In-Progress Review Draft

IN-PROGRESS REVIEW DRAFT Pre-release copy of significant commercial value to industry Document contains incomplete & in-progress research for comment For named reviewer/firm only; do not duplicate or distribute

RECIPIENT

FIRM

TARGET MARKET OPPORTUNITIES IN ASIA FOR SHEEP Part of Asia Market Success, April 2016 INHERENT LIMITATIONS

This work was commissioned by the Department of Agriculture and qualifications and limitations included in the Coriolis Document Forest Food Council photo or (3) are low resolution, complete Food Western Australia (DAFWA), with funding through the State and Coriolis Commentary, and are subject to significant uncertainties product/brand for illustrative purposes used under fair dealing/fair Government’s Royalties for Regions program and prepared by and contingencies, some of which, if not all, are outside the control of use for both “research and study” and “review and criticism”. Our Coriolis. This work is based on secondary market research, analysis of Coriolis; and usage of them complies with Australian law or their various license information available or provided to Coriolis by our client, and a range agreements (© Dollar Photo Club). of interviews with industry participants and industry experts. Coriolis e. any Coriolis Commentary accompanying the Coriolis document is have not independently verified this information and make no an integral part of interpreting the Coriolis document. Consideration representation or warranty, express or implied, that such information of the Coriolis document will be incomplete if it is reviewed in the COPYRIGHT is accurate or complete. absence of the Coriolis Commentary and Coriolis conclusions may be misinterpreted if the Coriolis document is reviewed in absence of the Copyright © Western Australian Agriculture Authority, 2016 Projected market information, analyses and conclusions contained Coriolis Commentary. herein are based (unless sourced otherwise) on the information IMPORTANT DAFWA DISCLAIMER described above and on Coriolis’ judgement, and should not be Coriolis is not responsible or liable in any way for any loss or damage construed as definitive forecasts or guarantees of future performance incurred by any person or entity other than DAFWA relying on the The Chief Executive Officer of the Department of Agriculture and or results. Neither Coriolis nor its officers, directors, shareholders, information in, and the Recipient unconditionally and irrevocably Food and the State of Western Australia and their employees and employees or agents accept any responsibility or liability to readers or releases Coriolis from liability for loss or damage of any kind agents (collectively and individually referred to below as DAFWA) recipients of this report other than DAFWA or people other than whatsoever arising from, the Coriolis document or Coriolis accept no liability whatsoever, by reason of negligence or otherwise, DAFWA who rely upon it (described below as Recipients) with Commentary including without limitation judgements, opinions, arising from any use or release of information in this report or any respect to this document. hypothesis, views, forecasts or any other outputs therein and any error, inaccuracy or omission in the information. interpretation, opinion or conclusion that the Recipient may form as a Coriolis wishes to draw Recipients’ attention to the following result of examining the Coriolis document or Coriolis Commentary. DAFWA does not make any representations or warranties about its limitations of the Coriolis document “Target Market Opportunities in quality, accuracy, reliability, currency, completeness or suitability for Asia for the Western Australian Premium Products” (the Coriolis The Coriolis document and any Coriolis Commentary may not be any particular purpose. Before using the information, you should Document) including any accompanying presentation, appendices relied upon by the Recipient, and any use of, or reliance on that carefully evaluate these things. and commentary (the Coriolis Commentary): material by the Recipient is entirely at their own risk. Coriolis shall have no liability for any loss or damage arising out of any such use. The information is general in nature, is not tailored to the a. Coriolis has not been asked to independently verify or audit the circumstances of individuals or businesses, and does not constitute information or material provided to it by or on behalf of the Client or ACCESSIBILITY financial, taxation, legal, business or management advice. We any of the parties involved in the project; recommend before making any significant financial or business Coriolis seeks to support the widest possible audience for this decisions, you obtain such advice from appropriate professionals who b. the information contained in the Coriolis Document or any Coriolis research. This document has been designed to be as accessible to as have taken into account your individual circumstances and objectives. Commentary has been compiled from information and material many users as possible. supplied by third party sources and publicly available information The information in this report should not be presumed to reflect or which may (in part) be inaccurate or incomplete; Any person – with or without any form of disability – should feel free indicate any present or future policies or decisions by the to call the authors if any of the material cannot be understood or Government of Western Australia. c. Coriolis makes no representation, warranty or guarantee to accessed. Recipients, whether express or implied, as to the quality, accuracy, reliability, currency or completeness of the information provided in We welcome the opportunities to discuss our research with our the Coriolis Document and any Coriolis Commentary or that readers and users. reasonable care has been taken in compiling or preparing them; All photos used in this discussion document were either (1) d. the analysis contained in the Coriolis Document and any Coriolis purchased by Coriolis from a range of stock photography providers as Commentary are subject to the key assumptions, further documented, (2) received written permission to use Southern FINAL v100; April 2016

2 SCREENING OVERVIEW In Phase One of the Target Market Opportunities in Asia for WA Premium Products Report (TMO Report), extensive import/export trade data was fed through a multi-stage screening process to “hone-in” on potential opportunities for Western Australia; stakeholder interviews also fed into this process STRUCTURE OF MULTI-STAGE SCREENING PROCESS USED IN THIS PROJECT Model; 2016 WA INDUSTRY-GOOD RESEARCH INDIVIDUAL FIRM STAGE I STAGE II STAGE III STAGE IV ROLE & RESPONSIBILITY

PLATFORM PRODUCT FIT WITH WA POSITIONING Project does not attempt to TARGET MARKET address firm-level operational or executional activities:

