Sheepmeat January 2018

GLOBAL MARKET SNAPSHOT Sheepmeat January 2018 MLA INDUSTRY INSIGHTS i GLOBAL MARKET SNAPSHOT Sheepmeat Contents Australia 1 United States 5 Japan 9 Korea 13 China 17 South East Asia 21 European Union 25 MENA 30 © Meat & Livestock Australia, 2018. ABN 39 081 678 364. MLA makes no representations as to the accuracy of any information or advice contained in MLA’s Market snapshot and excludes all liability, whether in contract, tort (including negligence or breach of statutory duty) or otherwise as a result of reliance by any person on such information or advice. All use of MLA publications, reports and information is subject to MLA’s Market Report and Information Terms of Use. Please read our terms of use carefully and ensure you are familiar with its content. FOR FURTHER INFORMATION VISIT US ONLINE AT: www.mla.com.au or email us at: [email protected] MLA INDUSTRY INSIGHTS January 2018 ii MARKET SNAPSHOT SHEEPMEAT Australia In recent years Australia’s economy has remained strong; however Australian consumers’ confidence is being weighed down by high household debt and low wage growth. Disposable income has failed to grow with inflation and broadly rising living costs (electricity, childcare, rent), which is impacting consumer purchasing behaviour around categories like fresh meat causing them to become more cautious and price sensitive. However, overall Australians continue to be big consumers of meat, being one of the largest per capita consumers of sheepmeat in the world (Source: OECD). Sheepmeat consumption in Australia is facing some challenges and opportunities: • ‘Premiumisation’ trend across both retail and foodservice channels Asian countries (where pork is the dominant protein), and an ageing highlights consumers are willing to pay more for the right offer. Fresh population who are avoiding red meat for health/functional/price meat, such as lamb, is a key category consumers are willing to spend reasons. more on. • Competitive pressures will continue on lamb with ongoing competitor • Messaging around factors such as country of origin, environmental marketing activity (particularly pork), aggressive pricing (chicken) and impact, animal welfare, health and safety, along with food integrity the increasing profile of alternate proteins such as turkey and salmon. and transparency, provide opportunities to consider in consumer • Maintaining value share will be challenge if lamb’s price premium to communication. chicken/pork grows larger as the primary reason for consumers eating • Australia’s changing demography provides some macro challenges less red meat is currently due to cost and not health. for sheepmeat with two broad trends of increased migrations from Population Households earning* Meat consumption92.7kg per capita*2 total meat protein*3 >US$35,000/year 1.34 1.16 24.5in 2017 9.5in 2017 10.5in 2021 0.65 0.68 >US$50,000/year 0.58 0.63 7.9 9.0 0.21 0.24 25.7in 2021 in 2017 in 2021 Pork Poultry Beef Sheepmeat In million households 2017 2021 In million tonnes cwt In million Source: BMI Research, 2017 estimate & 2021 forecast Source: BMI Research, OECD (2017 estimate, 2021 projection), Source: BMI Research, 2017 estimate & 2021 forecast * Disposable income MLA Domestic utilisation lamb Retail fresh meat share Australian retail (share of produced volume) meat price (¢/kg) ‘000 tonnes cwt 2,000 290 302 277 280 250 222 193 195 1,500 179 176 186 193 170 125 2017 2016 125 131 116 123 1,000 243 0.63 243 231 230 227 228 226 222 224 215 222 220 0.58 214 207 207 209 205 200 500 Beef – 35% Beef – 36% Chicken – 27% Chicken – 26% Lamb – 14% Lamb – 14% 0 Pork – 13% Pork – 12% 2011 2014 2013 2012 2015 2016 2001 2010 2007 2004 2003 2008 Other – Other – 2002 2005 2006 2009 2000 2% 2% 2017e Jul-17 Jul-13 Jul-01 Jul-05 Seafood – 9% Seafood – 8% Jul-09 Turkey – 1% Turkey – 1% Domestic consumption Exports Veal – 0% Veal – 0% Beef Lamb Chicken Pork Source: ABS, MLA estimates e = estimate Source: Nielsen Homescan, MAT to 04/11/2017 vs year ago Source: Source: ABARES, calculated using ABS data Single person households English only spoken at home Median age in Australia 2.8 million 76.8% 72.7% 2.3 million 34 37 41.5 2.1 million years years years 2015 2016 2026f 2011 2016 1995 2016 2050f Source: ABS Source: ABS Source: ABS, BMI © Meat & Livestock Australia, 2018. ABN 39 081 678 364. MLA makes no representations as to the accuracy of any information or advice contained in MLA’s Market snapshot and excludes all liability, whether in contract, tort (including negligence or breach of statutory duty) or otherwise as a result of reliance by any person on such information or advice. All use of MLA publications, reports and information is subject to MLA’s Market Report and Information Terms of Use. Please read our terms of use carefully and ensure you are familiar with its content. FOR