian Beef & Cattle Market Development Fund, and; PROV is Provincial Government Funding.
- 8 - Projects may include: - Outgoing missions related to exploring new markets or market segments; - Outgoing missions related to developing new products or specifications; - Participation in trade shows outside Canada; - Participation in Federation-led international promotion events.
ii) Generic Export Readiness
Activities undertaken be Export Members addressing the constraints described in the Federation’s Strategic Business Plan may be supported. Normal training of new company employees in markets currently served by the company is not eligible.
Projects may include: - Provision of training to Export Members related to new markets, products, or specifications; - Provision of training to international clients related to Canada’s beef and veal products and the merits of their use; - Provision of training to international regulators and other market leaders related to Canada’s product specifications, regulations (quality and safety), and trade practices.
iii) Branded Promotions
Branded Promotion activities undertaken by Export Members in response to competitors’ foreign government sponsored initiatives in specific markets may be supported.
Projects may include: - Development of company-specific promotional materials; - Production and placement of advertising; - Participation at trade shows when CBEF is not attending; - Retail and food service promotions; - Trade seminars (not including travel expenses).
2. MEMBER INFORMATION AND LIAISON $55,000
The Federation's foundation is firmly rooted in its ability to be responsive to its membership by keeping them informed of relevant activities and opportunities. This market information and intelligence must be tailored to the specific needs of each Export Member, by maintaining close contact the members and understanding their strengths and export aspirations. To continue growing, CANADA BEEF must constantly attract an expanding, diversified membership as well as maintaining excellent communication with existing members. This will be done by alerting current and prospective members to the
- 9 - Federation's market development and training activities. The production of the "Beefing Up Exports" newsletter, operation of the web site (www.cbef.com), publicity (Inside the Export Marketplace, news releases, media articles and speaking engagements), beef inquiries, market updates, competitive intelligence reports, and other information products will form the base for all communication activities. The Federation's 1993 Strategic Communications Review identified these priorities. We have responded to our members' expressed desire for more targeted communications.
3. TRADE ADVOCACY and EMERGING MARKETS $100,000
The Federation will pursue market access on behalf of the Canadian cattle and beef industry in all key markets. This will require travel to international markets to meet with international market regulators and industry leaders. This process will also require hosting in-coming missions of foreign market regulators and industry leaders. In addition to market access projects, the Federation will continue to participate in the International Meat Secretariate (Regional Conferences and World Meat Congress) and actively contribute to the WTO Negotiation process The Federation will also undertake specific promotions in emerging markets that demonstrate value and opportunity to the industry. (CAFI)
4. INTERNATIONAL MARKETING SEMINAR $28,000
The Federation will conduct one major International Marketing Seminar during the year. It is envisioned that this seminar will be held in conjunction with the Federation’s Annual General Meeting. High value international speakers will be invited to inform, educate and motivate the Federation’s membership and attending cattle producers. This seminar will lead to an improved understanding of the international marketing process - and challenges - for Canadian beef. (CAFI)
5. MARKET RESEARCH PROGRAM $67,000
The Canada Beef Export Federation proposes to conduct two market research projects. The first project will see the Federation continue its membership in GIRA's group-client world-wide annual meat study. This study cover more than 30 countries’ beef production and trade capabilities. Worldwide demand and pricing series are also estimated in the short term. The second project will see the Federation purchase GIRA’s Long-term Market Demand and Supply study, that will provide trade flow estimated to 2015 in all key international markets for beef, poultry, pork and sheepmeat. (CAFI)
- 10 - 6. TECHNICAL MARKETING MATERIALS $125,000
Recognizing that competitors such as Australia have recently increased their check-off contributions to strengthen their collateral investment in this area there is both a need and an opportunity to develop additional technically oriented marketing materials to promote and demonstrate the Canadian Beef Advantage. The Federation will work in close collaboration with all international offices to develop and produce science based resources for each market with a focus on beef quality, safety and profitability. (CAFI)
TOTAL CANADA MARKET DEVELOPMENT $875,000
- 11 - B. Japan Market Development Program
CANADA BEEF's goal is to capture a 8% share of Japan's 900,000 tonne imported beef market by the year 2015. This will amount to an estimated 70,000 tonnes ($350 million) of beef products, which is equivalent to 245,000 head of Canadian grain-fed cattle. Canada has not exported beef to Japan since its market closed in May 2003. Japan also banned beef imports from the US in December 2003 in response to a BSE incident there. Without supplies of grain-fed cattle from North America, Japan has seen an unprecedented supply-demand imbalance in its beef market.
To correct this imbalance, protect the food-service industry and resolve related problems, the Japanese government has been holding constructive talks with the US government over the past year and has made major progress on an important point of debate.
Japan reestablished restricted trade in Canadian beef in December 2005, exempting beef derived from cattle verified to be less than 21 months of age from the mandatory BSE testing regime it has long advocated.
1. Overview of Market Conditions
As of November 2005, 426,104 tonnes of imported beef had cleared Japanese customs, up 9.7% year-on-year. Australian beef imports made a new record last year and have been doing consistently well this year, up 7.5% year-on-year. New Zealand beef has had a remarkable year-on-year increase of 15.8%.
Japan's suspension of imports of North American beef following the discovery of BSE has led to higher prices for Australian and domestic beef. This has not only discouraged beef purchasing by consumers, but by volume retailers as well, due to low profit margins. As a result, beef consumption in Japan has fallen significantly this year, and the Japanese market for beef, including both imports and domestic products, has diminished to 98% of what it was in 2004.
The most important cause of this downward trend is higher beef prices. A Grade A3 carcass of Japanese beef produced in Japan is selling at wholesale for 1,945 yen per kilogram on average, up 1.1% year-on-year, and Holstein beef is going for 937 yen per kilogram, up 4%. A full set of grain-fed Australian beef cuts is selling at 835 yen per kilogram, down 3 %. Before BSE, North American short plates held the largest share of Japanese beef imports by volume, but since the import ban they have not been reaching the Japanese market at all. This has done enormous damage to the beef-bowl chains, and contributed significantly to decreasing consumption of beef in Japan.
2. The Current Business Situation and Outlook for 2006
The Japanese economy has finally slipped out of its rut, making steady progress into a stable recovery, based in large measure on brisk sales of flat-panel television sets, digital
- 12 - appliances, automobiles, package tours, and dress shirts in response to the government's "cool biz" campaign. More jobs have been created, pushing unemployment down to 4.1%. Japan's GDP grew by 2.9 % year-on-year for the July-September quarter of fiscal 2005, leading projections of around 3.3% growth for the year as a whole.
Due to higher oil prices and other factors, the yen's value has been holding relatively low at about 117 yen against the dollar. While this is a positive factor for exporters, higher prices on imports are a concern.
Individual consumption is up by about 3.1% year-on-year, and industries like automobiles, household appliances, steel and sea transportation have been doing particularly well. The Nikkei average has risen above 16,000 yen as of December 2005, creating hope for a continuing upward trend in the stock markets.
3. What the Markets Are Doing
Since imports of North American beef were halted, beef prices have been generally high, particularly for Australian and domestic beef and imported offals. Japanese companies have lately been very cautious about buying beef because prices on Australian beef have inflated unreasonably and the government elected to resume limited imports of North American beef on December 12.
Lower profitability has curbed enthusiasm for selling beef among the leading supermarket chains, and they are giving more meat counter to other products, like pork and processed meats. Beef from Wagyu cattle and other domestic produced in Japan hold the major portion of retail sales, 80% of the total against 20% for imports.
Because the food-service industry has depended heavily on North American beef, Yakiniku restaurant beef industry has seen an annual sales decrease of 4.1%, while beef- bowl chains increased sales by 5% year-on-year with new menus using pork and other alternatives.
4. What our competitors are doing
A. United States
Japan suspended imports of North American beef after a BSE-infected cow was discovered in the US in December 2003. As a result there were no imports of US beef in November of 2005.
The US beef industry has been holding seminars on food safety to promote systems for better control of animal health , highlighting specific measures against BSE, and bringing in experts from the University of Colorado and Texas A&M University as lecturers. The US also places articles on BSE in national newspapers such as Yomiuri Shimbun, Asahi
- 13 - Shimbun, Nihon Keizai Shimbun and Sankei Shimbun, as well as television commercials emphasizing the safety of US beef.
Tyson is offering joint seminars with food-service chains to illustrate the safety of its products using Powerpoint and video presentations.
B. Australia
Japan imported 380,252 tonnes of Australian beef between January and November 2005, up 7.5% year-on-year, and we expect to see its volume record broken for a second consecutive year. This growth reflects Japan's shift to Australian beef as a substitute for North American beef since the import ban . The ratio of chilled to frozen beef is 53% to 47%, and there has been a prominent increase in middle-grain chilled beef.
Australia does not employ mass media; instead it directly promotes the safety, taste and health benefits of Australian beef to retailers, restaurants and consumers. To promote Aussie beef and lamb, a food specialist under contract provides preparation advice and designs original gifts for sales campaigns. Supermarkets hold display contests for Australian beef, offering the winners tour tickets, cash and other prizes.
Large companies like AMH, Nippon Meat Packers, Itoham and Teys Cargill are leading beef exporters to Japan. Nippon Meat Packers and Itoham, which runs feed lot business are losing money due to the high prices of feeder cattle.
C. New Zealand
With BSE in North America, New Zealand beef imports made 15.8% year-on-year increase, to 35,953 tonnes between January and November 2005. Chilled beef imports were up 16% to 4,031 tonnes, approaching the volume of frozen beef.
New Zealand has not undertaken new promotions, but it does participate in Foodex to raise the profile of New Zealand beef.
Leading suppliers to Japan include Richmond Five Star, owned by Itoham, and PPCS.
D. Other Countries
Japan bought 9,899 tonnes of beef from nations other than those previously mentioned, mainly Chile and Mexico. Mexico provided 6,200 tonnes of beef, and this is expected to increase as the free-trade pact concluded between Japan and Mexico comes into force. The current tariff on Mexican beef will expire in 2006, and a new lower tariff starting in 2007 under the FTA will allow up to 3,000 tonnes annually to help popularize Mexican beef in Japan.
The effects of the Japan-Mexico free-trade agreement are expected to spread.
- 14 - Sukarne and Carranza are the leading beef suppliers; Hannan, Mitsui & Co. Shinwa and Daimaru Kogyo are the major Japanese importers.
5. What the Canadian Industry is Doing
Following the government's December 12 decision, the first air shipment of Canada beef arrived in Japan in late December, and the Hanamasa supermarket chain held Canada beef fairs.
Now that Japan has reopened its market to North American beef, the Japan Federation proposes that as many Canada beef exporters as possible participate in the program for Japan-bound exports and obtain CFIA authorization for exports to Japan. While 39 US plants have won authorization, only six plants have in Canada. We hope that exporters to Japan will provide information on their products, their safety control systems and methods for separating cattle of eligible age for the Japanese market. Canada should also be ready to inform Japan on approximate production volumes of cattle for export to Japan and sales strategies, i.e. by cut or set, including specific cuts.
6. What the Federation is Doing
The Japan Federation will keep in touch with Canada beef customers and communicate the safety of Canada beef and the security of its production systems to maintain good relationships and smooth transactions after imports resume.
Last year CBEF organized VIP tours for selected representatives from related industries, Canada beef seminars and food safety seminars in March and October, and exhibited at food shows in March and November. During Expo 2005 Aichi Japan we offered seminars at the Canada Pavilion. In 2006 we will build on this momentum.
We are producing promotional tools with the Canada beef logo, including vests, catalogue holders and ties, and a grading system brochure. We publish the CBEF newsletter twice a year, and contribute to leading industry media, providing up-to-date information on Canada beef, and frequently update the CBEF Website.
Since the government announced the resumption of imports in December 12th 2005, the Japan Federation has been following and planing three-step reentry strategy to facilitate the return of Canada beef to the Japanese market. This strategy includes: placing articles in industry papers to detail Canada's food safety measures; holding receptions in Tokyo, Osaka, Sapporo and Hakata to celebrate the resumption of Canada beef imports, inviting people in media and related industries; and, informing consumers using major media and ads on public transportation to raise awareness of Canada beef.
Before the BSE issue, the record for beef imports from Canada to Japan was the 29,245 tonnes in 2001. To bring import volumes back close to this level after imports resume, the Federation, in partnership with Canada beef distributors, will approach restaurants,
- 15 - retailers, hotels and the like. While a lot will depend on the availability of supplies from Canada, we do not think this goal will be hard to achieve.
7. BSE Recovery
Canada's food safety system is getting high marks from the Japanese industry as well, and its cattle identification program is drawing particular attention. The Federation Canada analysis concludes that Canada is well recognized in Japan as an important beef supplier.
Japan reopened its market to the beef of those from North American cattle under 21months of age in December 2005. The initial volumes of Canadian beef exports to Japan have been very small due to the limited supply of verified cattle. A further restriction became apparent, when independent beef processors were excluded from the access protocol (integrated establishments and stand alone fabrication establishment owned by companies that also operate slaughter establishments have been approved).
Japan Market Development Program
1. Market Representation $431,000
The Federation contractually engaged three full-time and one part-time individuals in Tokyo to represent the Federation and its members in Japan. The federation also has direct funding responsibility for all non-promotion operating costs of the office, including transportation, hosting/entertainment, and office facilities. The representative office provides a primary and vital link between Canadian beef exporters, and new and existing Canadian-beef clients in Japan. These individuals also monitor, report, and represent the Federation and its members regarding all regulatory market access matters affecting Canadian beef and veal products. This office actively identifies new potential clients for Canadian beef on behalf of our members. This office continually monitors existing and emerging constraints and opportunities facing Canadian beef exporters in Japan, and recommends industry wide and company-specific responses to address them. This office also takes primary responsibility for the Federation's core market development program in Japan. (CAFI/PROV)
2. VIP Beef Awareness Mission $55,000
One in-coming mission, including a total of six Japanese meat industry executives, will be completed. The purpose of this project is to create a "Buy Canada" mandate within the most senior levels of prominent Japanese meat import and distribution, retail, and food service companies. Past experience tells us that many former VIP Mission members have become "pro-Canada" and started purchasing Canadian beef products soon after returning to Japan. These missions also create the opportunity for Federation staff to establish strong relationships with the buyers during the course of the missions. The
- 16 - Federation asks Export Members to nominate prospective mission members. Success is measured by the empowerment of each company's beef buying team to selectively increase their imports of Canadian beef. (CAFI)
3. CANADA BEEF Seminars $105,000
It is vital that CANADA BEEF provide educational services and highlight Canada's competitive advantage to the Japanese meat trade by bringing technical experts to a seminar. Members will also be invited to attend these events, to display their products and meet with buyers. For this purpose, the Federation will hold a CANADA BEEF seminar at a city chosen for its potential to generate new sales each year. Additional Technical Seminars (i.e. cutting, cooking, financial/yield analysis) will be completed for specific clients groups. These technical seminars will be very closely coordinated with the Federation’s retail promotion and advertising programs. (CAFI)
4. Retail and Food Service Promotions $850,000
The Federations promotion strategy for Asia is to focus on distribution channel development tactics supported by consumer marketing promotions to enhance and grow sales opportunities. Channel development strategies and tactics will be designed to create demand and grow volumes within the delivery system by differentiating Canadian beef and the Canada Beef Export Federation team from our competitors. This will be accomplished by leveraging the Canadian beef advantage and Federation expertise to build and implement business successes for our trading partners, end users and consumers. The Canadian beef brand represents outstanding quality, safety, craftsmanship and value that is not currently found or fully understood in the marketplace. This value position must be demonstrated, proven and earned in the marketplace to differentiate ourselves from our competitors. Price, quality, craftsmanship and reputation are important purchase drivers in Japan. The Canada Beef team will undertake a channel specific focus on demonstrating and promoting the marketable value of Canadian Beef in the functional terms of yield, quality and profit advantages that are not always fully considered in the commodity beef buying scenarios in Asia. Canada Beef programs will drive initial sales volumes resulting in increased carcass utilization and expanded product mix opportunities. Functional analysis by the Canada Beef team during promotional events will demonstrate value through increased profitability. Simply put, short term sales lift provide the opportunity to measure Canadian beef performance against other competitive protein choices. All promotion types and applications will be standardized and detailed across all markets to facilitate consistent investment and measures of performance, success and impact.
Through this program, the Federation pursues this large segment of the beef market, one that must now be further developed if the industry’s long term tonnage and market share goals are to be realized. The Federation's Tokyo-based contractors approach small, medium, and large sized department stores, supermarkets, hotels, and restaurants to investigate undertaking Canadian beef and veal promotions to demonstrate that Canadian
- 17 - beef and veal products are attractive to the Japanese consumer. Export Members nominate Canadian-beef clients for a number of these promotions as well. Export Members also individually develop terms of reference for the selection of cooperating companies who do not presently purchase Canadian beef and veal products. The Federation estimates that 50 individual promotions will be completed.