- R&D

- Product development

- Sourcing & supply chain

- Production & operations

- Marketing & branding 679 47 9 20 TRADE QUAL/QUANT PLATFORMS OPPORTUNITIES - Sales & sales structure CODES SCREENS - Capital structure

- Negotiation

- Distributor appointment

YOU ARE HERE

3 This project is focused on “market demand” from the following twenty-four Asian/Middle Eastern markets4

24 COUNTRIES DEFINED AS HIGH POTENTIAL TARGET MARKETS FOR WESTERN AUSTRALIA Target markets; 2015

SOUTH ASIA SE ASIA

India China Pakistan Hong Kong Sri Lanka Japan South Korea Taiwan Indonesia Malaysia Philippines Singapore Thailand MIDDLE EAST Vietnam

Bahrain Egypt Israel Jordan Western Kuwait Australia Lebanon Oman Qatar 24 defined target Saudi Arabia markets for this project UAE

Note: Complete list for analysis purposes, some countries excluded from list if no/limited trade data available (e.g. Iran) 4 WHAT IS THE PRODUCT? Sheep meat emerged in Phase I as one of twenty “high growth, high potential” opportunities for Western Australia; sheep meat, lamb or mutton, is a meat used in a wide range of cuisine styles

PRODUCT OVERVIEW Example; 2016

PRODUCT PROFILE HS Codes 020410, 020421, 020422, 020423, 020680 Product All fresh/chilled meat of sheep and lamb; all forms (carcasses, half-carcasses, bone-in cuts/primals, boneless cuts/primals, chilled offal) Out-of-scope Live; frozen; dried; canned; extracts; ready-meals and other processed foods Origin Among the first animals to be domesticated by humans; domesticated sometime between 11,000-9,000 BC in Middle East Example Sheep meat ingredients

Forms/usage - Hot pot/steamboat restaurants - Curries, similar - Kebab - Barbecued - Wide range of other uses Drivers of - Easy to produce, hardy animal that thrives in low-tech, desert conditions consumer/ - Relatively small animal, easily butchered in local settings market success - Strong cultural association with, and usage in, certain cuisines - Not religiously prohibited; generally favoured by the gods - Premium/niche product in many high income Western markets

Source: photo credit (Dollar Photo); Coriolis analysis 5 DOCUMENT STRUCTURE

What is the global situation?

What is the strategic situation in the market?

In this environment, what is the opportunity for Western Australia?

Who are the potential in-market partners?

Who are the key firms in Western Australia capable of delivering?

6 The global sheep flock is spread across the planet

DISTRIBUTION OF GLOBAL SHEEP FLOCK Head; m; 2014

102 87 163 259 262 95 17 226 USA/Canada 6 Nigeria United Kingdom Iran 41 34 50 Brazil 18 Sudan Spain Algeria 40 15 28

Morocco India Australia Argentina 19 Ethiopia 63 73 15 29 Syrian Arab Republic 18 Indonesia China Kazakhstan South Africa 202 Other Europe 16 15 26 60 Uzbekistan 15 Kenya Turkmenistan 17 14 South Sudan Afghanistan 17 13 Somalia Other Americas 12 49 USSR/Russia Saudi Arabia 22 12 Yemen 10 Iraq Other SS Africa Pakistan 8 New Zealand 92 29 30 Turkey Other NA/ME/CA 31 44 Mongolia Other SE Asua 23 Other Indian Sub 1 3 Other E Asia 0 Australasia Americas Europe NA/ME/CA* SS Africa# Indian Sub SE Asia E Asia

* North Africa/Middle East/Central Africa; # Sub Saharan; Source: UN FAO AgStat database; Coriolis classification and analysis 7 The Middle East, Africa and China are growing sheep numbers; Australia has falling animal numbers

53 YEAR DISTRIBUTION OF GLOBAL SHEEP FLOCK Head; m; 2014

53y ABS 1,210 1,206 1,197 1,182 1,175 1,163 1,159 1,154 Other E Asia -1 1,140 1,142 1,138 1,131 1,127

1,127 Mongolia 11 1,125 1,123 1,120 1,119 1,119 1,118 1,118 1,116 1,109 1,099 1,113 1,080 1,081 1,074 1,069 1,073 1,066 1,063 1,059 1,059 1,056 1,048 1,048 1,047 1,047 1,051 1,051 1,040 1,042 1,038 1,038 1,041 1,034 1,029 1,031 1,018

1,013 China 141 1,000 994 997 1 Indonesia 12 Other Indian Sub 2 Pakistan 19

India 23 Other 0

Other SS Africa 64 South Sudan 17 Kenya 13 South Africa -12 Ethiopia Sudan 6 Nigeria 32 Other NA/ME/CA Iraq 40 Yemen Saudi Arabia 35 Somalia -1 Afghanistan 107 6 Turkmenistan -5 Uzbekistan 14 15 Kazakhstan 15 Syrian Arab Republic 15 Morocco 6 Algeria 23 Iran 18 Turkey -3 USSR/Russia -111 Other Europe -22 Spain -7 United Kingdom 5 Other Americas -13 Argentina Brazil -35 4 USA/Canada -27 New Zealand -19

Australia -80 1963 1964 1965 1993 1995 2003 2004 2005 2007 2008 2010 2011 1961 1962 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1994 1996 1997 1998 1999 2000 2001 2002 2006 2009 2012 2013 2014

Source: UN FAO AgStat database; Coriolis classification and analysis 8 Sheep numbers are falling in developed, temperate climate countries and growing in dry regions of the developing world; Australian numbers are falling rapidly