FURTHER INFORMATION VISIT US ONLINE AT: www.mla.com.au or email us at: [email protected] MLA INDUSTRY INSIGHTS Australia January 2018 1 What things do What are attributes What key strengths consumers look for that are important does lamb have? Consumers on pack/on shelf for Australian when buying lamb? consumers? • Overall Australian consumer demand for sheepmeat is (all protein) impacted by many factors, such as demographic shifts, income Is my/my family’s Colour of meat Tastes delicious growth and changes in people’s attitudes and beliefs towards favourite meat food from family, friends and the media. Is easy and • As awareness of lamb is high among Australians, the main I am willing to pay a bit Price per kg convenient to more for this meat opportunity sits with increasing frequency of purchase and prepare consumption (Source: MLA Global Consumer Tracker Australia, 2017). Is the most superior Date packed Guaranteed safe to eat meat Protein image profiles Is the most superior Freshness Tastes delicious meat Beef Lamb Chicken Pork Seafood Consistent quality Is my/my family’s Use by date standards favourite meat Easy everyday Source: MLA Global Consumer Tracker Australia, 2016 Goodness Australia’s increasingly diverse population High levels of immigration are driving Australia’s A little bit special population growth and also leading to a more increasingly diverse population. In the most recent ABS Source: MLA Global Consumer Tracker Australia, 2017 survey it showed that more than a quarter of Australia’s * Tick = Area of strength vs other proteins residents are now born overseas, and for the first time • Consumers perceive lamb as ‘special’ relative to other proteins in Australia’s history, the majority of these people born and are often choosing lamb as it ‘tastes delicious’. However, abroad are from Asia rather than Europe. This is leading there is opportunity to focus on lamb’s versatility and recipes to foodservice and retailer operators looking at adjusting that are easy to prepare (Source: MLA Global Consumer Tracker Australia, 2017). in-store/menu space that better targets these changing demographics. • When consumers are shopping for lamb, the key information they look for on pack relates to price and then freshness (meat colour and use-by date) (Source: MLA Global Consumer Tracker Australia, 2017). • As the retail price of red meat has trended upwards since 2013, • Research by Roy Morgan into Australian Food Attitudes from consumers claim price to be the main reason for eating less red meat, above health or animal welfare/environment concerns (see 2006 to 2016 highlights some key trends that lamb messaging figure below). can leverage with now almost three quarters of the population (72%) saying they enjoy food from all over the world (up from • Despite lamb’s price premium to many other proteins it remains 65% in 2006). Food without additives in it has also become a very popular meat choice with Australians, being one of the increasingly popular along with a preference for taste over largest per capita consumers of lamb in the world (Source: OECD). ingredients. Interestingly some of the health-orientated dietary concerns such a low fat diet has dropped (Source: Roy Morgan). Main reason for eating less red meat Rising costs of living 50 50 Australian consumers are paying higher prices for utilities, childcare, health and education, which in turn 40 is contributing to more cautious consumer spending on 34 food and grocery items according to recent research 33 commissioned by Coles. Coles CEO John Durkan has 30 come out and said Coles customers, particularly in lower socio-economic areas, are shifting from buying premium 20 20 products to the supermarket giant’s own range of private 13 10 label products, and are spending less on fresh produce 10 and fresh meat, despite relatively low food and grocery 6 8 7 price inflation over the same period. 2 0 Feb’10 Dec’10 Jun’12 Jun’13 Jun’14 Jun’15 Jun’16 Jun’17 (n=224) (n=313) (n=316) (n=175) (n=290) (n=292) (n=376) (n=437) Too expensive Health concerns Concerned about treatment of animals Don’t like the taste anymore Environmental concerns (any) Other Source: Pollinate/MLA 2 MLA INDUSTRY INSIGHTS Australia January 2018 Place of fresh meat purchase by average weekly customer spend and market share Retail Place of purchase Average Value market customer spend share ($) • Lamb has the third highest share of retail sales of any meat in Butcher $37 23.5% 2016-17, with around 13% share of fresh meat sales (by value) Market/Delicatessen/ (Source: Nielsen Homescan). $34 9.4% Other • It is a critical category for retailers with the average grocery basket value typically worth $45, it jumps to around $80 when Woolworths/Safeway $27 26.4% the basket includes fresh meat/seafood (Source: Nielsen).

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