Multi-media advertising, product demonstrators, and point-of-sale (POS) materials are supplied to the cooperating clients in exchange, where possible, for guaranteed purchase quantities of Canadian beef and veal. In all cases, companies are selected after they have indicated a strong willingness to continue carrying Canadian beef and veal, subject to consumer acceptance of the product. The Federation's series of promotional materials specifically designed for the Japanese retail and food service sectors will be used in these promotions. Success will be measured by the penetration of Canadian beef into Japan’s retail and food service sectors in Japan. (CBCMDF)
5. Food Shows $75,000
In order to introduce Canadian beef to Japanese users and distributors, CANADA BEEF will participate in two primary food shows (FOODEX and Canadian Culinary Cup) in cooperation with the Canadian Embassy. This will provide an opportunity for Japanese users to be introduced to Canadian beef while also being exposed to other Canadian agri-food products such as pork, seafood, and spirits. The Federation will augment these two major shows with several smaller cooperative events, that are sponsored by Japanese clients and industry associations. Success is measured by the emerging cooperation of Canadian agri-food industries, and by how the entire Canadian agri-food sector is perceived by Japanese clients. (CBCMDF)
6. Promotional Materials $100,000
The preparation of generic promotional and reference materials provides a base level of support for our members and their clients to assist them in delivering the CANADA BEEF message to their clients. Success is measured by the multi-purpose effectiveness of these materials in supporting the sales efforts of our members, and by the increased awareness of Canadian beef in the target market. All materials will reinforce Canada’s health and safety messages in the face of negative BSE imaging.
Recognizing that competitors such as Australia have recently increased their check-off contributions to strengthen their collateral investment in this area there is both a need and an opportunity to develop additional technically oriented marketing materials to promote and demonstrate the Canadian Beef Advantage. The Canada Beef team will work in close collaboration with the Calgary team to develop and produce science based resources for this market with a focus on beef quality, safety and profitability. (CBCMDF)
7. Newsletter $80,000
- 18 - The newsletter is the window to all of our past and future business contacts. Our mailing list is continually expanding. The newsletter has been used to describe the quality and selling attributes of Canadian beef, to highlight our past successful events, and to announce our future events. One section in each issue highlights one of our members and describes their relationship with CANADA BEEF and the products and services the member provides. (LEGACYI)
8. Market Research $80,000
The Federation will undertake to conduct beef quality perception research in the Japanese marketplace to determine channel specific perceptions and attitudes regarding current domestic and imported beef quality attributes. The research will seek direct feedback from both senior marketing and operational levels in both the retail and food service sectors to identify potential opportunity gaps, challenges or barriers that Canada Beef might be facing in Japan. This kind of competitive analysis is integral in understanding the real and perceived quality attributes, attitudes and expectations of the evolving beef marketplace in Japan.
The Federation will undertake a comprehensive distribution channel satisfaction survey conducted by an independent research firm to subjectively measure performance, success, impact of Canada Beef programs, implementation and sector penetration within the marketplace. This survey will be conducted in Q4 with final reporting at the AGM in March. This project will include direct feedback back from all distribution channel partners and end users. (CBCMDF)
9. Advertising and Public Relations $500,000
By creative use of joint advertising opportunities and by linking our efforts with other stake-holders in the food industry, the Federation will achieve a high profile for Canadian beef. Advertising and public relations activities are primarily are focussed within selected niche markets and through the Japanese-language web site. Specific local and regional advertising will be completed in support of CANADA BEEF brand recognition within sub regions where awareness will be maintained in anticipation of future market success. Significant super-regional advertising will be completed during the initial stages of market re-entry in order to bring Japanese customers back to the Canadian retail meat case and restaurant menu. This enhanced advertising is also designed to instil confidence in Canada’s prior Japanese retail and food service end-users. (CBCMDF)
TOTAL JAPAN MARKET DEVELOPMENT $2,276,000
- 19 - C. Korea Market Development Program
CANADA BEEF's goal is to capture a 12% share of South Korea's 430,000 tonne imported beef market by the year 2015. This will amount to an estimated 50,000 tonnes ($230 million) of beef products, which is equivalent to 175,000 head of Canadian grain-fed cattle. Canada has not exported beef to South Korea since its market closed in May 2003.
1. Overview of Market Conditions
BSE scare and lack of beef supply have caused several unprecedented situations in the Korea`s meat market. As a mixed result of sluggish economy and short beef supply, there seemed to be a 1.8 % increase in overall beef consumption in 2005, while there was 2 % decrease in demand for import beef. Korea`s beef import has increased by about 28 % over 2004 to about 204,753 tonnes in 2005. Australian and New Zealand beef, especially Short Rib price has soared by more than twice in 4th quarter of 2005 over pre-BSE times. As of December 2005, Korean beef cattle herd increased by 27.3 % to 1.63 million head over December 2003. Korean cattlemen, being encouraged by high domestic cattle price, will continue to increase the cattle herd to over 2.1 million head in 2006. The progress of negotiation between the US and Korea over market access is pushing down domestic cattle price.
Korea determined to grant market access to the US boneless beef under 30 months of age. The same condition will apply to Canadian beef as well when Korea open the border to Canadian beef. The Korean government officials conducted preliminary on-site inspection in Canada this January. Korea seems to consider having some months interval gap between Canada and the US in the resumption of beef import, while Canada is pursuing simultaneous border opening to Canadian and the US beef on the same terms.
2. Current Business Situation and Outlook to 2005
Korea’s economic growth may bounce to 4.7% in 2006 after 3.9% growth this year, due mainly to recovery in domestic consumption combined with growing world economic environment. Korea`s stock index broke 1,400 point mark and seems to be able to rise to as high as 1,250 points, reflecting on ample liquidity, the US interest rate hikes, the easing of concerns over North Korea, recovering domestic demand, and the continued corporate restructuring and strong corporate results.
The average exchange rate in 2005 has been appreciated at U$ 1,024 /Won. The US`s weak dollar policy has been the main reason for continuing appreciation of Won value against dollar. Won is expected to continue to be appreciated against dollar to U$ 990/W in 2006. Korea has been worried over the possibility of export business being hurt by this situation.
- 20 - The nation`s per capita national income is expected to reach U$ 16,900 this year and U$ 18,000 by 2007, boosted by stronger economic growth. This will strengthen consumer buying power. Domestic consumption is likely to increase 2.5% in 2005, after shrinking by an estimated 0.8% in 2004, due to the gradual recovery of private consumption and stronger Won.
3. What the Market Is Doing This Year
While North American post-quarantined beef inventory brought more sales margin for importer/distributors in 2004, the continuing border closure, higher Australian beef export price, and slow demand for import beef, pressured a number of the Korean importers financially into restructuring and downsizing their companies. Some of major importers have been able to build or expand their chilled beef storage capacity and case ready meat processing facilities in order to play leading role in post-BSE times.
Because of resistence of the Korean consumers` negative sentiment against the US beef, the retailers have yet to actively merchandise and sell US beef in their stores. According to a major consumer survey(by KREI), 73% of Korean consumers said they will not eat US beef even after the border opening. Much higher Australian beef purchase cost pushed up retail beef price, slowing down consumers` purchase of beef.
With BSE related beef supply pressure and high beef menu cost, even the high-end Korean restaurants have used Australian beef cuts as the replacement for North American beef. The Korean consumers do not appreciate the reality that they have to pay a lot to have lower quality of beef. Korea`s food service beef market is expected to be reorganized into a chilled beef-oriented market. The Western style family restaurant chains are getting more popular while competing between themselves in marketing chilled beef steak.
Korea`s National Assembly finally passed the bill of mandatory country of origin labelling for dishes served in restaurants partly as a safeguard against BSE threat. Under this act, the country of origin indicating system on the meat menu at over 300 sq metre sized restaurants will be required from 2007. This could work as a trade barrier because restaurants usually refrain from selling import beef because of Korean consumers` strong preference for domestic beef attribute. The Federation is trying to turn this negative regulatory environment into promotional opportunities based on strong relationship with some specific Korea clients who perceives Canadian beef advantage.
4. What Our Competitors Are Doing
A. United States
No US beef has been imported in 2005 due to Korea`s continuing ban. The price of post- quarantined US beef products was strong in the market. Post-quarantined North American Short Rib price has risen almost by twice as much as in pre-BSE times but
- 21 - because the shelf life of the US beef expires in December 2005, there is no US beef left in Korea.
US MEF conducted 10-day frozen beef promotions at about 40 retail outlets in 2005. US MEF Korea has not really supported North American approach to the BSE problem in Korea. US MEF has hired the service of a professional PR agency to conduct promotion and information activities.
Korea offices of US major packers such as Excel, Tyson/IBP, and Swift are focussing on their businesses to sales of pork or processed meat products in Korean market.
B. Australia
Australia is expected to capture 70 % of Korea`s import beef market share in 2005. Their export to Korea is expected to increase to 143625 Mt in the same year. Australia`s beef export to Korea increased only by 35 % over 2004 even in the absence of North American beef. This, at least partly reflects on the limited supply availability of Aussie beef for Korea. Short Rib, Chuck Roll, Shoulder Clod, Shank, Brisket are 5 major items for export to Korea which represent over 50% of Australia`s total shipments to Korea.
Meat and Livestock Australia aggressively conducted 10-day promotions to promote its `Clean and Safe Australian beef`, especially their grain-fed chilled beef in almost 700 retail outlets in 2005. These promotions were combined with placement of advertisements in national newspapers 7 times. MLA even conducted every other special event for consumers in each month with spending huge promotional budget.
Australia`s share of Korea`s import chilled beef market is expected to represent about 95% in 2005 as same as in 2004. Total fresh/chilled beef sales account for about 13% of their overall export to Korea. The importers` risk of having big chilled beef inventory, coupled with MLA`s active promotion, raised the demand for Australian chilled products. MLA, in coordination with a few Korean importers, very actively conducted branded chilled beef products in Korean retail stores.
C. New Zealand
Korea is expected to import 57,018 tonnes of beef from this country in 2005, up by about 8% from 2004. New Zealand`s market share decreased from 33% of 2004 to 28 % in 2005. Grass-fed Short Rib, Shoulder Clod, Chuck Roll, Brisket, and Hip are 5 major export items, representing almost 62% of New Zealand`s total shipments to Korea. There was temporary import an on the products of a New Zealand packer and recall of their products with the finding of endosulfan in the products of the same packer.
New Zealand`s level of activity has been as steady as in the previous years. They conducted low cost seminar at a college and food service promotions in hotels twice in
- 22 - 2005. Meat New Zealand has organized a cooking competition for amateur cooks and sponsored beef and other promotional materials at cooking contests twice as well.
New Zealand suppliers have greatly benefited from absence of North American beef supply in 2005. While food service, catering, and military sector have been their target market, some of them successfully got their chilled beef into Korea`s retail sector. New Zealand beef suppliers had begun to expand sales of chilled beef and captured 5% market share of total Korea`s chilled beef import in 2005.
D. Other countries
Mexico is expected to export about 4,110 tonnes of their beef products to Korea, capturing 2 % of market share in 2005. Mexico started exporting beef products to Korea in early 2004 and chilled beef in early 2005. There was temporary ban on the import from Mexico due to one Mexican packer`s fraud mixture of US beef in the shipment to Korea in 2004.
Some promotional programs have been conducted by the local agents of Mexican suppliers. Mexico has no representative non-profit organizations to conduct promotions in Korea. Each of importers have promoted Mexican products by themselves.
Beef importers in Korea have increased trade with Mexico to find replacement for grain- fed beef. The range of quality is quite various.
5. What the Canadian Industry is Doing
Korea imported no Canadian beef and beef offal products in 2005 due to their continuing ban on the beef import from Canada. Since December 2005, there has been no North American post-quarantined beef. The vacuum created by the absence of North American beef in the local market was filled by Australian and New Zealand beef. The Federation announced their goal of achieving 10% market share in Korea`s post-BSE market through their regular seminar, while gaining big support from the clients in Korea. Each Export Member, independently or through the Federation, have interacted with each of their own major clients and potential clients over post-BSE business plan.
The period of absence of Canadian beef in the market has interestingly reminded the Korean clients of the importance of Canadian beef in terms of availability, quality, and negotiation power. When they get mentally prepared to immediately resume their purchases of Canadian beef once access is restored. We need to complete all necessary pre-arrangement for immediate shipment to Korea, while continuing to bring up best possible recovery strategy.
6. What the Federation is Doing
- 23 - The Korea office conducted no food service and retail promotions due to no availability of Canadian beef. The Korea office conducted one small inner seminar; two medium-sized seminar; one big market access seminar; two food shows; two meat cutting demonstrations; a VIP Beef Awareness Mission in 2005-2006 fiscal year; and ongoing updating of the local Home Page. The Korea office, for the first time, subsidized a professional research on the economic impact of BSE. The Korea office has worked as key channel of communication between the beef industries of Canada and Korea. The Korea office, through its independent relationship with Korean government officials, politicians, and academics, has also worked as the key source of information and strategy and influencer regarding border opening issue for the Government of Canada and Canadian beef industry .
The Korea office will encourage both export members and importers to communicate more actively with each other to achieve BSE recovery in a speedy way. To strengthen promotion activities, the Korea office will select right importer/distributors and cooperate with them to conduct either branded or generic promotions in loyal retail stores and food service outlets more on long-term and regular basis. The clients responded to the Korea office`s education programs including seminars (59%) and information providing activity (10%) are the most satisfactory to them, the Korea office will keep up these activities, while developing some other useful and creative programs.
Because bone, bone-in products, and offal products will be excluded from list of products eligible for export, the Korea office will concentrate more of its effort on supporting boneless product development and promotion. The Korea office is very interested in developing more professional, detailed, and standardized Handbook of Canadian beef to arouse interest of the Korean clients in product sourcing or development with Canadian suppliers. It is also interested in having education programs to interact more actively with Korean clients over the product quality, yield, and specification test.
7. BSE Recovery
Right after the border opening, retail and food service promotion need to be organized based on strategy discussed between the Korean office and a few major importers. While not excluding spot promotions, the coordination with these major importers will be made on six month or one-year commitment so that Canadian beef will be featured in some specif stores very regularly. The Korea office will develop Canadian beef brand image that might be more appealing to the Korean consumers.
There will be more resources allocated for different type of programs. Branded promotions need to be more actively conducted in close coordination between specific exporters, importers, the Korea office, and end-users. It is recommended that each export member consider branded chilled beef promotion with the use of Partners` Program The financial support to their brand name development can be considered as a big encouragement for them. The possibility of organizing Mission consisting of these major importers` selected end-users need to be considered. The Korea office will try to make
- 24 - its seminar and education programs more sophisticated through addition of retail merchandising and yield test programs. Through these active promotional efforts, recovery of pre-BSE level of monthly export should happen within less than a year.
Through CBEF Korea`s own survey, Korean importers responded limited availability and purchase opportunities (27%), insufficient branded and generic promotion (32%), price competitiveness (16%), suppliers` passive trade attitude (13%) as the main problems CBEF and their members have to tackle in post-BSE times. CBEF cannot recover the lost market share by itself. Fast recovery is possible when these mentioned problems are tackled and it is absolutely necessary for the members to work actively on these matters.
Korea Market Development Program
1. Market Representation $ 227,000
The Federation has contractually engaged two full-time and one part-time individuals in Seoul to represent the Federation and its members in South Korea. The contract includes all non-promotion operating costs of the representative, including administrative assistance, transportation, hosting/entertainment, and office facilities. The representative provides a primary and vital link between Canadian BEEF exporters, and new and existing Canadian-BEEF clients in South Korea. This individual also monitors, reports, and represents the Federation and its members regarding all regulatory market access matters affecting Canadian BEEF and veal products. This position actively identifies new potential clients for Canadian BEEF on behalf of our members. This position continually monitors existing and emerging constraints and opportunities facing Canadian BEEF exporters in South Korea, and recommends industry wide and company-specific responses to address them. This position also takes primary responsibility for the Federation's core market development program in South Korea. (CAFI)
2. VIP BEEF Awareness Mission $ 55,000
One in-coming mission, consisting of a total of approximately six senior Korean meat industry executives, will be completed. The purpose of this mission is to create a "Buy Canada" mandate within the most senior levels of prominent meat import and distribution companies. This mission will also allow buyers to increase their commitment to Canadian BEEF and veal, based on knowledge and confidence. (CAFI)
3. CANADA BEEF Seminars $ 150,000
It is vital that CANADA BEEF provide educational services and highlight Canada's competitive advantage to the Korean meat trade by conducting seminars. Members will also be invited to attend these events, to display their products and meet with buyers. For this purpose, the Federation will hold a CANADA BEEF seminar at a city chosen for its
- 25 - potential to generate new sales each year. Additional Technical Seminars, featuring BEEF cutting demonstrations will be completed for specific clients groups. (CAFI)
4. Retail and Food Service Promotions $ 700,000
The Federations promotion strategy for Asia is to focus on distribution channel development tactics supported by consumer marketing promotions to enhance and grow sales opportunities. Channel development strategies and tactics will be designed to create demand and grow volumes within the delivery system by differentiating Canadian beef and the Canada Beef Export Federation team from our competitors. This will be accomplished by leveraging the Canadian beef advantage and Federation expertise to build and implement business successes for our trading partners, end users and consumers. The Canadian beef brand represents outstanding quality, safety, craftsmanship and value that is not currently found or fully understood in the marketplace. This value position must be demonstrated, proven and earned in the marketplace to differentiate ourselves from our competitors. Price, quality, craftsmanship and reputation are important purchase drivers in Korea. The Canada Beef team will undertake a channel specific focus on demonstrating and promoting the marketable value of Canadian Beef in the functional terms of yield, quality and profit advantages that are not always fully considered in the commodity beef buying scenarios in Asia. Canada Beef programs will drive initial sales volumes resulting in increased carcass utilization and expanded product mix opportunities. Functional analysis by the Canada Beef team during promotional events will demonstrate value through increased profitability. Simply put, short term sales lift provide the opportunity to measure Canadian beef performance against other competitive protein choices. All promotion types and applications will be standardized and detailed across all markets to facilitate consistent investment and measures of performance, success and impact.