10 YEAR SHEEP NUMBERS GROWTH MATRIX: ABSOLUTE CHANGE VS. RATE OF CHANGE VS. CURRENT NUMBER Head; 2004 vs. 2014 8% Mongolia

Other SE Asia Indonesia

Iraq 6% Kenya

Uzbekistan Ethiopia GROWING

USSR/Russia Algeria 4% Saudi Arabia Kazakhstan Other SS Africa Nigeria Afghanistan 10 year Turkey Other Indian Sub China CAGR Other NA/ME/CA 2% Yemen Head; Pakistan 04-14 Brazil Sudan Morocco Other Turkmenistan Other E Asia Syria India 0% Other Americas South Africa Argentina Other Europe Iran United Kingdom USA/Canada

-2% Somalia SHRINKING New Zealand Bubble scale: # of head 100 Australia in 2014; A bubble this size =

-4% Spain -30 -20 -10 0 10 20 30 40 50

10 year absolute change in head 04-14 Source: UN FAO AgStat database; Coriolis classification and analysis 9 ‘Realised’ meat per animal varies by country; Australia sits at the top end of the curve, bested only by South Africa and the USA

GLOBAL SHEEP/LAMB MEAT YIELD CURVE: HEAD KILLED VERSUS MEAT PER HEAD Head; kg/head; 2013 28.4 25.0 21.7 20.5 20.0 19.9 19.0 19.0 19.0 18.6 18.5 17.7 17.3 17.3 16.5 16.0 16.0 16.0 16.1 16.1 14.9 14.9 14.4 14.0 13.0 13.1 12.6 12.0 11.5 11.2 11.2 11.0 10.0 10.0 10.0 10.0 Kg per animal; 2013 7.8 USA/Canada South Africa Australia Iraq Saudi Arabia United Kingdom New Zealand Mongolia Uzbekistan Kazakhstan Iran Other NA/ME/CA Russia Algeria Turkmenistan Other E Asia Turkey Brazil China Afghanistan Pakistan Other Americas Other Europe Kenya Other SS Africa Somalia Sudan India Spain Morocco Argentina Nigeria Yemen Ethiopia Indonesia Other SE Asua Other Indian Sub

Proportional to head slaughtered; 2013

Source: UN FAO AgStat database; Coriolis classification and analysis 10 Yields improvement varies by country

MEAT YIELD PER ANIMAL: AUSTRALIA VS. SELECT COUNTRIES Kg/head; 1961-2013 20y CAGR 25 South Africa 3.4%

Australia 0.5% 21 Saudi Arabia 0.7% United Kingdom 0.3%

19 New Zealand 0.8% Kazakhstan 0.2%

17 China 1.3%

13 Sudan -0.4%

11 Ethiopia 0.0%

7 1962 2002 2003 2005 2006 2007 2008 1974 1976 1978 1979 2012 2013 1961 1963 1964 1965 1966 1967 1968 1969 1970 1971 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2009 1972 1975 1977 1973 2000 2001 2010 2011 2004

Source: UN FAO AgStat database; Coriolis classification and analysis 11 While global sheep/lamb meat production is spread across all regions, China, Australia and New Zealand stand out for absolute size, followed by Turkey, the UK, Algeria and India

DISTRIBUTION OF GLOBAL SHEEP/LAMB MEAT PRODUCTION Tonnes; 000; 2013

1,111 406 1,431 2,242 764 407 54 2,175 Iran 127

USA/Canada United Kingdom 289 Algeria Nigeria 90 280 176

Morocco Spain 118 118 Syria Australia 164 India 660 South Africa 238 Brazil Kazakhstan 144 86 135 Uzbekistan 123 Indonesia Turkmenistan Kenya 46 Other Europe 145 42 China Argentina 555 2,081 49 Afghanistan Somalia106 Saudi46 Arabia Yemen100 55 Iraq 47 Other Americas Russia Other SS Africa 173

181 402 Pakistan New Zealand 162 450 Other NA/ME/CA 797

Turkey 295 Other SE Asua 8 Mongolia Other Indian Sub 92 Other E Asia 7 1 Australasia Americas Europe NA/ME/CA SS Africa Indian SubSE Asia E Asia

Source: UN FAO AgStat database; Coriolis classification and analysis 12 China stands out for increasing sheep/lamb meat production over the past fifty years; Australian production relatively static, with yield increases making up for falling animal numbers

52 YEAR DISTRIBUTION OF GLOBAL SHEEP/LAMB MEAT PRODUCTION* Tonnes; 000; 1961-2013 52y ABS 8,589 8,491 8,402 8,335 8,332 -2 8,243 Other E Asia 8,150

8,145 46 8,049 Mongolia 7,835 7,789 7,770 7,767 7,791 7,524 7,392 7,209 7,196 7,211 7,077 7,040 7,114 7,026 7,033 China 2,026 6,835 6,651 6,352 6,223 6,221 5 6,102 6,081 Indonesia 4

5,888 Other Indian Sub

5,867 31 Pakistan 110 5,660 5,634 5,647 India 115 5,536

5,428 Other 0 5,416 5,386 5,401 5,375 5,337 5,316 5,307

5,271 Other SS Africa 238 5,143 5,040 5,040 5,110 Kenya 5,038 27 5,016

4,930 South Africa 41 Nigeria 169

Other NA/ME/CA 673 Iraq 12 Yemen 41 Saudi Arabia 83 Somalia 36 Afghanistan 45 Turkmenistan 145 Uzbekistan 123 Kazakhstan 135 Syrian Arab Republic 135 Morocco 73 Algeria 250 Iran (Islamic Republic of) 10 Turkey 52 Russian Federation -780

Other Europe 40

Spain 14 United Kingdom 21 Other Americas Argentina 30 Brazil -11761 USA/Canada -303 New Zealand -7

Australia 77 1963 1965 1970 1978 1992 1995 1998 2007 2013 1961 1962 1964 1966 1967 1968 1969 1971 1972 1973 1974 1975 1976 1977 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1993 1994 1996 1997 1999 2000 2001 2002 2003 2004 2005 2006 2008 2009 2010 2011 2012

* Data is meat production; excludes live exports (measured at destination); Source: UN FAO AgStat database; Coriolis classification and analysis 13 Australia is achieving basically flat production long term; all export growth is coming from meat freed up from the local market through falling Australian domestic lamb consumption

DISPOSITION OF AUSTRALIAN PRODUCTION VOLUME INCLUDING LIVE EXPORTS Tonnes; 000; 1961-2013

972 16

CAGR 853 839 0.4% 239 14 791 767 765 138 761 756 753 748 743 10 733 733 732 731 722 718 175 709 111 712 711 711 703 20 77 690 693 690

687 52y ABS 86 682 682 123 108 88 64 670 100 671 664 660 654 102 43 110 7 74 102 86 83 179

6 Live exports 40 632 138 631 125 620 620 621 93 614 87 608 608 115 104 116 605 106 603 600 599 601 190 103 586 586 114 120 5 581 111 33 5 568 6 124 71 4 6 5 562 64 554 3 59 51 115 296 208 109 66 97 88 221 158 88 67 73 96 99 52 210 27 229 300 321 71 116 487 140 160 230 160 281 163 316 266 250 124 234 310 103 20 207 92 321 243 190 413 234 293 173 226 147

259 Processed exports 346 268 90 192 93 152 235 312 717 650 576 573 550 530 523 517 515 512 507 500 495 470 460 446 439 434 426 427 424 423 420 419 418 421 392 380 377 372 366 367 364 363 363 363 362 359 358 344 339 336 332 325 323 321 305 302 302 287 282 247 243 Apparent domestic consumption -269 1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: UN FAO AgStat database; Coriolis classification and analysis 14 However, despite being relatively small producers, Australia and New Zealand dominate the global cross- border processed lamb meat trade

EXCLUDES LIVE* GLOBAL SHEEP/LAMB MEAT EXPORT VALUE: ALL CUTS AND FORMS (CHILLED & FROZEN) US$; m; 2014 $177 $49 $33 $13 $5,005 $191 $1,642

USA $33

United Kingdom $633 New Zealand $2,548 $132 India Uruguay $98 NA/ME/CA

Ireland E/SE Asia $33 $278 $13

Spain $186

Netherlands $155 Australia Other SS Africa Chile $2,458 $36

Belgium $19 $117

Germany Pakistan $44

Other Americas $62 France $57 $23 Other Europe $154 NA/ME/CA SS Africa Indian Sub E/SE Asia Australasia Americas Europe

* We cannot easily analyse the global live trade due to civil war and non-existent government in many key suppliers; Source: UN Comtrade database; Coriolis classification and analysis 15 Average export value per kilogram varies by country, with the Europeans leading returns (generally trading amongst themselves) and Australia selling at a discount to New Zealand

EXCLUDES LIVE* GLOBAL SHEEP/LAMB MEAT EXPORT VALUE CURVE: ALL CUTS AND FORMS (CHILLED & FROZEN) Tonnes; US$; actual; 2014 $9.40 $9.34 $9.15 Average price per kg; US$; 2014 $6.36 $6.21 $6.03 $5.88 $5.58 $5.75 $5.44 $5.17 $5.13 $4.96 $4.91 $4.91 $4.18 $4.02 $3.56 $3.23 $2.89 $2.81 Belgium Germany Netherlands France Ireland United Kingdom Other Europe India Chile Uruguay E/SE Asia Spain Pakistan Other SS Africa Other Americas Namibia USA Other New Zealand Australia NA/ME/CA

Proportional to total export volume; tonnes; 2014

What is the global situation?

What is the strategic situation in the market?

In this environment, what is the opportunity for Western Australia?

Who are the potential in-market partners?

Who are the key firms in Western Australia capable of delivering?

17 Industry representatives supported an opportunity in chilled lamb

“Chilled lamb to the Middle East has more opportunity for growth into the top- ”Chilled gets a premium over frozen easily.” Management, Large, Agricultural end markets.” Management, Large, Agricultural Company Company

“Chilled is the only opportunity. Need premium lambs to get a higher price in- “We need to focus on improving the quality and consistency of lambs. We need market and a higher margin. There is no money in frozen commodities.” to have a premium product for the market 12 months of the year.” Management, Management, Large, Meat Company Large, Meat Company

“Chilled carcass to the Middle East is growing in value from second tier to prime “We can process retail ready beef, lamb and pork. This is a really exciting lamb market.” Management, Large, Meat Company opportunity.” Management, Large, Agribusiness Company

“We are hiring new staff and upgrading the processing to move into more chilled “Now we have access for chilled lamb into China, we need to see where the real products.” Management, Large, Agribusiness Company opportunities are.” Management, Medium, Meat Company

Source: Industry interviews 18 Within this section, chilled lamb and sheep are defined as follows