CANADA BEEF will undertake Canadian BEEF and veal promotions in a number of supermarkets, restaurants, and hotels to demonstrate the acceptability of Canadian BEEF and veal to Korean consumers. The Federation's Export Members will be asked to nominate specific clients for these promotions. Where possible, these promotions will guarantee certain minimum purchase quantities, permanent menu listings, and/or promotion activities on behalf of the client. Previous experience with Asian retailers and food service companies has proven that Canada's image of a clean environment is very popular with their clients. These same images are valued by the wider consumer public. We are convinced that holding retail and food service Canadian BEEF promotions is the most tangible and effective way to let supermarkets gain experience and exposure to purchasing Canadian BEEF continuously. Success will be measured by the penetration of Canadian BEEF into South Korea’s retail and food service sectors. (CBCMDF)
5. Food Shows $ 50,000
By actively cooperating with the Canadian Embassy and Consulate, the Federation will conduct a limited number of co-sponsored promotions, designed to raise the profile of
- 26 - Canada and Canadian BEEF simultaneously for mutual benefit in a cost effective manner. The goal is to correct misperceptions and to become known as a credible industry which must be taken seriously. Activities undertaken in the past year, with great success, included the Federation's attendance at Food & Hotel Korea. (CBCMDF)
6. Promotional Materials $ 100,000
The preparation of generic promotional and reference materials provides a base level of support for our members and their clients to assist them in delivering the CANADA BEEF message to consumers. A wide range of promotional materials will be targeted to the hotel and restaurant (frozen portion control BEEF and veal) and specialty (processed) sectors. By preparing materials which emphasize our selling points and educate the customer how to properly thaw, prepare and present Canadian BEEF. The Federation will create a new series of promotional materials specifically designed for the Korean retail sector. Materials will include such items as BEEF tasting booths, consumer-directed information kits, recipe cards, rail cards, store signage, and consumer prize packages.
Recognizing that competitors such as Australia have recently increased their check-off contributions to strengthen their collateral investment in this area there is both a need and an opportunity to develop additional technically oriented marketing materials to promote and demonstrate the Canadian Beef Advantage. The Canada Beef team will work in close collaboration with the Calgary team to develop and produce science based resources for this market with a focus on beef quality, safety and profitability. (CBCMDF)
7. Newsletter $ 15,000
The newsletter is the window to all of our future business contacts. Our mailing list is continually expanding. The newsletter has been used to describe the quality and selling attributes of Canadian BEEF, to highlight our past successful events, and to announce our future events. One section in each issue highlights one of our members and describes their relationship with CANADA BEEF and the products and services the member provides. (CBCMDF)
8. Market Research $80,000
The Federation will undertake to conduct beef quality perception research in the Korean marketplace to determine channel specific perceptions and attitudes regarding current domestic and imported beef quality attributes . The research will seek direct feedback from both senior marketing and operational levels in both the retail and foodservice sectors to identify potential opportunity gaps, challenges or barriers that Canada Beef might be facing in Korea. This kind of competitive analysis is integral in understanding the real and perceived quality attributes, attitudes and expectations of the evolving beef marketplace in Korea.
- 27 - The Federation will undertake a comprehensive distribution channel satisfaction survey conducted by an independent research firm to subjectively measure performance, success, impact of Canada Beef programs, implementation and sector penetration within the marketplace. This survey will be conducted in Q4 with final reporting at the AGM in March. This project will include direct feedback back from all distribution channel partners and end users. (CBCMDF)
9. Advertising and Public Relations $ 300,000
By creative use of joint advertising opportunities and by linking our efforts with other stake- holders in the food industry, the Federation will achieve as much profile as possible. All advertising and public relations will be focussed within selected niche markets and through the Korean-language web site. Specific local and regional advertising will be completed in support of CANADA BEEF brand recognition within sub regions where awareness will be maintained in anticipation of future market success. Significant super-regional advertising will be completed during the initial stages of market re-entry in order to bring Korean customers back to the Canadian retail meat case and restaurant menu. This enhanced advertising is also designed to instil confidence in Canada’s prior Korean retail and food service end-users. (CBCMDF)
TOTAL KOREA MARKET DEVELOPMENT PROGRAMS $1,677,000
- 28 - D. Taiwan Market Development Program
CANADA BEEF's goal is to capture a 22% share of Taiwan's 90,000 tonne imported beef market by the year 2015. This will amount to an estimated 20,000 tonnes ($105 million) of beef products, which is equivalent to 70,000 head of Canadian grain-fed cattle. Canada has not exported beef to Taiwan since its market closed in May 2003.
1. Overview of Market Conditions
According to Taiwan Customs, beef import volume from January to September 2005 was 54,274 tonnes; the total volume increased by 4% compare with last year, same period. US imports were 7,023 tonnes, New Zealand was 24,130 tonnes, decreased by 12%, while Australian volume was 21,627 tonnes, increased by 8 %. As well, Panama was 962 tonnes, market share 1 %, and Nicaragua was 533 tonnes. Because the economic growth was below the forecast and Taiwan suffered from a long-term political instability, the lower price beef items are more in demand. Australia and New Zealand short rib bone-in is replacing North American beef. The purchasing of AAA/Choice will be changed to purchase of No Roll. Moreover, the Taiwan beef best sellers are chuck roll, rib finger, shin/shank, rib eye from cow or bull, short rib boneless, chuck tender, kunckle, and tenderloin from cow or bull.
Since the first Canadian BSE case in 2003, Taiwan stopped beef importation from Canada. There is currently no Canadian beef in the Taiwan beef market, so the successes and failures of Canadian beef and veal could not be evaluated at this moment.
2. Current Business Situation and Outlook to 2006
The economic growth rate is now recovering fast from 5.91% in 2004 to 3.52% in 2005. The forecasted economic growth rate for 2006 is 4.7%. The economic growth rate of Taiwan might keep on about 4.5% in 2006 to 2010. The government strategy will strengthen and increase domestic demand. If the cross-strait direct transportation between Mainland China and Taiwan could be achieved sooner, it will be a great help for the Taiwan economy.
Due to the continuous devaluation of the US dollar, the exchange rate for New Taiwan Dollar is about 25-26 per Canadian dollar in 2005. The currency is forecast to be about NT$26-28 per Canadian dollar in 2006. In order to enhance the competition on exports, the government prefers to revise the currency strategy to devaluation.
In past years, the repression of nuclear energy by the Government of Taiwan has seriously effected the regularity of the economy. The limitation of cross-strait investment narrowed the expansion of Taiwan enterprises. Paying too much attention to elections and political competition led to a loss of faith by consumers in the Taiwan government. All of those worsening conditions let to the decrease of Taiwan people’s consumption capacity, including the purchasing of high price beef items.
- 29 - 3. What the Market is Doing
Taiwan importers have combined with the local wholesalers in order to expand market share and to add to the beef products sub-value. Importers are selling not only to wholesalers and local distributors but also directly to wet market; the best sales to wet market are rib finger, shin/shank, chuck tender, knuckle, short rib, and rib eye. As well, Taiwan beef importers actively built cooperation with meat processors to win over a large market share. They cooperate with both local and national meat processors who are the main providers of Chinese restaurants, hot-pot and mid-low priced steak restaurants. In this market, the beef best sellers are rib eye, tenderloin. Chinese restaurants tend to using rib finger, shin/shank, and tenderloin.
The trend of Taiwan retail to ‘bigger’ has become ‘the biggest’, and the smaller retailers have diminished. The beef sale quantity of the retai’ sector is 25% market share, including beef source and self-importation and purchasing from importers. For local super/hyper markets such as Sinon and Yumaowu and national hypermarkets such as wellcome, Carrefour, Cosco, RT-Mart, and Geant, the best sellers are top blade muscle, rib finger, shin/shank/ short rib,rib eye, knuckle, chuck tender, tenderloin, and chuck roll rib.
Food service has 20% market share of the beef sale quantity, and the sale routes include local restaurants, five-star hotels, and chain steak restaurants. In those routes, five-star hotels tend to use chilled beef items but local and chain steak houses like to use frozen beef products. Because Taiwanese Government intends to promote the delicious Taiwanese foods to whole world, diversified restaurants are big in Taiwan. In order to match up with customers` demand, steak houses are changing their style to diversified restaurant, which means they not only sell steaks but also hot pot and barbecue. Thus, the best sellers are rib eye, T-bone, striplion, short rib, tenderloin, and roast ready.
For political reasons, the Taiwan Government gives Panama the courtesy of non-customs duties. Only Panama is possessed of zero tariff on beef import; for other countries with entry into the WTO, eventually, the tariff on all beef items will go down to NT$10 per kilogram from 2004.
4. What Our Competitors Are Doing
A. United States
The US beef import quantity from April to June in 2005 was 7,023 tonnes for a market share of 13%. US beef realized sales of 7,023 tonnes because the Taiwan government temporarily reopened to US beef from April 16 to June 23, and the containers were transported overseas before June 23 and could enter Taiwan.
During the short re-import period, USMEF focussed on promotion of individual items and on the brands from specified exporters. After US beef was banned again, USMEF Taiwan
- 30 - held a press conference about the newest US BSE information and the future of US beef. They reported update information to staffs of Taiwan beef industries, and notified that the AIT has started negotiating with the DOH about the US beef access. Many importers think that after the Japan market reopened, they have the possibility to discuss the reopening of the Taiwan market. Regarding US beef re-imports, USMEF kept searching for ways and forces to negotiate with the Taiwan Government.
By way of a public relations company, USMEF held several promotions and sent out videos of US beef advertisements in the temporary re-import period. For the reopening of beef import to Taiwan, USMEF is preparing budgets and a lot of sales promotions plans. Assisted by the public relations company, USMEF and AIT held a conference via Business Weekly. The main topic of the conference was ``Seminar On the Safety of Beef Consumption and BSE``, and they invited a Japanese expert to give a speech.
B. Australia
The Australia beef import quantity from January to September in 2005 was 21,627 tonnes for a market share of 40% in 2005. Frozen beef sales decreased by 8% to 19,728 tonnes. Fresh beef sales increased by 3% to 1,899 tonnes. Because of the short of Australian cattle and the high demand of Korea and Japan, the beef supply from Australia was significantly below the market requirements.
MLA worked through supermarkets to promote the AUS wagyu beef. The promotion accompanied the Beaujolais Festival in the red wine season. They lowered the price of Wagyu steak and Wagyu shabu-shabu, and attracted consumers to buy those beef products with red wine. They said enjoying waygu beef with Beaujolais wine will bring consumers a wonderful experience.
MLA Taiwan office is actively promoting Australian grain-fed beef products which it focuses on the food service market to replace North American beef. According to the current condition, it is successful because consumers do not have any other choice but Australia beef. For gathering more young consumers, MLA is starting to hold many promotion activities at elementary and secondary schools.
C. New Zealand
The New Zealand beef import quantity from January to September in 2005 was 24,130 tonnes which was a market share of 45%, exceeding the market share of Australian beef. Frozen beef sales decreased by 8%. Fresh/chilled beef sales decreased by 43% to 1,918 tonnes. The marketing share of New Zealand beef in Taiwan in 2005 was still as large as expected, this was because there are many food services which tend to use New Zealand beef instead of high-priced North American beef.
Meat New Zealand does not operate an international office in Taiwan. The Strategy of New Zealand beef promotion is still focused on the relation with beef importers. New
- 31 - Zealand companies maintained their long and strong relationships with Taiwan`s major importers. New Zealand has built a very strong image in the food service market which explains why many chefs prefer New Zealand beef.
With the holidays of Taiwan, such as Mother`s Day, Dragon Boat Festival, and Taiwan Father`s Day, New Zealand beef was promoted by renewing the menu of food services. Cooperating with several restaurants and hotels, New Zealand beef kept promoting their various beef products. They provided a new meal that contains rice, vegetable, and New Zealand beef, but just used a little seasoning and oil to emphasize the concepts of health. The promotion topic is the natual environment of New Zealand and low fat and high iron of New Zealand beef.
D. Other Countries
The other countries’ beef import quantity from January to September 2005 was 1,495 tonnes ( Panama 961 tonnes and Nicaragua 533 tonnes). Argentina cannot export beef to Taiwan since their last FMD outbreak in August 2000. Japan and Korea also cannot export beef to Taiwan because of FMD. Even though the Panama beef is not very competitive in the beef industry, no other country has completed any retail or food service promotions. Taiwan’s government has declared that this market will not be opened to Mainland China for now.
Panama beef will be possessed of zero tariff on beef import from 2004. All Panama beef is imported frozen beef at this time, the beef items only tenderloin and shank. Central & South America have not planned any promotional activities or selling strategies.
The beef packers of Central & South America do not provide after-sales service to the Taiwan local market. They do not even have international offices in Taiwan. Most of their beef business is arranged by the shipping company or Taiwanese people that immigrated to South America.
5. What the Canadian Industry is Doing
CANADA BEEF's goal is to capture a 10% share of Taiwan's import beef market (125,000 tonnes) by the year 2010. This will amount to an estimated 14,000 tonnes ($73 million) of beef products, which is equivalent to 42,000 head of Canadian grain-fed cattle. Our 2002 exports were 4,026 tonnes ($21 million), a 35% increase from 2001. Exports increased significantly over the first five months of 2003, prior to our BSE crisis. Total exports in 2003 fell by 63% to 1,487 tonnes ($8 million). The Taiwan government still banned Canada beef in 2005.
CBEF Taiwan was set up in October, 1996. Until now, Taiwan gained the Canadian beef importation quantities of 600 tonnes in 1996; 1,293 tonnes in 1997; 1,507 tonnes in 1998; 2,098 tonnes in 1999; 2.228 tonnes in 2000; 3,006 tonnes in 2001; 3,604 tonnes in 2002; and 1,915 tonnes in 2003; with the ban effective from this year. The current beef market
- 32 - in Taiwan has 65,000 tonnes total import quantity, and shared by traditional market by 45%, retail by 25%, food service by 20%, and meat processors by 10%. During the North American beef ban period, US beef was temporarily imported from April 16, 2005 to June 26, 2005, and obtained an import amount 7,023 tonnes, US$42 million value. From this, we can expect that Canadian beef will be as successful as US beef after the market reopens, and the Taiwan beef market has good potential for our expansion.
In regards to the market competition, based on our established strong relationships with national partners (such as top four beef importers: Shuh-Sen, Keeper, Mayfull, and Eagle; top three chain steak houses: Wang Steak house, My Home Steak, and Noble Family Steak; top supermarket: wellcome; and second largest hypermarket: RT-Mart) CBEF Taiwan set a strategy to enhance the relationship with all local partners, including importers, wholesalers and distributors, food services and retails. Furthermore, CBEF Taiwan also focuses on the connections with food service associations such as Western- Style Food Association, Chinese Foods Association, Chefs Society, and Chinese Food Cultural Association. Utilising the power of the organizations, we can increase the knowledge and reputation of Canadian beef in the hospitality field.
6. What the Federation is Doing
To maintain contact with legislators, Consumers Foundation, National Institute of Health, Taiwanese government Department of Health, Council of Agriculture and the BSE risk evaluation members, and to provide the latest information between each other for Canadian beef access, CBEF Taiwan promotes Canadian beef through lectures. CBEF Taiwan also makes efforts for education in Taiwan hospitality schools. In Taiwan, there are 37 colleges and universities and 157 vocational schools containing departments of hospitality, and CBEF Taiwan assists in lectures regarding beef knowledge. CBEF Taiwan also cooperates with the Council of Labour Affairs in beef techniques tutoring. Moreover, preparing for the market occupation after reopened, CBEF Taiwan cooperated with importers to educate wholesalers and users about the advantages of Canadian beef.
In spite of the Taiwanese government’s continued ban on import Canadian beef, the sale of Canadian beef was quite successful on middle cut and chuck cut and offals in the past. We do expect that we can achieve the import target with 5,000~7,000 tonnes as the Canadian beef re-opens to the Taiwan market.
Before BSE , the Canadian beef products sold to Taiwan were short rib bone-in 60%, top blade muscle 15%, rib finger 10%, rib eye 5%, T-bone 5%, and heel muscle 5%. The largest Canadian beef items selling in Taiwan were, rib eye, strip loin, short rib (Boneless), top blade muscle, chuck flap, chuck short rib (Boneless), heel muscle, rib finger, short plate, back rib, eye of round, inside and outside skirt, honeycomb tripe, tongue, tail and tendons. The product mix in Taiwan is very wide and profitable. After a lone-term ban for
- 33 - Canadian BSE eruption, Canadian beef will change the direction to compete for high price beef market when the border reopenes in the coming future.
7. BSE Recovery
In the past, the Department of Health (DOH) process for re-opening to North American beef was: the DOH committee reaches a consensus on reopening, DOH officials consulted on a draft resolution in an interdepartmental meeting; as long as most of the other departments agree, the issue is sent to the Executive Yuan for final decision, and lastly, a public announcement is then made by DOH. However, because the decision to open to US beef brought tremendous pressure from the Consumers Foundation and members of the Legislature, the procedure has now been modified. The new procedure is: DOH committee reaches a consensus on reopening during a meeting, DOH sends the meeting results to the Consumers Foundation, members of Parliament, and an epidemiological risk assessment group. If all of these three organizations agree with the consensus to reopen, the remaining steps as outlined will be be followed including the interdepartmental meeting, decision from Executive Yuan, and reopening announcement by DOH. The term for DOH committee members will expire by the end of this year. So DOH started to issue the new contracts to these members, but some members may decline to continue. We still kept an eye on the changes of DOH committee. Moreover, new factors may be added from legislators, Consumers Foundation, and National Health Research Institute. In regards to the North American beef reopening issue, Taiwanese Government would reopen Canadian beef and US beef simultaneously. We will follow those situations’ progress and provide the newest information for CBEF and CTOT to make the best strategy.
We will request CBEF members keep contact with Taiwan beef importers, and both of them hope Canadian beef can be imported soon. We do believe they will keep support and retrieve businesses on Canadian beef as Canadian beef re-opens to the market. CBEF Taiwan held a Taiwan beef buyers VIP Mission on August 21 - August 27, 2005, and this VIP group has visited CBEF members in Canada in 1998. This time CBEF members impressed those Taiwan beef buyers very different from the visit in 1998, because in 1998, Canadian beef exporters focussed on the businesses with the United States much more than other countries. This year CBEF members responded to the suggestions and criticisms from Taiwan VIP delegates very quickly, and Taiwan VIP delegates were satisfied about those CBEF members kind feedback. Thus I do believe that the target of 12,500 tonnes import quantity of Canadian beef will soon be achieved.
After Taiwan market reopens, CBEF Taiwan will put more efforts on promotion of rib, loin, and chuck. Plus, we will also keep promoting Eye of Round, Top Sirloin Butt, Sirloin Tip and Tri Tip have future potential in Taiwan market. The most popular offal items include honeycomb tripe, tendons and omasum. The Flap, Flank, and Skirts, Boneless Clod are new interest in the Taiwan beef market, and which they are also the new products we will develop and focus in the future.
- 34 - Taiwan Market Development Program
1. Market Representation $170,000
The Federation has contractually engaged two full-time and one part-time individuals in Taipei to represent the Federation and its members in Taiwan. The contract includes all non-promotion operating costs of the representative, including administrative assistance, transportation, hosting/entertainment, and office facilities. The representative provides a primary and vital link between Canadian BEEF exporters, and new and existing Canadian- BEEF clients in Taiwan. This individual also monitors, reports, and represents the Federation and its members regarding all regulatory market access matters affecting Canadian BEEF and veal products. This position actively identifies new potential clients for Canadian BEEF on behalf of our members. This position continually monitors existing and emerging constraints and opportunities facing Canadian BEEF exporters in Taiwan, and recommends industry wide and company-specific responses to address them. This position also takes primary responsibility for the Federation's core market development program in Taiwan. (CAFI)
2. VIP Mission $55,000
One in-coming mission, consisting of a total of approximately six senior Taiwan meat industry executives, will be completed. The purpose of this mission is to create a "Buy Canada" mandate within the most senior levels of prominent meat import and distribution companies. This mission will also allow buyers to increase their commitment to Canadian beef, based on knowledge and confidence. (CBCMDF)
3. Canada Beef Seminars $50,000
It is vital that CANADA BEEF provide educational services and highlight Canada's competitive advantage to the Taiwanese meat trade by conducting seminars. Members will also be invited to attend these events, to display their products and meet with buyers. For this purpose, the Federation will hold a CANADA BEEF seminar at a city chosen for its potential to generate new sales each year. Additional Technical Seminars (i.e. beef cutting demonstrations, merchandising techniques and cooking) will be completed for specific clients groups. (CBCMDF)
4. Retail and Food Service Promotions $300,000
The Federations promotion strategy for Asia is to focus on distribution channel development tactics supported by consumer marketing promotions to enhance and grow sales opportunities. Channel development strategies and tactics will be designed to create demand and grow volumes within the delivery system by differentiating Canadian beef and the Canada Beef Export Federation team from our competitors. This will be accomplished by leveraging the Canadian beef advantage and Federation expertise to build and
- 35 - implement business successes for our trading partners, end users and consumers. The Canadian beef brand represents outstanding quality, safety, craftsmanship and value that is not currently found or fully understood in the marketplace. This value position must be demonstrated, proven and earned in the marketplace to differentiate ourselves from our competitors. Price, quality, craftsmanship and reputation are important purchase drivers in Taiwan. The Canada Beef team will undertake a channel specific focus on demonstrating and promoting the marketable value of Canadian Beef in the functional terms of yield, quality and profit advantages that are not always fully considered in the commodity beef buying scenarios in Asia. Canada Beef programs will drive initial sales volumes resulting in increased carcass utilization and expanded product mix opportunities. Functional analysis by the Canada Beef team during promotional events will demonstrate value through increased profitability. Simply put, short term sales lift provide the opportunity to measure Canadian beef performance against other competitive protein choices. All promotion types and applications will be standardized and detailed across all markets to facilitate consistent investment and measures of performance, success and impact.
CANADA BEEF, in cooperation with key Taiwanese importer/distributors, will approach a number of supermarkets, restaurants, and hotels to investigate undertaking Canadian beef promotions to demonstrate how Canadian beef is attractive to Taiwanese consumers. The Federation's Export Members and their representatives in Taiwan will be asked to nominate specific clients for these promotions. Where possible, these promotions will guarantee certain minimum purchase quantities, permanent menu listings, and/or promotion activities on behalf of the client. Previous experience with food service companies in Taiwan has proven that Canada's image of a clean environment is very popular with their clients. These same images are valued by the wider consumer public. We are convinced that holding retail and food service Canadian beef promotions is the most tangible and effective way to let supermarkets gain experience and exposure to purchasing Canadian beef continuously. Success will be measured by the penetration of Canadian beef into Taiwan’s retail and food service sectors. (CBCMDF)
- 36 - 5. Food Shows $40,000
By actively cooperating with the Canadian Trade Office in Taipei, the Federation will participate in the Taipei International Food Show. The Canadian section of this show is designed to raise the profile of Canada and Canadian beef simultaneously for mutual benefit in a cost effective manner. (CBCMDF)
6. Promotional Materials $50,000
CANADA BEEF will expand the range of Chinese language promotional materials. New point-of-purchase (POP) materials and pamphlets targeted at the restauranteur, and the white table cloth chefs. The Federation will develop and produce other point-of-sale (POS) promotional items targeted at the consumer to complement the in-store and restaurant. Significant new consumer-oriented materials will be developed to support the reintroduction of Canadian beef in the Taiwan market. Clear and concise information regarding the heal and safety standards of the Canadian industry as it relates to BSE will support the recapture of past lost market share.
Recognizing that competitors such as Australia have recently increased their check-off contributions to strengthen their collateral investment in this area there is both a need and an opportunity to develop additional technically oriented marketing materials to promote and demonstrate the Canadian Beef Advantage. The Canada Beef team will work in close collaboration with the Calgary team to develop and produce science based resources for this market with a focus on beef quality, safety and profitability. (CBCMDF)
7. Market Research $80,000
The Federation will undertake to conduct beef quality perception research in the Taiwanese marketplace to determine channel specific perceptions and attitudes regarding current domestic and imported beef quality attributes. The research will seek direct feedback from both senior marketing and operational levels in both the retail and food service sectors to identify potential opportunity gaps, challenges or barriers that Canada Beef might be facing in Taiwan. This kind of competitive analysis is integral in understanding the real and perceived quality attributes, attitudes and expectations of the evolving beef marketplace in Taiwan.
The Federation will undertake a comprehensive distribution channel satisfaction survey conducted by an independent research firm to subjectively measure performance, success, impact of Canada Beef programs, implementation and sector penetration within the marketplace. This survey will be conducted in Q4 with final reporting at the AGM in March. This project will include direct feedback back from all distribution channel partners and end users. (CBCMDF)
- 37 - 8. Advertising and Public Relations $100,000
By creative use of joint advertising opportunities and by linking our efforts with other stake-holders in the food industry, the Federation will achieve a high profile for Canadian beef and veal. Advertising and public relations activities are primarily are focussed within selected niche markets and through the Chinese-language web site. Specific local and regional advertising will be completed in support of CANADA BEEF brand recognition within sub regions where awareness will be maintained in anticipation of future market success. Significant super-regional advertising will be completed during the initial stages of market re-entry in order to bring Korean customers back to the Canadian retail meat case and restaurant menu. This enhanced advertising is also designed to instil confidence in Canada’s prior Taiwanese retail and food service end-users. (CBCMDF)
TOTAL TAIWAN MARKET DEVELOPMENT PROGRAM $845,000
- 38 - E. China Market Development Program
CANADA BEEF's goal is to capture a 16% share of China’s (incl. Hong Kong) 366,000 tonne imported beef market Our 2005 exports are estimated at 20,000 tonnes ($69 million), up substantially from all previous years. It should be noted that the Chinese market of Macau was open to Canadian beef since February 2004 and that the Chinese market of Hong Kong reestablished trade in Canadian beef on November 30, 2004. Canada has not exported beef to Mainland China since its market closed in May 2003.
1. Overview of Market Conditions
China Customs registered a total of 6,552 tonnes of imported beef in the first 10 months of 2005, representing a year-on-year decrease of 71%. As in 2004, the ban on high quality grain-fed beef from Canada and the US caused a significant volume of beef being missed in the import trade, which cannot be replaced by other beef export countries. High quality grain-fed beef is indirectly transported into China’s different regions through a number of informal trading channels to fulfil the surging demands for high quality beef in the fast-developing food service sectors.
In the first 9 months of 2005, Hong Kong’s beef import increased by 22% to 139,286 tonnes. The share of boneless beef, bone-in beef and offal among the total imports is 22.5%, 2.4% and 72% respectively. Re-exports to Mainland China are registered at 25,854 tonnes, representing a year-on-year decrease of 27%. This also reflects the missing re-export volumes of high quality grain-fed beef that could not be replaced by other beef export countries.
Registered imports of Canadian beef products into Hong Kong increased by 227% in the first 9 months of 2005. This is due to the resumption of Canadian beef trade with Hong Kong since November 30, 2004. Effective June 2, 2005, an additional seven establishments were approved for exports to Hong Kong, which made up a total of twelve establishments eligible for exports to Hong Kong. Macau offers unrestricted access to Canadian beef. Import volumes of Canadian beef products continue to achieve high growth rate in Macau and Hong Kong for the China region. There are trends and great potential for Canadian beef to capture larger market shares in China, Hong Kong and Macau region.
2. Current Business Situation and Outlook to 2006
China’s GDP growth for the third quarter of 2005 reached 9.1%, still showing a promising and steady growth after the China Central Government has been implementing a number of administrative control measures. To maintain a sustainable and substantial GDP growth is a policy of China’s Central Government. By shifting more economic focus to encourage in-country consumer expense, significant decrease of individual’s income tax entry level enables the working class public to increase household expenditures.
- 39 - Hong Kong’s GDP growth for the third quarter of 2005 reached 7%, showing a good and continuous economic recovery. The consumer market is positively supported by the China Central Government’s continuous policy on “individuals travels” scheme, which allow individual travellers from various provinces of China to come down to Hong Kong and Macau often and freely in order to experience the metropolitan life.
Further to the “Closer Economic Partnership Agreement” (CEPA), a free-trade-zone-like agreement, which has boosted the services and trade activities between Hong Kong and Mainland China, China’s Central Government encouraged the so-called “Pan Pearl River Delta Economic Co-operation” which formulates the regional partnerships among China’s nine southern provinces, with Hong Kong and Macau, in a regional economic and trade bloc.
Effective July 21, 2005, the Chinese Yuan (RMB) appreciated by 2% and is allowed to fluctuate within controlled ranges against various international currencies. The international marketplace expects a stronger RMB little by little, which is positive for encouraging imports and also supports the China Central Government’s policy to boost consumer expenses.
The Hong Kong Dollar (HKD) is still pegged to the US Dollar (official exchange rate is 7.80). The tight links between the China economy and that of Hong Kong, keep urging the appreciation pressure on HKD to go in line with currency direction of RMB.
The China Central Government encourages more imported goods in order to ease the trade pressures on RMB appreciation. Coupled with a stable and probably stronger currency, rising per capita disposable income, inflation under control, and local people’s optimistic feelings about the economic future, China’s consumer buying power continues to grow, especially for foreign goods. The high level of savings and latest decrease of taxable income levels, also enable the growing consumer buying power in most cities.
Hong Kong remains the wealthiest city within China and there is increasing demand for safe, healthy and premium food products. Consumer confidence has been regained and retail sales volumes growth is resuming significantly. Salaries are back on track increasing to support growth of consumer spending. Inflation is back in economic reports.
3. What the Market is Doing
Importers in Hong Kong and Macau resumed Canadian beef imports immediately and actively, after Macau and Hong Kong re-opened market access to Canadian beef. Late and lack of good supplies of Canadian beef before peak season, have been distracting importers and distributors from much bold business planning.
- 40 - Hong Kong’s traders continue their roles (financial and logistics) in the beef trading business into Mainland China. Leading importers are continuously and progressively penetrating into Mainland China to secure market positions, especially after the CEPA is in place in 2004. Orders and payment are made in Hong Kong, while shipments are directly sent to various ports in China (Hong Kong, Macau, Shanghai, Dalian, Tianjin, etc). Several key importers also set up operations in Macau in view of the booming HRI sector in Macau. More importers/distributors are investing in value-added processing and packaging, with HACCP certification.
International retail giants are stepping up expansion plan in Mainland China, with the opening of retail market under the WTO commitments. Hypermarkets and supermarkets changed the eating habits of Chinese. Frozen and microwavable food are getting popular. Fresh meat counters are also quickly developed in high-end supermarkets, for better cut varieties and quality. Local meat brands are eagerly shaping up their packaging to gain consumer confidence whilst a lot of food safety issues about local foods were happened in 2005.
High-end retail stores in Hong Kong, due to greater sophisticated development, create stable sales channel for high-priced chilled middle cuts. Consumers are more and more gaining preference towards grain-fed beef. Hot pot beef items (boneless short ribs, boneless chuck short ribs, pastrami plate, etc) are available in most supermarkets (PARKnSHOP, Wellcome, DCH FoodMart, etc). Rib fingers have become stable items in stores, while top blade muscle is also gaining popularity.
Restaurant business continues to grow in China as urban residents have increases in incomes. In addition to Chinese hot-pot restaurants, increasing numbers of western-styled restaurants and BBQ restaurants boosts the demand for imported beef products. Increased business activities with foreign companies will allow more western culture and life style in China's major cities, which will benefit overall consumption of high-end beef cuts. High quality restaurants are growing quickly in major cities, which give imported foods much more chances in front of consumers.
Tariff reductions will gradually enable volume increase of imported beef into Mainland China. However, China has taken more stricter administrative measures for import meat product inspection and quarantine, such as the Chinese-language label. Hong Kong continues to be a free port for effective beef product trades.
4. What Our Competitors are Doing
A. United States
Officially, the import ban is still in place in China.
- 41 - Hong Kong customs registered a total of 31 tonnes (1 tonne of chilled boneless beef and 30 tonnes of prepared and preserved meat/offal) of US beef in the first 9 months of 2005.
USMEF operates its main Representative Office in Hong Kong, with 3 satellite offices in Mainland China - South China Office located in Guangzhou, Central China Office located in Shanghai, and North China Office located in Shenyang. As the import ban on US beef is still in place, USMEF is promoting US pork and the target markets are Hong Kong, Guangzhou, Shanghai, Beijing and Dalian. They exhibited at food shows (HOFEX in Hong Kong, Food & Hotel China in Shanghai) and organized pork seminars in various cities of China.
Market intelligence indicates US beef products are shipped to China via Vietnam, by a few traders in the US.
B. Australia
China Customs registered a total of 2,494 tonnes of Australian beef in the first 10 months of 2005, representing a year-on-year decrease of 80%. Australia’s market share was 38%. Offal shared 62% of the total Australian beef imports into Mainland China.