TRADE DESCRIPTORS BY TEMPERATURE STATE

IN SCOPE OUT OF SCOPE

Lamb, chilled carcass Lamb, frozen carcass

Sheep, chilled carcass Sheep, frozen carcass

Sheep, chilled bone-in Sheep, frozen bone-in

Sheep, chilled boneless Sheep, frozen boneless

Sheep, chilled offal Live Sheep

Sheep, frozen offal

19 Western Australia is well-positioned to grow chilled lamb exports to Asia

- Asian chilled sheep/lamb meat imports are rising, driven by increasing volumes and growing prices - Asian/Middle East chilled lamb import growth is coming across a range of products - Asian/Middle East chilled lamb imports come from Australasia (Australia and New Zealand) and the Indian Subcontinent (India and Pakistan) - Australia and India stand out for driving chilled lamb import value growth in Asia & the Middle East over the past decade - Australia leads in driving growth over the past five years - Average FOB price to target Asian markets vary by supplier, with Australia appearing to set the pricing lead - The Gulf states are the key Asian/Mid-East markets for chilled lamb meat; Japan and China stand out in East Asia - Growth in chilled lamb meat trade into Asia/Middle East is coming from the Gulf states - The smaller Gulf states and China stand out for driving growth - Average chilled lamb import prices vary by country, with Japan standing out as a large market paying premium prices - Imported chilled lamb consumption and aggregate chilled lamb imports appear unlinked with income per capita; that said, a number of markets appear to have long-run penetration upside - Australia is the market share leader across most markets; India has pockets of strength, particularly in Pakistan, Vietnam and Saudi - Western Australia has a strong position across most of the target markets; continued growth will need to come from driving penetration (vs. live or frozen) rather than taking share from competitors - Data supports new high value, premium chilled lamb opportunities being initially launched in (1) Japan, (2) Singapore and (3) Hong Kong - As a “Straw Man” for discussion, we identify an export market roll-out plan

20 Asian chilled sheep/lamb meat imports are rising, driven by increasing volumes and growing prices

TOTAL IMPORTS TO ASIA/MIDDLE EAST TARGET REGION (24 COUNTRIES) VOLUME AVERAGE PRICE PER KILOGRAM VALUE T; 000; 2004-2014 US$; 2004-2014 US$m; 2004-2014

120 $7.00 $800

$700 $6.00 CAGR 100 7%

$600 CAGR* $5.00 10% 80 $500 CAGR 17% $4.00

60 $400

$3.00

$300 40 $2.00 $200

20 $1.00 $100

0 $- $- 2010 2011 2010 2011 2010 2011 2004 2004 2004 2014 2014 2014 2008 2008 2008 2006 2009 2006 2006 2009 2009 2007 2007 2007 2005 2005 2005 2012 2012 2012 2013 2013 2013

* Compound Annual Growth Rate; Source: UN Comtrade database; Coriolis analysis and classifications 21 Asian/Middle East chilled sheep/lamb meat import growth is coming across a range of products

10y ABS

EXPORT VALUE TO TARGET REGION BY TRADE SUB-CODE US$m; FOB; 2014 $668

$581

$233 Sheep, chilled lamb carcass +$212

CAGR $209 17% $448

$382 $139 $148 Sheep, chilled sheep carcass +$132 $331 $337 $111 $127 $68 $90

$106 $224 $68 $84

$183 $57 $91 $165 $212 Sheep, chilled bone-in +$154 $156 $47 $79 $174 $135 $23 $28 $39 $116 $134 $20 $17 $21 $29 $16 $92 $69 $63 $61 $59 $62 $113 $63 $53 $57 $70 Sheep, chilled boneless +$31 $51 $52 $57 $58 $39 $43 $16 $0 $2 $3 $2 $2 $4 $5 $8 $13 $5 Sheep, chilled offal +$5 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications 22 Asian/Middle East chilled sheep/lamb meat imports come from Australasia (Australia and New Zealand) and the Indian Subcontinent (India and Pakistan)

EXPORT VALUE BY SUPPLIER TO TARGET REGION TOTAL = US$668m US$m; FOB; 2014 $8 $8 $506 $145 $1

Romania $3

Ethiopia India $6 $106 Australia $445 UK Other $2 $1

Spain $1

Other SS Africa Pakistan $2 $39 New Zealand Other Europe $61 $2 Europe SS Africa Australasia Indian Sub Other

NA/ME/CA = North Africa/Middle East/Central Asia; Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications 23 Australia and India stand out for driving chilled sheep/lamb meat import value growth in Asia & the Middle East over the past decade

10y ABS EXPORT VALUE BY SUPPLIER TO TARGET REGION US$m; FOB; 2004-2014 $668 +$533

$581

CAGR 17% $448 $445 Australia +$361

$382 $367

$331 $337

$286

$247 $164 $224 $219

$183 $54 $61 New Zealand +$38 $165 Romania +$3 $156 $3 United Kingdom +$2 $130 $27 $0$2$3$1 $0$2$1 Spain +$2+$1 $135 $7$1 $6$2 Other Europe -$0 $0$5$1 $54 Ethiopia +$5 $119 Other SS Africa +$2 $110 $46 $102 $0$4$2$1 $36 $10 $98 $106 India +$94 $84 $7 $0 $24 $108 $10 $0$1 $0 $0$1 $11 $40 $0$7$1 $2$7 $0 $23 $0 $28 $25 $23 $0 $32 $23 $2$5 $43 $0$1 $0$3 $0$2$3 $12$0 $10$0$2 $13 $19 $40 $49 $46 $39 Pakistan +$37 $2 $4 $8 $12 $15 $23 $28 $12 $10 $6 $2 $2 $1 $0 $0 $1 $1 $1 Other -$12 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications 24 Australia leads in driving growth over the past five years