Hong Kong’s import of Australian beef increased by 109% to 8,495 tonnes in the first 9 months of 2005. Major increase was from the category of offal. Australia’s market share was 6%. Offal shared 80% of the total Australian beef imports into Hong Kong. Australia is the largest supplier of chilled beef to Hong Kong with a market share of 50%.
Meat and Livestock Australia (MLA) operates one office in Beijing to develop the entire China market. MLA aggressively organized seminars in Mainland China, and participated in the HOFEX show in Hong Kong and the Food & Hotel China show in Shanghai. Retail and Food Service promotional events are minimal. Wagyu beef from Australia is becoming more visible to create a premium quality image from price level point of view.
Major Australian beef suppliers to Hong Kong are Cargill and Elliott for muscle cuts, and AMH for offal. Taste Plus, representing Tender Plus, is the major supplier of Australian beef cuts in Mainland China. Wagyu beef suppliers such as Darling Down and Security are active in the market as well. Australian wagyu beef has been gaining exposure, as the most expensive beef product available in the market.
C. New Zealand
China Customs registered a total of 955 tonnes of New Zealand beef (almost 100% offal) in the first 10 months of 2005, representing a year-on-year decrease of 82%. New Zealand’s market share was 14%.
- 42 - Hong Kong’s import of New Zealand beef decreased by 26% to 2,638 tonnes in the first 9 months of 2005. New Zealand’s market share was 1.9%. Muscle cuts shared 60% of the total New Zealand beef imports into Hong Kong. New Zealand is the second largest chilled beef supplier to Hong Kong with a market share of 23%.
Meat New Zealand is still hiring a marketing agency in Hong Kong to deliver limited programs such as advertising and BBQ event. Chilled beef promotions are held at some retail stores in Hong Kong through the co-operation between suppliers and importers.
Major New Zealand beef suppliers to China and Hong Kong are Richmond, AFFCO, Alliance and PPCS. Some packers (e.g. Greenlea) have exclusive agent in Hong Kong. Organic beef from New Zealand, though small volume, is available in the market. Popularity in low-priced beef menus are still observed.
D. Other Countries
China Customs registered a total of 3,102 tonnes of beef products, with a market share of 47%, were supplied by Brazil, Uruguay, Argentina and Ukraine, in the first 10 months of 2005. Market intelligence indicated that South American beef imports into Mainland China are under-reported.
In addition to Canada, US, Australia and New Zealand, Hong Kong importers had transactions with another 26 beef supplying countries in 2005. Brazil continues to be the largest beef supplier to Hong Kong and the import volume increased by 25% to 75,182 tonnes in the first 9 months of 2005. Brazil’s market share was 54%. Offal shared 79% of the total Brazilian beef imports into Hong Kong. Argentina beef increased by 14% to 23,969 tonnes and offal shared 84%. Argentina is the third largest chilled beef supplier to Hong Kong with a market share of 10%. Major frozen beef cuts from South America are knuckle, strip loin and ribeye.
Beef marketing and promotion organization of these exporting countries are not found in Hong Kong and China. Argentina beef promotions are held at some retail stores in Hong Kong through the co-operation between suppliers and importers. South African beef has just started exposure in particular retailer.
Major beef suppliers from Brazil are Bertin, Margen, Friboi and GJ. Major beef suppliers from Argentina are Quick Food and Rafaela. Major beef suppliers from Uruguay are Colonia, Tacuarembo and Carrasco. South America became the top supplier of beef to Hong Kong because of low prices, improving trimming and packaging skills.
5. What the Canadian Industry is Doing
Hong Kong’s import of Canadian beef for the first 9 months of 2005 is 8,068 tonnes, representing a year-on-year increase of 227%. The share of boneless beef, bone-in beef and offal among the total Canadian beef imports is 60%, 11% and 29% respectively.
- 43 - Canada’s overall market share has increased to 5.8%. Canada is the fourth largest chilled beef supplier to Hong Kong with a market share of 9% (207 tonnes).
While Macau is open to all Canadian beef establishments, Hong Kong so far have registered 12 beef establishments (after 2 phases) for Canadian beef trades. All interested establishments are able to establish business contacts with importers in Macau and Hong Kong. However, for establishments that are of first time experience to local markets, the detailed logistics plans are yet to be worked out cost-effectively. CBEF have covered promotional activities for products of each of the establishments.
Export members are encouraged to be more active in China, Hong Kong and Macau - providing price quotes, meeting with clients, partnering in promotional activities, and participating in CBEF China’s marketing activities and new client development. Export members are also encouraged to expand the product range of Canadian beef muscle cuts, through existing import/distribution relationships and the established trade channels.
6. What the Federation is Doing this Year
CBEF China intensifies close liaisons with existing and potential clients to strengthen the business relationship and to identify opportunities. Clients have been demonstrating their continuous and firm interests and support to Canadian beef, after Macau and Hong Kong re-opened market access. CBEF China has been intensifying the marketing and promotional supports to local importers (for retailers and food service providers) in Macau and Hong Kong. CBEF China also participated in major food shows and is in close communications with various Hong Kong Chefs Associations in order to maintain active market contacts in general as well as to retain CANADA BEEF‘s strength and commitments on market development.
During the pursuit for resuming all beef trades, CBEF China has been co-ordinating with the Embassy and Consulates to push for earlier and broader (more products, more establishments) agreements on trades for all non-SRM beef items to re-access Hong Kong and Mainland China. The co-operations were also extended to facilitate “VIP Beef Buyers Awareness Mission” to Canada for bringing chefs and importers to visit Canadian beef establishments and meet with government representatives, for strengthening confidence in Canadian beef industry.
CBEF China’s regional goals are Hong Kong and Macau (for Pearl River Delta area), Shanghai (for Yangtze River Delta area), Beijing and Dalian (for the Northern Region). Consumption of high-end cuts in Hong Kong is presently the highest. There is increasing demand for high-end cuts in GuangDong Province, Shanghai and Beijing as a result of food service sector development. Dalian is a distribution centre for the Northeast China region and demand for varieties of beef products are developing. Since the BSE case, there is not enough Canadian beef inventory to support sizeable marketing activities in these regions. CBEF China has been assisting in linking the import sources and distributors in local markets.
- 44 - CBEF China’s product goals are middle cuts, short ribs, chuck items and short plate, while maintaining the offal volume in trades. Middle cuts are to build up visible brand and icon of high-end quality image of Canadian beef. Promotions of middle cuts at retail stores can demonstrate the quality to the eyes and minds of consumers. Short plate, in addition to offal, is to maintain substantial volume momentum for Canadian beef exports in local regional distribution networks. Since the import ban, there is not enough Canadian beef inventory to promote these products in Mainland China. Supplies of short ribs and chuck short ribs have become reliable in 2005 to local regions and enable trade volume growth and increasing interests in wholesale channels.
7. BSE Recovery
Persistence of marketing presence in the distribution, retail and food service sectors has been performing with the joint efforts and campaigns with most of the key players in respective fields. Canadian beef is back into markets in good and healthy shape and with strength and commitments. The superior quality images on real taste and international culinary varieties of grain-fed beef are also emphasized. Activities for food shows and advertisements will be intensified for sustaining the awareness to and co-operative relationship with local beef business community and retailers/consumers respectively. Efforts will also be focussed to reinforce member-client relationship alignment and set up partnership programs with key importers and distributors in order to motivate them on joint efforts for marketing and distribution programs.
Export members should ensure product availability and continuity as well as price competitiveness to allow market share growth. Stable supply has been a serious concern by many local importers after the re-open of Hong Kong market. Supply continuity and reliability are essential to distribution momentum and network development. Export members are encouraged to visit our markets so that closed group meeting among client, member and CBEF can be intensified. It is important to build partnership work teams instead of case-by-case transaction co-operations.
All the products that are allowed to import into China and Hong Kong again must be ensured, in order to fulfil the ongoing patience and support from importers/distributors. Macau is serving as secondary distribution centre for regional beef trade, which also supplement the bone-in beef trade when Hong Kong is still limited to boneless beef trade. Offal and short plate are important to maintain the volume momentum in the trade distribution networks in China and Hong Kong. It is important to demonstrate that Canadian beef exporters are reliable supply sources. CBEF China has repeatedly requested to lift the ban on all non-SRM products.
- 45 - China Market Development Program
1. Market Representation $345,000
The Federation has contractually engaged three full-time individuals to represent the Federation and its members in China (including Hong Kong). The contract includes all non-promotion operating costs of the representative, including administrative assistance, transportation, hosting/entertainment, and office facilities. The representative provides a primary and vital link between Canadian Beef Exporters, and new and existing Canadian Beef clients in China. This individual also monitors, reports, and represents the Federation and its members regarding all regulatory market access matters affecting Canadian Beef and Veal products in each target market and region. This position is expected to actively identify new potential clients for Canadian Beef and Veal on behalf of our members. This position continually monitors existing and emerging constraints and opportunities facing Canadian Beef Exporters in China, and recommends industry-wide and company-specific responses to address them. This position also takes primary responsibility for the Federation’s core market development programs in China. (CAFI)
2. VIP Mission $70,000
One in-coming mission, consisting of a total of approximately eight senior Chinese meat industry executives, will be completed. The purpose of this mission is to create a "Buy Canada" mandate within the most senior levels of prominent meat import and distribution companies. This mission will also allow buyers to increase their commitment to Canadian beef, based on knowledge and confidence. (CBCMDF)
3. CANADA BEEF Seminars $40,000
Marketing seminars, especially for hotels and restaurants, will be held in order to develop High-end Muscle Cuts. The seminars are business-oriented, by working with particular food service importers. Immediate business opportunities can be identified in North, East and South China. Canadian beef advantages will be addressed, and tasting and product display will be arranged during seminars. Export Members will also be invited to attend these seminars for sales leads follow-up. Additional Technical Seminars, featuring beef cutting demonstrations will be completed for specific client groups. (CBCMDF)
4. Retail and Food Service Promotions $285,000
The Federations promotion strategy for Asia is to focus on distribution channel development tactics supported by consumer marketing promotions to enhance and grow sales opportunities. Channel development strategies and tactics will be designed to create demand and grow volumes within the delivery system by differentiating Canadian beef and the Canada Beef Export Federation team from our competitors. This will be accomplished by leveraging the Canadian beef advantage and Federation expertise to build and
- 46 - implement business successes for our trading partners, end users and consumers. The Canadian beef brand represents outstanding quality, safety, craftsmanship and value that is not currently found or fully understood in the marketplace. This value position must be demonstrated, proven and earned in the marketplace to differentiate ourselves from our competitors. Price, quality, craftsmanship and reputation are important purchase drivers in China. The Canada Beef team will undertake a channel specific focus on demonstrating and promoting the marketable value of Canadian Beef in the functional terms of yield, quality and profit advantages that are not always fully considered in the commodity beef buying scenarios in Asia. Canada Beef programs will drive initial sales volumes resulting in increased carcass utilization and expanded product mix opportunities. Functional analysis by the Canada Beef team during promotional events will demonstrate value through increased profitability. Simply put, short term sales lift provide the opportunity to measure Canadian beef performance against other competitive protein choices. All promotion types and applications will be standardized and detailed across all markets to facilitate consistent investment and measures of performance, success and impact.
Based on the specific export/import relationships established, supermarket (in-store promotions) and HRI promotions (i.e. chefs table, restaurants and hotels promotions) will be completed in order to expand the volumes of muscle cuts - with priority on the Rib, Loin, and Chuck. Moderate marketing efforts will continue in support of sales volume growth and price realization for the full range of Thin Meats (i.e. Short Plate, Short Ribs, Chuck Short Ribs, Top Blade Muscle and Intercostal) to support the development of Chinese wholesale, retail, food service clients. Where possible, these promotions will guarantee certain minimum purchase quantities, permanent menu listings, and/or promotional activities on behalf of our clients. We are convinced that holding retail and food service Canadian Beef promotions are the most tangible and effective way to let supermarkets and food service establishments gain experience and exposure to purchasing Canadian Beef continuously. Success will be measured by the penetration of Canadian Beef into China’s retail and food service sectors. (CBCMDF)
5. Food Shows $80,000
The Federation will participate in Food & Hotel China show in Shanghai, HOFEX (bi- annual) in Hong Kong, and other smaller regional food shows. The Federation will exhibit at the Canadian Pavilion, if available, in order to raise the profile of Canada and Canadian Beef simultaneously for mutual benefit in a cost effective manner. It is important to have Export Members’ participation in these two major shows by displaying products (especially new products) and sending sales representatives to meet with new and existing clients. These shows are cost effective channels for the Federation and its members to maintain the market presence, and to identify business opportunities. By participating in these shows, the Federation is able to support the existing importers and distributors of Canadian Beef. The Federation would maintain sufficient resources to follow up and develop prospects identified during these shows. (CBCMDF)
- 47 - 6. Promotional Materials $35,000
CANADA BEEF will produce a limited range of Chinese language promotional materials. The preparation of generic promotional and reference materials provides a base level of support for our members and their clients to assist them in delivering the CANADA BEEF message to their clients. New point-of-purchase (POP) materials and pamphlets targeted at the food service sector will be developed. The Federation will also develop and produce other point-of-sale (POS) promotional items targeted at the consumer to complement retail promotions (eg consumer-directed information leaflets, recipe cards, logo stickers, etc). Success is measured by the multi-purpose effectiveness of these materials in supporting the sales efforts of our members, and by the increased awareness of Canadian Beef in the target market. Recognizing that competitors such as Australia have recently increased their check-off contributions to strengthen their collateral investment in this area there is both a need and an opportunity to develop additional technically oriented marketing materials to promote and demonstrate the Canadian Beef Advantage. The Canada Beef team will work in close collaboration with the Calgary team to develop and produce science based resources for this market with a focus on beef quality, safety and profitability. (CBCMDF)
7. Market Research $80,000
The Federation will undertake to conduct beef quality perception research in the Chinese marketplace to determine channel specific perceptions and attitudes regarding current domestic and imported beef quality attributes . The research will seek direct feedback from both senior marketing and operational levels in both the retail and foodservice sectors to identify potential opportunity gaps, challenges or barriers that Canada Beef might be facing in China. This kind of competitive analysis is integral in understanding the real and perceived quality attributes, attitudes and expectations of the evolving beef marketplace in China.
The Federation will undertake a comprehensive distribution channel satisfaction survey conducted by an independent research firm to subjectively measure performance, success, impact of Canada Beef programs, implementation and sector penetration within the marketplace. This survey will be conducted in Q4 with final reporting at the AGM in March. This project will include direct feedback back from all distribution channel partners and end users. (CBCMDF)
8. Advertising and Public Relations $40,000
Advertising and public relations activities are primarily focussed within selected niche markets. Specific national or regional advertising will be completed for the Federation to achieve a high-end profile for Canadian Beef and Veal. Specific public relations activities will be completed to pull the key Canadian Beef clients together. (CBCMDF)
TOTAL CHINA MARKET DEVELOPMENT PROGRAM $990,000
- 48 - F. Mexico Market Development Program
CANADA BEEF's goal is to capture a 26% share of Mexico’s 580,000 tonne imported beef market by the year 2015. This will amount to an estimated 150,000 tonnes ($600 million) of beef products, which is equivalent to 525,000 head of Canadian grain-fed cattle. Our estimated 2005 exports were 53,000 tonnes ($212 million).
1. Overview of Market Conditions
The Mexican Market continues to be a loyal ally for Canadian Beef. Mexican clients are more than ever aware of the improvements that our Industry has achieved in the last years and continue asking for Canadian product. Beef consumption in Mexico keeps growing which is an interesting indicator that we must continue with our efforts. The BSE issue seems to be forgotten now.
Friendly educational talks with our clients are helping to correct negative ideas that buyers could have about Canadian product. Export Members must be more aggressive when offering Canadian product to Mexican buyers, particularly those who have offices in the US , because most of the time the Canadian product is offered as a last option; this makes our clients think that the Canadian product is not as good as the one coming from other countries and at the end buyers think it should be cheaper.
2. Current Business Situation and Outlook to 2006
High oil prices around the world have benefitted the Mexican economy, increasing its USD reserves and fortifying the Mexican Peso. Mexico is one of the biggest oil producers in the world. As well, important transnational companies (from Japan, Korea, China, Germany, U.S.,mostly) continue to invest considerable amounts of money in new assembly plants in Mexico. Most of these companies are in the northern border of the country, however some of them are planning to open facilities in Central Mexico. Ironically, thousands of Mexicans emigrate to the US looking for better job opportunities and each year the amount of USD that they send to their families continues to grow. These cash deposits help increase consumption of every kind of goods in Mexico, and beef it is no exception.
GDP growth rate in 2004 was estimated to be 3.5%, and all the economic indicators show that by the end of this year the Mexican GDP will be 3.3% compared to the same period in 2004. The inflation factor, which reached 5.19% in 2004 will end this year in 3.5% according to the latest news from Financial Sources related to the Federal Government. Fiscal and Energy Reforms are still pending to be resolved; if they were resolved in the short term, the effect on Mexican economy would be more than positive, it would become a catapult for sustained economic progress in Mexico.