FIVE YEAR EXPORT GROWTH MATRIX: CHANGE IN VALUE VS. RATE OF GROWTH VS. ABSOLUTE VALUE US$m; 2009 vs. 2014

30% Spain Other Europe Other SS Africa

25% United Kingdom

Australia

20%

New Zealand

15%

5y CAGR Pakistan 10%

5% Ethiopia

0% India

-5% Other Size of bubble = US$m; 14 $100m A bubble this size=

-10% $-50 $0 $50 $100 $150 $200 $250 $300

5y absolute change in value

Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications 25 Average FOB price to target Asian markets vary by supplier, with Australia appearing to set the pricing lead in chilled sheep/lamb meat

AVERAGE EXPORT VALUE COST CURVE BY SUPPLIER US$/kg; t; FOB; 2014

$9.65

$6.82 $6.61 $6.21 $6.04 $5.80 $5.49 Average $5.24

FOB $4.29 value $4.71 $4.45 Spain New Zealand Romania Other Ethiopia Other SS Africa Other Europe Pakistan United Kingdom Australia India

Volume imported by defined target market Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications 26 The Gulf states are the key Asian/Mid-East markets for chilled sheep/lamb meat; Japan and China stand out in East Asia

IMPORT VALUE BY MARKET BY REGION TOTAL = US$668m US$m; FOB; 2014 $501 $1 $25 $141

India $0

United Arab Emirates $173 Singapore Japan $12 $68

Bahrain $71

South Korea Malaysia $7 Qatar $4 Taiwan $61 Other $5 $1 Hong Kong SAR Kuwait $15 $33 Thailand Saudi Arabia $4 $73 Philippines Egypt $0 $0 Indonesia China $1 $46 Other $91 Vietnam $4 NA/ME/CA Indian Sub SE Asia East Asia

Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications 27 Growth in chilled sheep/lamb meat trade into Asia/Middle East is coming from the Gulf states

IMPORT VALUE BY MARKET BY REGION US$m; FOB; 2004-2014 10y ABS

$668 +$533

$581 $173 UAE +$146

$151 CAGR 17% $448 $71 Bahrain +$69

$382 $112 $76 $61 Qatar +$56

$337 $331 $33 Kuwait +$28 $94 $40 $46 $33 $72 $92 $73 Saudi Arabia +$57 $38 $39 Egypt $4 $0 Israel +$0-$0 $9 $69 $224 $26 $26 $25 $22 Other ME $13 India $14 $0 $91 +$80 $13 Other Ind. Sub $183 $51 Singapore $63 $60 $56 Malaysia $165 $0 $77 Thailand $156 $55 $0$1 +$0 $2 $12 Philippines +$5 $52 $7 $0 $4 Indonesia +$1 $135 $34 $8 $20 $0$4$1 +$0+$3 $25 $0 $0 $62 $4 Vietnam +$3 $46 $0$1 $5$2 $5$1 $2$5 $39 $10 $27 $5 $5 $9 $3 $15 $46 $45 $0$1 $1 $18 $0$1 $10$0$1 $68 Japan +$23 $5 $0$1 $0 $25 $11 $10 $2 $13 $13 $0 $0 $0$1 $2$1 $2$3$1 $16 $0$5 $0$1 $0 $8 $9 $2$1 $0$1 $5$1 $13 $21 $7 $60 $11$0 $0$1 $0 $21 $1 $0$1 $7$1 $0$7 $1 $7 South Korea +$6 $7 $1 $2 $1 $58 $5 Taiwan +$2 $0$3$1 $1 $1 $1 $66 $4 $15 Hong Kong SAR +$10 $67 $66 $50 $4 $50 $45 $43 $15 $45 $2$5 $3 $4$3 $12 $46 China +$44 $2 $3 $3 $4 $32 $3$1 $2$3 $2 $6$2 $2 $8$3 $12 $13 $16 $5$3 $4$6 $6$3 $4 $6$3 $3 $4 $4 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications 28 The smaller Gulf states and China stand out for driving growth

FIVE YEAR IMPORT GROWTH MATRIX: CHANGE IN VOLUME VS. RATE OF GROWTH VS. ABSOLUTE VALUE US$m; t; 2009 vs. 2014 100% India Sri Lanka

80% Bahrain

China

60%

5y CAGR Qatar Value 40%

Pakistan Thailand 20% South Korea Vietnam Taiwan Jordan UAE Hong Kong SAR Kuwait Japan Singapore Saudi Arabia Oman 0% Indonesia

Size of bubble = US$m; 14 $100m A bubble this size= Egypt Malaysia Lebanon Philippines -20% -8,000 -6,000 -4,000 -2,000 0 2,000 4,000 6,000 8,000 10,000 12,000

5y absolute change in volume

Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications 29 Average chilled sheep/lamb meat import prices vary by country, with Japan standing out as a large market paying premium prices

AVERAGE IMPORT VALUE COST CURVE BY MARKET/REGION US$/kg; t; FOB; 2014 $9.65 $9.48 $9.27 $8.89

$8.68 $8.16 $6.55 $6.11 $5.98 $5.73 $5.73 $5.93 $5.85 $5.81 $5.33 $5.66 $5.49 $5.45