The Mexican peso ended 2005 at an average level of 9.00 Pesos per C$. The average exchange rate for 2006 is expected to be increased between 9.50 Pesos per C$ to 10.50
- 49 - pesos per C$. The Mexican Peso is considered a very secure currency among other things because it is supported on reserves of more than 65,000 million USD as the Mexico Stock Exchange reports sustained growing tendencies and the international oil prices remain high.
Consumer buying power continues to grow according to market expectations in spite of the current economic fundamentals such as GDP, IPC and inflation. Mexican exports in 2005 kept their positive tendency, developing a sense of trust in Mexican and foreign investors; this means that there’s more money out there to be spent. The consumption loans remain very strong (both from banks and private institutions). Housing and car loans are also showing signs of stronger demand. Major national banks compete against each other aggressively, promoting housing and car loans at fixed rates of 11% per year.
3. What the Market is Doing
Now that the BSE situation is behind (most Mexicans don’t even remember it), importers and distributors are taking their chances importing more Canadian product. This based particularly on two main things; 1) they had the chance to try Canadian product last year (when Mexico was closed to US product) proving to themselves that our quality and yields are much better than our competitors; and 2) CBEF continues “pushing” our clients to demand more Canadian product by telling them to do so with their suppliers.
It is important to mention that Mexicans consider Canada as a synonym of quality, specifically when it comes to food and food safety. There is no question that with the right promotion strategies and the support of sales offices, Canadian product will earn more space in our clients’ warehouses.
The unquestionable sales leader in Mexico is Wal-Mart, however other companies such as Soriana (no.2) and Comercial Mexicana (no.3) continue fighting aggressively against the American giant in different geographic areas of the country. It is important to notice that most of the beef purchased by Wal-Mart are domestic, so other companies like Soriana become better partners for our industry since they import more than 65% of their total beef. Regarding the company founded in 2003 (SINERGIA) which included Soriana, Comercial Mexicana and Gigante, it was initially conceived a s a purchasing entity, however it doesn’t apply for meat. Something that must be considered is that even when Wal-Mart is the sales leader in Mexico, they do not sell as much beef as their competitors.
Other big retailers like Gigante and Chedraui have the same policy as Wal-Mart and most of their beef purchases are domestic. There are however some medium-sized companies that support imported beef (Smart, Casa Ley, etc.) Recently Chedraui group acquired Carrefour Mexico, and through this transaction Chedraui now has more than 85 stores.
- 50 - Gigante continues with their strategy of remodelling old stores redirecting them to middle- class incomes. Soriana`s expansion plans project the opening of 40 stores in 2006 (this includes their price club format so as the traditional supermarket), and Comercial Mexicana will invest important amounts of money increasing their store numbers.
Successful entrepreneurs, new food service magazines, modern chef tendencies, excellent tourism levels and intelligent investors are bringing back to life this sector in Mexico. Although some problems derived from fiscal reforms in past years harmed the sector, this isn’t something that happens today. The gastronomic sphere is back in Mexico, this is something you can see in every major city along the country. Each time it is easier to find fancy restaurants (this is a direct effect of a better consumer buying power) showing high end cuts in their menus. Foreign food service chains such as Applebees, Chili’s, Sirloin Stockade and the classical burger restaurants like McDonalds, Wendy’s, Jack in the Box or Carl’s Junior continue expanding all around Mexico. Hotel and Restaurant Chambers report a promising future for the sector, based on the growing number of tourists that visit Mexico, as more often people eat outside home. One last point to mention is that new Chef Schools are opening in Mexico (particularly in Mexico City).
Mexican Health Authorities remain very strict on physical and paperwork inspections of beef coming from Canada (as from any other country) because of all the illegal beef imports from Australia, New Zealand and Central America lately. Food safety regulations must be perfectly accomplished in order to allow any meat load inside the country. No re- labelling is allowed any more as the risk of confiscating the whole load is always in the air. Mexican Animal Health wants to strictly enforce the Mexican Official Norm (NOM-030- ZOO-1995) which clearly indicates this and other specific situations.
It is important to mention this each time more facilities are opened to import beef to Mexico; recently the port of Veracruz and now Mazatlán (in the Gulf of Mexico and the Pacific respectively) have been added to the list of authorized entry ports. Manzanillo port authorities (in a meeting with CBEF) have committed to make more fluent any beef product import that arrives there.
4. What Our Competitors Are Doing
A. United States
Mexico represents one of the most important beef and beef variety meats markets for the United States. The Mexican market imported in 2004, 190,752 tonnes worth more than $500 million; if we observe this in volume and value, it means a huge decrease compared to 2003 of 43.2% on volume terms and a 42.9% on value terms (however we must consider that 2004 was a historic record year for Canadian Agri-Food Exports and that the Mexican border was closed to the US product the first months of the year). In 2004, Mexican market share for the United States was close to 63.3% of the total beef and beef variety meats imports in Mexico which represents in value close to 65%.
- 51 - USMEF continues with their national promotions undertaken in Mexico. An important part of their promotion is based on expensive billboards all over the country (particularly in major cities) with the slogan COMO COMO (which means HOW I EAT) mainly directed to the final consumers. USMEF is currently trying to cover both the food service and the retail sectors: the first one through Chef and Recipes Contests such as seminars in resorts at Mexican beaches and touristic points. The retail sector promotions are always supported with the performances of popular singers, pop bands or comedians. A USMEF common practice is to share expenses with the retail sector in case any special publicity or support is required. Lately the main protein source that USMEF is promoting is pork, however almost a month ago they slowly restarted promoting beef through their billboards.
There is no question that US exporters have an advantage over us, and this is the size of their industry. It is easy to understand that for American exporters it is no problem to send full loads of a determined product to Mexico without having to mix it with different items. Three of our valuable members have Sales Offices in Mexico with Spanish speaking staff, and this provides great help when closing business transactions; however as has been mentioned before, these offices (except for one that is 100% Canadian) always offer American product first and as a last option the Canadian product, creating a bad impression with the buyers, who might even consider our product to be not as good as the American with no reason.
B. Australia
In 2004 Australia exported to Mexico 7,888 tonnes of beef and beef variety meats, this represents close to 2.61% of the total volume of Mexican beef imports and showed a slight increase compared to 2003 when Australian exports to Mexico were 7,153 a 1.78% of the total volume of beef imported by Mexico. The best clients for Australian beef are those retailers who are completely price-oriented and for whom the quality is not that important such as the distributors and importers whose major sales are made to street TACOS sellers. We can not forget the duties that Australian beef has to pay to be allowed into Mexico, 25% for frozen product and 20% for fresh product. Another important nicht for Australian product are those people who specialize in marinating inside and outside skirts. Mexico nowadays is not as important as it used to be in the past for Australia because they are very focussed on the Asian Market right now. Note that Australia is more a lamb and horse meat exporter to Mexico.
Meat and Livestock Australia does not perform any promotional activity in Mexico.
C. New Zealand
New Zealand just like Australia represents a small percent of the Mexican beef imports. In 2004 New Zealand exported to Mexico 8,544 tonnes which represents a 2.83% of the total volume. However, it is interesting to point out that New Zealand exports to Mexico grew in 2,809 tonnes comparing 2004 against 2003. The main beef products that New
- 52 - Zealand export to Mexico are exactly the same as Australia (inside and outside skirts for marinating and some inside rounds and offal). Same duties apply for New Zealand as for Australia. The clients for New Zealand product happen to be the same as for Australia.
Meat New Zealand has an office in Mexico City in Colonia Roma, their main products to promote are lamb derivates (french racks, square cut shoulders, legs
D. Other Countries
Mexico has imported beef from other countries like Chile, Uruguay and Nicaragua. In 2004, Mexico received a total of 9,856 tonnes which represent a 3.27% of the total beef volume imported. We must mention that although it is not a very impressive figure, the import amount increased in 4,893 tonnes comparing 2004 against 2003; of course if we talk about quality there is absolutely no comparison with the Canadian product, South and Central American product are completely grass fed.
All the Central and South American countries mentioned above have no representation offices in Mexico, all the sales are made through Mexican importers or brokers and consequently they do not perform any promotional activities in Mexico.
Some Chilean Missions have started to visit Mexico in order to allocate more of their product in Mexico but they have not been very successful, besides the amounts of product that they can offer are not enough for Mexican demand, the only advantages they might have are that they can supply some bone in shanks, such as femur bones for soups at very low prices. Central America exporters are currently doing nothing about promoting their beef in Mexico.
5. What the Canadian Industry is Doing
Canada is no question Mexico’s second largest beef supplier after the US. Total Canadian beef volume exports to Mexico reached 84,191 tonnes in 2004, this means that Mexican imports grew 55,225 tonnes from 2003 to 2004 (a 190% increase) and 20,587 tonnes from 2002 to 2004 (a 32.3% increase). We must have very clear that BSE dramatically affected the figures in 2003 when the Mexican border was closed to Canadian product.
In 2004 Canadian exports to Mexico represented a 27.9% of total Mexican volume beef imports (the total amount of imported beef to Mexico was 301,231 tonnes). This year, two of the biggest Canadian packers were de-listed by Mexican Health Authorities during some months in 2005 for alleged violations to bone in beef shipments to Mexico. This issue, besides the recently solved strike at one of our Member’s facility, will surely affect the export figures by the end of the year. However the Mexican market like everybody in the Industry knows that the Canada Beef Export Federation is back.
- 53 - With the change in staff at CBEF Mexico, there was a transition period with introductory seminars held in Monterrey, Guadalajara and Mexico City, to let know industry people know that more than ever CBEF is ready to rebuild synergies.
Two VIP Missions were successfully completed with key importers from Monterrey, Sinaloa, Mexico City and Cancún, with the CBEF Mexico Office also familiarizing itself with our Export Members and Mexican clients. Visits to the main retailers and importers in Mexico have been completed, including the locations Monterrey, Mexico City, Guadalajara, Chihuahua and Morelia. Other visits have been made to the Authorities at the Port of Manzanillo as well as continuos exchanges of information with SAGARPA’S Authorities.
Important materials have been translated (to Spanish) and printed in high quality to ensure a productive and lasting presence in the Mexican Market. These promotional materials have started to be distributed to our clients in Mexico. CBEF Mexico Office has participated in a couple of Missions and Seminars such as Cutting Demonstrations in Cuba to try to open that market to more Canadian product. In the very short term, aggressive and enhanced promotions will be launched in Mexico. This Office is very clearly focussed on targetting volume buyers, followed by consumers.
Continuity is the key to success. In CBEF Mexico we must continue with our schedule of visits to our clients; holding seminars for both the retail and food service sectors; and creating profitable promotional campaigns which result in better sales for our Members. The sales offices of Export Members (particularly those who have representation in Mexico) will have to show themselves to be more aggressive and open to selling Canadian product to Mexican importers. CBEF Mexico will demonstrate through educational visits and seminars that the minimum differential prices between Canadian and American beef are plenty justified because of the better yields and quality of Canadian product. We must not allow discount prices for our products.
Sales Offices should follow up quotes and prices given to our clients, some times there are potential clients who ask for quotes and credit applications and all that the Sales Offices answer is, wait until we contact you. All our Food Safety and Traceability programs should be a tool for selling more beef for the Sales Offices. The Mexican industry recognizes the efforts that the Canadian Industry has made in order to guarantee total beef quality.
6. What the Federation is Doing
CBEF Mexico is currently finishing translating (to Spanish) printing and manufacturing real quality promotional materials such as Financial Tools Manual for Retail and Food Service sectors, GRP’s manuals for retailers, CBEF promotional information in DVD, Beef and Commercial Merchandising Guides, Ground Meat Management manuals, Inserts and Creative Ads on leader Food Service and Retailer Magazines, etc. Once CBEF has all these materials completed, they will be strategically distributed throughout the country to
- 54 - our current and potential clients (mostly volume buyers and chefs) as a first step prior to the seminars to be conducted in different geographic areas.
CBEF will visit culinary schools to start strengthening relationships with future chefs. It is time to promote not only the hip cuts or the shoulder cuts; Mexico’s high quality restaurants are looking for excellence of quality to offer to those customers who can pay for it. The promotions will be calculated based on the purchase volume of each client; we must remember that support for loyal clients is as important as gradually encouraging potential clients to buy Canadian beef. CBEF is now prepared for the start of a new promotion methodology, one that is measurable and that shows the effectiveness of the investment. All this shall be achieved with full interaction of CBEF and its Members. Two VIP Awareness Missions will be conducted in 2006 to position the presence of CBEF in really important expos in Mexico. CBEF Mexico will continue supporting (when necessary) efforts in Cuba efforts.
CBEF Mexico’s strategy is particularly divided in two main sectors: retail and food service. We will conduct retail seminars in six specific geographic areas where most of the important retailers are located: Mexico City, Monterrey, Sinaloa, Chihuahua, Veracruz and Guadalajara. Food service seminars will be imparted in five specific geographic areas which are destinations of business people and tourists and contain a high number of restaurants: Mexico City, Monterrey, Cancun, Los Cabos and Puerto Vallarta.
Currently Canada is only selling to Mexico boneless beef from UTM animals and some specific offals with except of SRM. CBEF has historically committed with promoting only “cheap” products, this strategy must contemplate a variant, there is always an opportunity to sell fine cuts in the Mexican Market in very specific niches such as High End Hotels and Gourmet Restaurants. Now that the transshipping issue through the US is one the past, Canadian product should reflect an increase in its sales volume for Mexico. CBEF and its Members must keep pushing for more Canadian product to be sold in Mexico and must have an strategy for once Asian Markets are open to US and Canada to prevent a shortage of product in Mexico. It is time for Mexico to be not only a volume country but a profitable market.
7. BSE Recovery
With Mexico open to Canadian bone-in beef, our industry is in a position to increase its export volumes to Mexico. Mexico is not self sufficient in beef supply so it depends on the import market to fulfill the demand. CBEF Mexico has talked to as many people as possible in order to clarify that Canada’s Sanitary Measures along with its Traceability System offer the best quality control in the world beef industry. CBEF will strongly promote the advantages of Canadian Beef through seminars and bulletins (e-letters) to our clients and through articles and creative ads in retail and food service specialized magazines.
- 55 - With the border open to bone in beef products, our Export Members should be ready to quote specific beef products required in this season by the Mexican market.
The OTM beef product situation (after talking to Dr. Javier Trujillo) will remain stalled at least for a year. Several inspections and negotiations will have to be conducted before achieving this goal.
Mexico Market Development Program
1. Market Representation $393,000
The Federation has contractually engaged three full-time individuals to represent the Federation and its members in Mexico. The contract includes all non-promotion operating costs of the representative, including administrative assistance and office facilities. The representative is providing a primary and vital link between Canadian beef exporters, and new and existing Canadian beef clients in Mexico and other countries in Central America. This individual is also monitoring, reporting, and representing the Federation and its members regarding all regulatory market access matters affecting Canadian beef and veal products in each target market. This position was also expected to pro-actively identify new potential clients for Canadian beef on behalf of our members. This position is continually monitoring existing and emerging constraints (ie. Distribution channels) and opportunities (ie. New retail developments) facing Canadian beef exporters in Mexico, and will recommend industry-wide and company-specific responses to address them. This position will also take primary responsibility for the Federation’s core market development program in Mexico. (CAFI)
2. VIP Beef Awareness Mission $80,000
Two in-coming missions, consisting of a total of approximately twelve senior Mexican meat industry executives, will be completed. The purpose of these missions is to create a "Buy Canada" mandate within the most senior levels of prominent meat import and distribution companies. This mission will also allow buyers to increase their commitment to Canadian beef, based on knowledge and confidence. (CBCMDF)
3. CANADA BEEF Seminars $100,000
It is vital that CANADA BEEF provide educational services and highlight Canada's competitive advantage to the Mexican meat trade by conducting seminars. Members will also be invited to attend these events, to display their products and meet with buyers. For this purpose, the Federation will hold two CANADA BEEF seminars at cities chosen for their potential to generate new sales each year. Additional Technical Seminars, featuring beef cutting demonstrations will be completed for specific clients groups. Company- specific seminars will also be completed with the assistance of professional trainers who are familiar with the Mexican meat industry. (CBCMDF)
- 56 - 4. Retail and Food Service Promotions $600,000
The Federations promotion strategy for Mexico is to focus on distribution channel development tactics supported by consumer marketing promotions to enhance and grow sales opportunities. Channel development strategies and tactics will be designed to create demand and grow volumes within the delivery system by differentiating Canadian beef and the Canada Beef Export Federation team from our competitors. This will be accomplished by leveraging the Canadian beef advantage and Federation expertise to build and implement business successes for our trading partners, end users and consumers. The Canadian beef brand represents outstanding quality, safety, craftsmanship and value that is not currently found or fully understood in the marketplace. This value position must be demonstrated, proven and earned in the marketplace to differentiate ourselves from our competitors. Price, quality, craftsmanship and reputation are important purchase drivers in Mexico. The Canada Beef team will undertake a channel specific focus on demonstrating and promoting the marketable value of Canadian Beef in the functional terms of yield, quality and profit advantages that are not always fully considered in the commodity beef buying scenarios in Mexico. Canada Beef programs will drive initial sales volumes resulting in increased carcass utilization and expanded product mix opportunities. Functional analysis by the Canada Beef team during promotional events will demonstrate value through increased profitability. Simply put, short term sales lift provide the opportunity to measure Canadian beef performance against other competitive protein choices. All promotion types and applications will be standardized and detailed across all markets to facilitate consistent investment and measures of performance, success and impact.