Average $4.94 import $4.21 value $3.44 $0.53 $0.00 India Indonesia Hong Kong SAR Malaysia South Korea Singapore Oman Vietnam Japan UAE Bahrain Kuwait Saudi Arabia Qatar Jordan China Thailand Taiwan Sri Lanka Lebanon Pakistan Philippines Egypt

Volume imported Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications 30 Imported chilled sheep/lamb meat consumption and aggregate imports appear unlinked with income per capita; that said, a number of markets appear to have long-run penetration upside

MARKET SIZE DRIVERS: GDP PER CAPITA VS. IMPORTS PER CAPITA VS. MARKET SIZE Kg; US$; t; 2014 9.0 Bahrain

Bubble scale: tonnes; 2014 10,000 A bubble this size= 8.0

7.0

6.0

Imports per Qatar capita 5.0

4.0

United Arab Emirates 3.0

2.0 Jordan

Kuwait Saudi Arabia 1.0 Philippines Oman Vietnam China Japan India Thailand Malaysia Taiwan South Korea Hong Kong SAR Singapore 0.0 Lebanon $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 Pakistan Egypt Sri Lanka Indonesia GDP per capita Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Wikipedia (GDP/capita); Coriolis analysis and classifications 31 Australia is the market share leader across most markets; India has pockets of strength, particularly in Pakistan, Vietnam and Saudi

IMPORT VALUE MARKET SHARE BY MARKET BY KEY SUPPLIER % of value in US$m; FOB; 2014

100%

Other 90%

80% SS Africa

70% Europe

60%

Pakistan 50%

40% India

30%

New Zealand 20%

10% Australia

0% Japan Thailand Qatar Singapore South Korea Bahrain China Saudi Arabia Kuwait Hong Kong SAR UAE Egypt Vietnam Taiwan Oman Lebanon Philippines India Indonesia Jordan Pakistan Malaysia Sri Lanka

Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications 32 Western Australia has a strong position across most of the target markets; continued growth will need to come from driving penetration (vs. live or frozen) rather than taking share from competitors

AUSTRALIAN IMPORT MARKET SHARE BY VALUE VS. TOTAL VALUE OF IMPORTS (ALL SOURCES) % of US$m; US$m; FOB; 2014 100% 98% 96% 94% 93% 90% 88% 85% 82% 79% 77% 76% 72% 72% 58% 56% 56% Australian market 47% share 25% 14% 9% 0% Oman Vietnam Saudi Arabia Kuwait Hong Kong SAR UAE Egypt Jordan Malaysia Japan Thailand Qatar Taiwan Singapore South Korea Bahrain Sri Lanka China Pakistan India Philippines Indonesia Lebanon

Total value of imports

Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications 33 Data supports new high value, premium chilled lamb opportunities being initially launched in (1) Japan, (2) Singapore and (3) Hong Kong

WHERE TO FOCUS FOR NEW HIGH VALUE, PREMIUM PRODUCTS: AU SHARE VS. AVERAGE VALUE VS. MARKET SIZE % of value; US$; US$m; 2014 $10.00

Thailand Taiwan $9.25 India

Indonesia 1 Japan

$8.25 Singapore 2

$7.25

VALUE Hong Kong SAR Average 3 FOB $/kg

$6.25 Saudi Arabia Kuwait Malaysia Bahrain Sri Lanka UAE Philippines Jordan Qatar Oman South Korea $5.25 China

Vietnam $4.25 Lebanon Bubble scale: US$m; 2014 $50 Egypt A bubble this size= Pakistan $3.25 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

AU share of total import value Note: data is as reported by sender (FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications 34 As a “Straw Man” for discussion, we identify an export market roll-out plan

PRELIMINARY “STRAW MAN” DEVELOPMENT & ROLLOUT PLAN FOR CHILLED LAMB OPPORTUNITY Model; 2016

0 1 2 3 Product Export launch in Export launch in Export launch in Hong development and Japan Singapore Kong testing

- High income, sophisticated market and consumers - AU already has a strong market position on which WA can build

35 DOCUMENT STRUCTURE

What is the global situation?

What is the strategic situation in the market?

In this environment, what is the opportunity for Western Australia?

Who are the potential in-market partners?

Who are the key firms in Western Australia capable of delivering?

36 Western Australia is well-positioned to grow chilled sheep/lamb meat exports to Asia

IS THE MARKET DEVELOPED & COMPETITIVE? - The flow of chilled lamb from the farm through to the consumer is relatively straight forward and simple - Chilled lamb prices are attractive in Asia - Asian markets generally have a much less developed chilled lamb range and offer than key Western countries with high consumption

WHAT IS WA CAPABLE OF DELIVERING? - Western Australian lamb processors need to continue to move forward and improve through improved product development and presentation - Multiple potential positions exist to develop a premium chilled lamb offer for Asia - Products from other processors in other markets demonstrate what is possible in terms of developing a premium Western Australian chilled lamb offer - There are a wide range of potential product positions or claims available for a premium chilled lamb product from Western Australia targeting Asia - As a “Straw Man” for discussion, we identify an opportunity for a high value, premium chilled lamb product with select characteristics for export market launch

37 HOW IS THE MARKET STRUCTURED? The flow of chilled lamb from the farm through to the consumer is relatively straight forward and simple

SIMPLIFIED MODEL OF SUPPLY CHAIN: CHILLED LAMB Model; 2016 This stage branches and adds multiple layers in large markets

In-Market Domestic Wholesalers Retailers Farmer Packer/Processor

Distributor(s) WA WA Lamb Agent/Broker/ Foodservice (multi-layered in Farmer Processor Distributor & Institutional large markets)