CANADA BEEF will cooperate with a number of supermarkets and key restaurants and hotels to in conducting Canadian beef promotions to demonstrate that Canadian beef is attractive to Mexican consumers. The Federation’s Export Members will be asked to nominate specific clients for these promotions. Where possible, these promotions will guarantee certain minimum purchase quantities, permanent menu listings, and/or promotion activities on behalf of the clients. Previous experience with Mexican retailers and food service companies has proven that Canada’s image of a clean environment is very popular with their clients. These same images are valued by the wider consumer public. We are convinced that holding retail and food service Canadian beef promotions is the most tangible and effective way to let supermarkets gain experience and exposure to purchasing Canadian beef continuously. Success will be measured by the penetration of Canadian beef into Mexico’s retail and food service sectors. (CBCMDF)
5. Food Shows $50,000
The Federation will participate in the following shows: ANTAD in Guadalajara; and Alimentaria in Mexico City. The Federation’s booth is designed to raise the profile of Canada and the Canadian beef industry in a cost effective manner. The Federation remains fully committed to cooperating with Canada Pork International in the operation of “Canadian Meat” booths at all food shows. (CBCMDF)
- 57 - 6. Promotional Material $180,000
CANADA BEEF will expand the range of Spanish language promotional materials. New point-of-purchase (POP) materials and pamphlets targeted at the food service sector. The Federation will develop and produce other point-of-sale (POS) promotional items targeted at the consumer to complement retail promotions. Larger scale materials (i.e. barbecue tents) will be used to support and solidify the recent national retail success of Canadian beef in the Mexican market. Recognizing that competitors such as Australia have recently increased their check-off contributions to strengthen their collateral investment in this area there is both a need and an opportunity to develop additional technically oriented marketing materials to promote and demonstrate the Canadian Beef Advantage. The Canada Beef team will work in close collaboration with the Calgary team to develop and produce science based resources for this market with a focus on beef quality, safety and profitability. (CBCMDF)
7. Market Research $20,000
The Federation will undertake to conduct beef quality perception research in the Mexican marketplace to determine channel specific perceptions and attitudes regarding current domestic and imported beef quality attributes. The research will seek direct feedback from both senior marketing and operational levels in both the retail and food service sectors to identify potential opportunity gaps, challenges or barriers that Canada Beef might be facing in Mexico. This kind of competitive analysis is integral in understanding the real and perceived quality attributes, attitudes and expectations of the evolving beef marketplace in Mexico.
The Federation will undertake a comprehensive distribution channel satisfaction survey conducted by an independent research firm to subjectively measure performance, success, impact of Canada Beef programs, implementation and sector penetration within the marketplace. This survey will be conducted in Q4 with final reporting at the AGM in March. This project will include direct feedback back from all distribution channel partners and end users. (CBCMDF)
8. Advertising and Public Relations $10,000
By creative use of joint advertising opportunities and by linking our efforts with other stake-holders in the food industry, the Federation will achieve as much profile as possible. All advertising and public relations will be focussed within selected niche markets. This budget is also used to ensure that the Federation is made aware of the activities and future directions undertaken by our major competitors in Mexico. (CBCMDF)
TOTAL MEXICO MARKET DEVELOPMENT PROGRAM $1,433,000
- 58 - V. OPERATING BUDGETS A) Projected Revenues: 2005-2006 1 Cattle Producer Associations 2005-2006 2004-2005
National Check-off $2,233,000 Alberta Beef Producers 0 Saskatchewan Cattle Check-off Funds 0 Ontario Cattlemen’s Association 0 Manitoba Cattle Producers’ Association 0 British Columbia Cattlemen’s Association 0 $2,233,000 $2,233,000
2 Membership Fees 100,000 125,000
3 Other Member Contributions Partner Market Development Program 125,000 Supplementary Member Contributions 20,000 Executive Committee (Per Diems) 8,000 153,000 278,000
4 Industry Development Funds National Beef Industry Development Fund 0 1,055,000
5 Provincial Governments Alberta Economic Development 500,000 Ontario Agriculture, Food and Rural Affairs 0 Saskatchewan Agriculture 10,000 510,000 510,000 6 Federal Government Canadian Ag & Food International Program 2,000,000 1,924,821
7 Legacy Funds Canadian Beef and Cattle Marketing Fund 4,000,000 0
8 Other Income 9,000 9,179 TOTAL PROJECTED REVENUES $9,005,000 $6,135,000
- 59 - - 60 - B) Projected Expenditures: 2006-2007 OPERATIONS’ BUDGET 2006-2007 2005-2006 Audit, Legal and Consulting $35,000 $35,000 Bank Service Charges 700 900 Capital Purchases 7,000 8,000 Capital Purchases - Capitalization (7,000) (8,000) Courier and Postage 7,000 7,000 CBEF Meetings Expense 33,000 37,000 Depreciation Expense 5,000 5,300 Due, Fees and Subscriptions 25,000 24,500 Hosting Expenses 9,000 8,000 Insurance 3,500 3,500 Internet 1,500 1,600 Office Equipment - Lease Payments 6,000 6,000 Office Equipment - Repairs and Supplies 4,000 5,700 Office Expenses 9,000 8,000 Office Occupancy Costs 50,600 40,500 Officers’ Expenses 60,000 60,000 Professional Development and Training 1,000 1,000 Salaries and Benefits 676,500 390,000 Telephone and Facsimile 12,200 16,000 Travel 50,000 32,000 Total Operations’ Budget $989,000 $682,000 MARKET DEVELOPMENT BUDGET Canada $875,000 $657,000 Japan 2,276,000 1,996,000 South Korea 1,677,000 1,102,000 Taiwan 845,000 672,000 China (PRC) 990,000 722,000 Mexico 1,433,000 915,000 Russia/EU25 0 0 Total Market Development Budget $8,096,000 $6,064,000 TOTAL PROJECTED EXPENDITURES $9,085,000 $6,746,000 TOTAL PROJECTED REVENUES $9,005,000 $6,135,000 TOTAL PROJECTED MEMBERS’ SURPLUS/DEFICIT ($80,000) ($611,000)
- 61 - VI. CONCLUSION
The Canada Beef Export Federation will actively pursue market access and market recovery on behalf of Canada's national cattle and beef industry during its 2006-2007 fiscal year. Our strategic plan is designed to identify the opportunities and constraints of marketing Canadian beef in new markets, advance the market access interests of the industry in Asia and Mexico, improve the corporate environment where international sales activities are undertaken, communicate critical information to our membership, and to encourage Export Member activity in export markets and assist with the establishment and improvement of trade relationships.
SUMMARY OF PROGRAMS 2006-2007 2005-2006
A. Canada $875,000 $657,000 B. Japan 2,276,000 1,996,000 C. South Korea 1,677,000 1,102,000 D. Taiwan 845,000 672,000 E. People’s Republic of China 990,000 722,000 F. Mexico 1,433,000 915,000 G. Russia/EU25 0 0
TOTAL OF ALL PROGRAMS $8,096,000 $6,064,000
The Federation will continue to focus its energies toward assisting our Export Members become more effective in pursuing new business opportunities in Asia, Mexico, and other emerging markets outside Canada and the United States. This business plan further endorses the philosophy that individual member sales activities will produce new export success for our entire industry, when channelled through and combined with the Federation's industry export development programs. Industry sales success is created at the company level. Increased business activity of individual members is the most effective way to produce export success, demonstrate Canada's dedication to our international business partners, and improve the knowledge and image of Canadian beef and veal internationally. This is the path that will allow our industry to reach and exceed its long- term export goals.
- 62 - APPENDIX I CANADA BEEF EXPORT FEDERATION PROMOTION PROGRAM 2005-2006 to 2008-2009
COUNTRY PROGRAMS 2005-2006 2006-2007 2007-2008 2008-2009 $ $ $ $ A. CANADA MARKET DEVELOPMENT PROGRAM 1 Partner Market Development Program 500,000 500,000 500,000 500,000 2 Member Information and Liaison 55,000 55,000 56,375 57,784 3 Trade Advocacy and Other Markets 50,000 100,000 102,500 105,062 4 Market Seminars 0 28,000 28,700 29,417 5 Market Research 52,000 67,000 68,675 70,392 6 Technical Marketing Materials 0 125,000 128,125 131,328 TOTAL CANADA PROGRAM 657,000 875,000 884,375 893,984
B. JAPAN MARKET DEVELOPMENT PROGRAM
1 Market Representation 505,000 431,000 443,930 457,248 2 VIP Beef Awareness Missions 55,000 55,000 56,650 58,350 3 CANADA BEEF Seminars 225,000 105,000 108,150 111,395 4 Retail and Food Service Promotions 578,000 850,000 875,500 901,765 5 Food Shows 88,000 75,000 77,250 79,568 6 Promotional Materials 75,000 100,000 103,000 106,090 7 Newsletter 80,000 80,000 82,400 84,872 8 Market Research 0 80,000 20,600 21,218 9 Advertising and Public Relations 390,000 500,000 515,000 530,450
(i) COUNTRY PROGRAMS 2005-2006 2006-2007 2007-2008 2008-2009 $ $ $ $ TOTAL JAPAN PROGRAM 1,996,000 2,276,000 2,282,480 2,350,954
C. SOUTH KOREA MARKET DEVELOPMENT PROGRAM
1 Market Representation 214,000 227,000 233,810 240,824 2 VIP Beef Awareness Mission 55,000 55,000 56,650 58,350 3 CANADA BEEF Seminars 100,000 150,000 154,500 159,135 4 Retail and Food Service Promotions 373,000 700,000 721,000 742,630 5 Food Shows 104,000 50,000 51,500 53,045 6 Promotional Materials 70,000 100,000 103,000 106,090 7 Newsletter 15,000 15,000 15,450 15,914 8 Market Research 0 80,000 20,600 21,218 9 Advertising and Public Relations 170,000 300,000 309,000 318,270 TOTAL SOUTH KOREA PROGRAM 1,101,000 1,677,000 1,665,510 1,715,475
D. TAIWAN MARKET DEVELOPMENT PROGRAM
1 Market Representation 185,000 170,000 175,100 180,353 2 VIP Beef Awareness Mission 55,000 55,000 56,650 58,350 3 CANADA BEEF Seminars 50,000 50,000 51,500 53,045 4 Retail and Food Service Promotions 242,000 300,000 309,000 318,270 5 Food Shows 40,000 40,000 41,200 42,436
(ii) COUNTRY PROGRAMS 2005-2006 2006-2007 2007-2008 2008-2009 $ $ $ $ 6 Promotional Materials 50,000 50,000 51,500 53,045 7 Newsletter 0 0 0 0 8 Market Research 0 80,000 20,600 21,218 9 Advertising and Public Relations 50,000 100,000 103,000 106,090 TOTAL TAIWAN PROGRAM 672,000 845,000 808,550 832,807
E. CHINA MARKET DEVELOPMENT PROGRAM
1 Market Representation 243,000 345,000 355,350 366,011 2 VIP Beef Awareness Mission 61,000 70,000 72,100 74,263 3 CANADA BEEF Seminars 10,000 40,000 41,200 42,436 4 Retail and Food Service Promotions 408,000 285,000 293,550 302,357 5 Food Shows 80,000 80,000 82,400 84,872 6 Promotional Materials 35,000 50,000 51,500 53,045 7 Newsletter 0 0 0 0 8 Market Research 0 80,000 20,600 21,218 9 Advertising and Public Relations 40,000 40,000 41,200 42,436 TOTAL CHINA PROGRAM 877,000 990,000 957,900 986,637
F. MEXICO MARKET DEVELOPMENT PROGRAM
1 Market Representation 230,000 393,000 404,790 416,934
(iii) COUNTRY PROGRAMS 2005-2006 2006-2007 2007-2008 2008-2009 $ $ $ $ 2 VIP Beef Awareness Mission 77,000 80,000 82,400 84,872 3 CANADA BEEF Seminars 48,000 100,000 103,000 106,090 4 Retail and Food Service Promotions 418,000 600,000 618,000 636,540 5 Food Shows 4,000 50,000 51,500 53,045 6 Promotional Materials 126,000 180,000 185,400 190,962 7 Newsletter 0 0 0 0 8 Market Research 0 20,000 20,600 21,218 9 Advertising and Public Relations 12,000 10,000 10,300 10,609 TOTAL MEXICO PROGRAM 915,000 1,433,000 1,475,990 1,520,270
H. RUSSIA/EU25 1 Market Representation 0 0 0 0 2 Establishment Programs 0 0 0 0 Total Russia/EU25 Programs 0 0 0 0
(iv) COUNTRY PROGRAMS 2005-2006 2006-2007 2007-2008 2008-2009 $ $ $ $ SUMMARY OF PROGRAMS A. CANADA 657,000 875,000 884,375 893,984 B. JAPAN 1,996,000 2,276,000 2,282,480 2,350,954 C. SOUTH KOREA 1,101,000 1,677,000 1,665,510 1,715,475 D. TAIWAN 672,000 845,000 808,550 832,807 E. PEOPLE’S REPUBLIC OF CHINA 877,000 990,000 957,900 986,637 F. MEXICO 915,000 1,433,000 1,475,990 1,520,270 G. RUSSIA/EU25 0 0 0 0 TOTAL OF ALL PROGRAMS 6,218,000 8,096,000 8,074,805 8,300,127 OPERATIONS 682,000 989,000 1,013,725 1,039,068 TOTAL BUDGET 6,900,000 9,085,000 9,088,530 9,339,195 COMMITTED REVENUES 6,135,000 9,005,000 9,005,000 9,005,000 PROJECTED SURPLUS/(DEFICIT) (765,000) (80,000) (83,530) (334,195)
Canadian Inflation: 2.5%
International Inflation: 3.0%
(v) APPENDIX II COST-BENEFIT INDICATORS (VALUE)
Table A: CANADA BEEF Cost-Benefit Indicators (Value). Fiscal CBEF Total Exports Gross ROI Net ROI Year Expenses $ 1 Ratio Ratio
1989/90 1,038,458 24,189,000 23.29 (26.91)
1990/91 1,676,233 21,302,000 12.71 (1.72)
1991/92 1,583,194 24,756,000 15.64 2.18
1992/93 1,846,941 31,719,000 17.17 3.77
1993/94 1,762,508 62,201,000 35.29 17.29
1994/95 2,278,933 105,910,000 46.47 19.18
1995/96 3,189,290 118,944,000 37.29 4.09
1996/97 3,854,485 132,114,000 34.28 3.42
1997/98 3,927,673 153,083,000 38.98 5.34
1998/99 4,269,045 325,371,000 76.22 40.36
1999/00 4,103,991 470,659,000 114.68 35.40
2000/01 4,472,310 499,760,000 111.75 6.51
2001/02 3,584,708 499,989,000 139.48 0.06
2002/03 4,618,901 214,204,000 46.38 (61.87)
2003/04 4,568,883 394,640,000 86.38 39.49
2004/05 4,517,098 282,785,000 62.60 (24.76)
2005/06 6,135,000 566,140,000 92.28 46.19
2006/07 9,030,000 853,130,000 94.48 50.77
2009/10 9,867,325 1,110,590,000 112.55 83.89
2014/15 11,438,934 1,461,680,000 127.78 78.29
16 Year $3,205,791 210,101,625 56.16 3.86 Average
1. Actual exports to Asia and Mexico for calender years 1990-2004. Estimated exports to Asia and Mexico for calender years 2005-2015.
Every dollar invested in the Canada Beef Export Federation has resulted in an average of $58.11 in total export sales to Asia and Mexico. Every dollar invested in the Canada Beef Export Federation has resulted in an average of $5.81 in new export sales to Asia and Mexico. Both measures of performance are recovering from BSE disruptions in 2003.
(i) APPENDIX III COST-BENEFIT INDICATORS (VOLUME)
Table A: CANADA BEEF Cost-Benefit Indicators (Volume). Fiscal CBEF Total Export $ Per $ Per Pounds Year Expenses Tonnes 1 Tonne Cwt. Per $
1989/90 1,038,458 6,652 $156.11 $7.08 14.12
1990/91 1,676,233 5,693 294.44 13.35 7.49
1991/92 1,583,194 6,194 255.60 11.59 8.63
1992/93 1,846,941 8,827 209.24 9.49 10.54
1993/94 1,762,508 13,562 129.96 5.89 16.97
1994/95 2,278,933 21,709 104.98 4.76 21.00
1995/96 3,186,683 26,019 122.48 5.55 18.00
1996/97 3,854,485 36,200 106.48 4.83 20.71
1997/98 3,927,673 40,690 96.53 4.38 22.84
1998/99 4,269,045 76,477 55.82 2.53 39.50
1999/00 4,103,991 109,576 37.45 1.70 58.87
2000/01 4,472,310 115,153 38.84 1.76 56.77
2001/02 4,461,000 132,665 33.63 1.53 65.57
2002/03 4,618,901 51,591 89.53 4.06 24.63
2003/04 4,568,883 99,639 45.85 2.08 48.09
2004/05 4,517,098 73,510 61.45 2.79 35.88
2005/06 6,900,000 140,000 49.29 2.24 44.74
2006/07 9,085,000 204,000 44.53 2.02 49.51
2009/10 9,927,425 268,000 37.04 1.68 59.53
2014/15 11,508,606 354,000 32.51 1.47 67.82
16 Year $3,260,396 51,510 63.30 2.87 34.84 Average
1. Actual exports to Asia and Mexico for calender years 1990-2004. Estimated exports to Asia and Mexico after 2004.
The Federation has spent an average of $60.68 per tonne ($2.75 per Cwt.) of exports to Asia and Mexico. For every dollar spent by the Federation, an average of 36.34 pounds of beef was exported to Asia and Mexico. Both measures of performance are recovering from BSE-related disruptions in 2003.
(i) Table B: Japan Cost-Benefit Indicators (Volume). Fiscal CBEF Total Export $ Per $ Per Year Expenses Tonnes 1 Tonne Cwt. 1989/90 $371,326 4,168 $89.09 $4.04 1990/91 393,342 4,449 88.41 4.01 1991/92 1,281,797 4,586 279.50 12.68 1992/93 1,438,670 5,928 242.69 11.01 1993/94 1,113,144 8,711 127.79 5.80 1994/95 875,807 11,733 74.64 3.39 1995/96 1,229,924 14,314 85.92 3.90 1996/97 1,342,196 18,357 73.12 3.32 1997/98 1,333,555 23,628 56.44 2.56 1998/99 1,462,090 27,547 53.08 2.41 1999/00 1,601,790 28,390 56.42 2.56 2000/01 1,630,130 29,245 55.74 2.53 2001/02 1,323,221 23,971 55.20 2.50 2002/03 2,045,332 8,501 240.60 10.91 2003/04 1,263,020 0 N/A N/A 2004/05 929,099 10 N/A N/A 2005/06 1,996,000 6,000 332.67 15.09 2006/07 2,276,000 34,000 66.94 3.04 2009/10 2,487,047 48,000 51.81 2.35 2014/15 2,883,169 70,000 41.19 1.87 16 Year $1,227,153 13,346 91.95 4.17 Average
1. Actual exports to Japan for calender years 1990-2004. Estimated exports to Japan after 2004
(ii) Table C: Korea Cost-Benefit Indicators (Volume). Fiscal CBEF Total Export $ Per $ Per Year Expenses Tonnes 1 Tonne Cwt. 1992/93 22,064 390 56.57 2.57 1993/94 90,628 1,778 50.97 2.31 1994/95 136,497 3,945 34.60 1.57 1995/96 408,670 4,458 91.67 4.16 1996/97 606,816 6,732 90.14 4.09 1997/98 528,251 4,745 111.33 5.05 1998/99 544,113 15,956 34.10 1.55 1999/00 523,925 20,593 25.44 1.15 2000/01 573,090 9,334 61.40 2.78 2001/02 531,447 17,254 30.80 1.40 2002/03 600,926 6,198 96.95 4.40 2003/04 755,315 0 N/A N/A 2004/05 691,692 0 N/A N/A 2005/06 1,101,000 12,000 91.75 4.16 2006/07 1,677,000 23,000 72.91 3.31 2009/10 1,832,503 35,000 52.36 2.37 2014/15 2,124,373 50,000 42.49 1.93 13 Year $462,572 7,029 65.80 2.98 Average
1. Actual exports to Korea for calender years 1990-2004. Estimated exports to Korea after 2004.
(iii) Table D: Taiwan Cost-Benefit Indicators (Volume). Fiscal CBEF Total Export $ Per $ Per Year Expenses Tonnes 1 Tonne Cwt. 1992/93 $57,070 73 $781.78 $35.45 1993/94 54,168 264 205.18 9.31 1994/95 77,241 834 92.62 4.20 1995/96 228,742 849 269.43 12.22 1996/97 225,724 1,673 134.92 6.12 1997/98 287,405 1,613 178.18 8.08 1998/99 370,900 2,063 179.79 8.15 1999/00 304,496 2,655 114.69 5.20 2000/01 401,640 2,985 134.55 6.10 2001/02 313,290 4,026 77.82 3.53 2002/03 406,864 1,487 273.61 12.41 2003/04 456,564 0 N/A N/A 2004/05 398,732 0 N/A N/A 2005/06 672,000 4,000 168.00 7.62 2006/07 845,000 9,000 93.89 4.26 2009/10 923,354 12,000 76.95 3.49 2014/15 1,070,421 20,000 53.52 2.43 13 Year $275,603 1,425 $193.44 $8.77 Average
1. Actual exports to Taiwan for calender years 1990-2004. Estimated exports to Taiwan after 2004.
(iv) Table E: China Cost-Benefit Indicators (Volume). Fiscal CBEF Total Export $ Per $ Per Year Expenses Tonnes 1 Tonne Cwt. 1992/93 $11,796 452 $26.10 $1.18 1993/94 44,738 763 58.63 2.66 1994/95 152,509 1,684 90.56 4.11 1995/96 287,214 2,587 111.02 5.04 1996/97 391,842 1,878 208.65 9.46 1997/98 421,980 2,120 199.05 9.03 1998/99 452,288 3,144 143.86 6.52 1999/00 556,651 3,315 167.92 7.62 2000/01 557,520 3,069 181.66 8.24 2001/02 581,459 3,276 177.49 8.05 2002/03 578,181 1,380 418.97 19.00 2003/04 381,372 10,214 37.34 1.69 2004/05 507,007 20,000 25.35 1.15 2005/06 877,000 17,000 51.59 2.34 2006/07 990,000 19,000 52.11 2.36 2009/10 1,081,800 54,000 20.03 0.91 2014/15 1,254,102 57,000 22.00 1.00 13 Year $378,812 4,145 91.40 4.14 Average
1. Actual exports to China (PRC) for calender years 1990-2004. Estimated exports to China after 2004.
(v) Table F: Mexico Cost-Benefit Indicators (Volume). Fiscal CBEF Total Export $ Per $ Per Year Expenses Tonnes 1 Tonne Cwt. $ 1996/97 $166,239 6,700 $24.81 $1.13 1997/98 333,871 8,506 39.25 1.78 1998/99 372,298 27,518 13.53 0.61 1999/00 408,071 53,189 7.67 0.35 2000/01 447,480 69,674 6.42 0.29 2001/02 561,632 77,887 7.21 0.33 2002/03 533,429 29,442 18.12 0.82 2003/04 917,438 87,067 10.54 0.48 2004/05 842,000 53,000 15.89 0.72 2005/06 915,000 100,000 9.15 0.42 2006/07 1,433,000 116,000 12.35 0.56 2009/10 1,565,878 134,000 11.69 0.53 2014/15 1,815,282 150,000 12.10 0.55 9 Year $509,162 45,887 11.10 0.50 Average
1. Actual exports to Mexico for calender years 1990-2004. Estimated exports to Mexico after 2004.
(vi) APPENDIX IV MARKET SHARE PERFORMANCE INDICATORS
Table A: Canadian Beef Market Share - Asia and Mexico (MT) Year Canada Total Canadian Market Share
1990 3,117 543,997 0.57%
1991 1,998 790,486 0.25%
1992 1,483 781,908 0.19%
1993 6,510 770,920 0.84%
1994 9,711 901,303 1.08%
1995 12,425 987,502 1.26%
1996 15,461 992,712 1.56%
1997 22,639 1,104,768 2.05%
1998 28,113 1,133,316 2.48%
1999 58,441 1,287,956 4.54%
2000 94,286 1,447,545 6.51%
2001 104,649 1,368,338 7.65%
2002 111,122 1,410,790 7.88%
2003 52,629 1,413,819 3.72%
2004 89,709 966,966 9.28%
2005 (P) 75,898 1,112,428 6.82%
2010 (P) 263,000 2,005,646 13.11%
Sources: Importing country market reporting agencies
Canada’s share of Asia’s and Mexico’s imported beef market has grown from 0.57% in 1990 to an estimated 6.82% in 2005. Not only has Canada shared in the natural growth of these key markets, but our exports have increased at a significantly faster pace than our competitors. Canada’s total beef production represents 6% of the total capacity of the four main industries (USA, Australia, New Zealand and Canada) serving the Asian and Mexican markets. As such, Canada’s natural market share is also approximately 6%. Canada will continue to increase its actual market share to over 13% by2010.
(i) Table B: Canadian Beef Market Share - Japan (MT)
Year Canada USA Australia New Other Total Canadian Zealand Market Share
1990 1,628 142,861 196,092 10,478 0 351,059 0.46%
1991 1,593 154,305 187,002 8,548 0 351,448 0.45%
1992 955 185,162 215,202 8,378 0 409,697 0.23%
1993 1,501 216,632 277,427 14,475 0 510,035 0.29%
1994 3,051 250,382 312,949 20,926 0 587,308 0.52%
1995 5,624 298,459 315,379 27,043 0 646,505 0.87%
1996 6,310 308,261 285,670 27,152 0 627,393 1.01%
1997 10,424 306,336 305,378 22,890 0 645,028 1.62%
1998 13,654 320,167 311,725 19,046 0 664,592 2.05%
1999 17,407 327,714 314,299 15,310 0 674,730 2.58%
2000 18,797 352,325 334,428 13,803 0 719,353 2.61%
2001 22,642 311,060 324,133 16,497 666 674,998 3.35%
2002 19,053 226,524 230,527 10,285 365 486,754 3.91%
2003 7,463 267,309 283,922 17,032 1,800 577,526 1.29%
2004 0 1,276 394,223 33,569 2,000 431,068 0.00%
2005 (P) 0 0 400,000 35,000 10,000 445,000 0.00%
2010 (P) 48,000 430,000 400,000 25,000 5,000 908,000 5.29%
Source: Japan Ministry of Finance (Boneless Cuts Equivalent), CBEF
(ii) Table C: Canadian Beef Market Share - South Korea (MT)
Year Canada USA Australia New South Other Total Canadian Zealand America Countries Market Share
1990 844 26,771 72,509 6,342 0 0 106,466 0.79%
1991 99 47,922 203,126 18,042 0 28 269,217 0.04%
1992 144 53,787 97,896 14,840 0 0 166,667 0.09%
1993 238 42,588 58,915 17,754 0 21 119,516 0.20%
1994 1,523 62,039 55,467 24,221 0 91 143,341 1.06%
1995 2,304 76,813 61,940 28,123 0 116 169,296 1.36%
1996 3,835 77,100 57,869 25,175 0 233 164,212 2.34%
1997 5,454 86,279 63,796 15,669 0 339 171,537 3.18%
1998 4,316 56,396 35,523 4,470 0 105 100,810 4.28%
1999 10,496 96,827 80,461 9,128 0 697 197,609 5.31%
2000 20,887 146,343 78,045 12,479 5,520 410 263,684 7.92%
2001 9,962 118,265 65,684 11,678 1,713 715 208,017 4.79%
2002 16,441 227,642 93,877 19,804 0 270 358,034 4.59%
2003 8,066 248,654 78,018 28,962 0 252 363,952 2.22%
2004 348 27,788 99,071 47,730 0 1,012 175,949 0.20%
2005 (P) 22 1,200 140,000 58,000 0 3,500 202,722 0.01%
2010 (P) 35,000 280,000 81,000 27,000 2,300 1,900 427,200 8.19%
Source: Ministry of Finance, Korea
(iii) Table D: Canadian Beef Market Share - Taiwan (MT)
Year Canada USA Australia New Other Total Canadian Zealand Countries Market Share
1990 24 3,487 29,421 4,960 50 37,942 0.06%
1991 94 3,793 32,662 8,386 50 44,985 0.21%
1992 104 3,822 36,936 7,244 50 48,156 0.22%
1993 54 4,543 33,083 9,826 70 47,576 0.11%
1994 378 7,012 33,600 10,989 80 52,059 0.73%
1995 639 10,100 30,390 14,112 100 55,341 1.15%
1996 600 10,795 24,846 12,084 100 48,425 1.24%
1997 1,293 14,315 33,368 13,463 150 62,589 2.07%
1998 1,507 13,766 33,216 11,690 200 60,379 2.50%
1999 2,081 14,802 35,633 15,213 1,715 69,444 3.00%
2000 2,228 12,810 28,625 14,451 2,995 61,109 3.65%
2001 3,006 10,854 28,755 14,223 71 56,909 5.28%
2002 3,902 16,485 35,108 15,421 354 71,270 5.48%
2003 1,915 16,119 31,713 21,854 329 71,930 2.66%
2004 0 651 27,064 29,830 1,173 58,718 0.00%
2005 (P) 0 7,000 25,000 25,000 3,000 60,000 0.00%
2010 (P) 12,000 20,000 30,000 20,000 10,000 92,000 13.04%
Source: Board of Foreign Trade, Taiwan
(iv) Table E: Beef Imports by Origin - China (Tonnes)
Year Canada USA Brazil Argentina Australia New Other Total Canadian Zealand Market Share
1990 146 5,192 6,540 11,162 7,012 4,320 3,920 38,292 0.38%
1991 206 5,779 10,124 9,912 6,212 4,065 5,071 41,369 0.50%
1992 275 7,095 15,707 7,492 7,679 4,620 3,630 46,498 0.59%
1993 716 10,642 13,894 8,063 8,369 4,653 3,451 49,788 1.44%
1994 834 14,680 14,841 9,676 7,557 5,581 5,737 58,906 1.42%
1995 1,085 20,292 9,758 14,745 11,426 9,676 5,929 72,911 1.49%
1996 1,836 26,924 13,368 15,341 11,990 9,059 3,989 82,507 2.23%
1997 1,696 22,679 17,765 14,507 13,253 8,036 4,832 82,768 2.05%
1998 1,857 29,001 20,992 13,012 17,245 11,511 4,059 97,677 1.90%
1999 4,076 33,683 35,333 13,943 16,563 8,831 5,266 117,695 3.46%
2000 4,175 38,349 45,587 18,335 25,712 15,979 7,575 155,712 2.68%
2001 5,632 43,432 51,789 16,467 20,064 8,133 9,195 154,712 3.64%
2002 8,122 69,114 60,611 19,324 14,301 7,004 12,881 191,357 4.24%
2003 6,219 75,277 78,642 24,723 13,445 6,323 14,527 219,156 2.84%
2004 5,170 2,603 86,406 27,463 19,417 10,827 15,609 167,495 3.09%
2005 (P) 13,000 5 100,000 35,000 14,000 5,000 17,000 184,005 7.07%
2010 (P) 34,000 115,000 110,000 40,000 29,000 15,000 23,000 366,000 9.29%
Source: HKSAR Census and Statistics Dept. and China Customs
(v) Table F: Beef Import Market Share by Origin - Mexico (Tonnes)
Year Canada USA Australia New Other Total Canadian Zealand Market Share
1990 475 45,850 179 30 1,996 48,530 0.98%
1991 6 105,500 0 1 19,329 124,836 0.00%
1992 5 140,503 3 6 16,871 157,388 0.00%
1993 4,001 75,314 4,000 8,729 1,749 93,793 4.27%
1994 3,925 90,721 6,884 9,345 7,720 118,595 3.31%
1995 2,773 111,709 1,147 490 241 116,360 2.38%
1996 2,880 147,278 1,430 717 377 152,682 1.89%
1997 3,772 216,901 2,779 1,338 824 225,614 1.67%
1998 6,779 289,614 6,496 3,196 1,450 307,535 2.20%
1999 24,381 304,993 6,680 2,512 7,607 346,173 7.04%
2000 48,199 323,718 7,801 3,259 20,422 403,399 11.95%
2001 63,407 342,730 9,674 7,373 5,230 428,414 14.80%
2002 63,604 409,822 10,690 4,411 6,205 494,732 12.86%
2003 28,966 353,594 7,153 5,735 4,963 400,411 7.23%
2004 84,191 190,752 7,888 8,544 9,856 301,231 27.95%
2005 (P) 62,876 326,076 4,107 5,977 5,670 404,706 15.54%
2010 (P) 134,000 426,098 5,210 7,130 6,008 578,446 23.17%
Source: INEGI, CBEF, USDA, USMEF
(January 31, 2006)
(vi) APPENDIX V
CANADA BEEF EXPORT FEDERATION
Export Member Survey
January 2006 APPENDIX VI
CANADA BEEF EXPORT FEDERATION
2006-2007
STRATEGIC BUSINESS PLAN
SPREADSHEETS