Other Australian Packer/Processor

New Zealand Packer/Processor Exports Packer/Processor Sales/Marketing

Logistics Providers European (Airfreight, Packer/Processor Seafreight, Trucking)

India/Pakistan Packer/Processor

Local/Regional Packer/Processor

Other Packer/Processor

Source: Coriolis 38 WHO IS THE COMPETITION? PRICING Chilled lamb prices are attractive in Asia

EXAMPLE: SHELF PRICE PER KG ACROSS SELECT WESTERN & ASIAN MARKETS: LAMB RACK US$/kg; Feb 2016

$53.98

$45.26

$24.29 $21.59

Hong Kong Singapore AU United Kingdom Australia

SELECT SE ASIAN RETAILERS SELECT WESTERN

Source: Coriolis from store checks 39 WHAT IS ON THE SHELF? RANGE IN MARKET Asian markets generally have a much less developed chilled lamb range and offer than key Western countries with high consumption

EXAMPLE: ACTUAL CHILLED LAMB RANGE ON SHELF Feb 2016

London: GDP/Capita US$75,200 Singapore: GDP/Capita US$83,100

Source: Coriolis from store checks; photo credit (fair use/fair dealing; low resolution; complete product/brand for illustrative purposes); Coriolis analysis 40 WHAT IS WA CAPABLE OF DELIVERING? STRATEGIC DIRECTION Western Australian lamb processors need to continue to move forward and improve through improved product development and presentation

SUGGESTED STRATEGIC DIRECTION: WESTERN AUSTRALIAN CHILLED LAMB Model; 2016

Vacuum packed Chilled & frozen Australian Regional Specific primal/sub- Case-ready Ready-meal carcass sent branded branded breed primal

India/Pakistan WA suppliers EU suppliers are suppliers are here in Asia here are here

High growth, high potential opportunities are here

41 WHAT IS WA CAPABLE OF DELIVERING? CLAIMS Multiple potential positions exist to develop a premium chilled lamb offer for Asia

IDENTIFIED POTENTIAL PREMIUM POSITIONS Model; 2016

HEALTH PROVENANCE INDULGENCE CONVENIENCE

High in protein Identified source region Gift packaging Serving for one

High in iron Organic Hand trimmed Oven ready

Gluten free Specialty breed Premium Ready in 30 min

Antibiotic free Track & trace Smoked flavour Suitable for freezing

No added hormones Free to graze

Farmer’s story

Source: Coriolis; photo credit (Dollar Photo and Southern Forests Food Council Inc.) 42 WHAT IS WA CAPABLE OF DELIVERING? GLOBAL PEERS Products from other processors in other markets demonstrate what is possible in terms of developing a premium Western Australian chilled lamb offer

EXAMPLES OF PREMIUM PRODUCTS FROM OTHER MARKETS Select; 2016

Case-ready Case-ready Case-ready Case-ready

Organic Abervale lamb “Hand Trimmed” Slow-cooked

Welsh lamb Bred for tenderness With Rosemary Serves 1

Dutchy Originals Succulent “Finest” Ready in 30 min

Free to graze British flag Black packaging Ready-to-cook/Oven ready

Lush valleys, uplands From a small group of and coastal regions dedicated farmers Suitable for home freezing

With minted gravy

Source: photo credit (fair use/fair dealing; low resolution; complete product/brand for illustrative purposes); Coriolis analysis 43 WHAT IS A POTENTIAL WA OFFER? There are a wide range of potential product positions or claims available for a premium chilled lamb product from Western Australia targeting Asia

HYPOTHETICAL EXAMPLE OF POTENTIAL PREMIUM PRODUCT FROM WA Model; 2016

High in protein High in iron

HEALTH

From Australian Farmer’s story Margaret River Flag

PROVENANCE

Bred for Hand trimmed tenderness Plain lamb INDULGENCE

Case-ready

CONVENIENCE

Source: Coriolis; photo credit (Dollar Photo and Southern Forests Food Council Inc.) 44 WHAT IS THE IDENTIFIED OPPORTUNITY? As a “Straw Man” for discussion, we identify an opportunity for a high value, premium chilled lamb product with select characteristics for export market launch

PRELIMINARY “STRAW MAN” DEVELOPMENT & ROLLOUT PLAN FOR CHILLED LAMB OPPORTUNITY Model; 2016

CURRENT WA IDENTIFIED HIGH GROWTH, POTENTIAL FUTURE POSITIONING IN ASIA HIGH VALUE OPPORTUNITY FOR WA PRODUCT LINE EXTENSION

From From Farmer’s story Honey & mint 100% grass fed Australia Margaret River

Bred for tenderness High in protein Riblets Certified Organic

Full of flavour “Hand trimmed” Gluten free Case ready

Track & trace Antibiotic free

No added hormones

Source: photo credit (fair use/fair dealing; low resolution; complete product/brand for illustrative purposes); Coriolis analysis 45 DOCUMENT STRUCTURE

What is the global situation?

What is the strategic situation in the market?

In this environment, what is the opportunity for Western Australia?

Who are the potential in-market partners?

Who are the key firms in Western Australia capable of delivering?

46 FOCUS MARKET – 1 – JAPAN Japan has a robust and well-developed food retailing and foodservice sector

TURNOVER & PURCHASES ESTIMATED WHOLESALE FOOD & FMCG PURCHASES US$b; 2014 US$b; 2014

$287.1 $93.0 100% 90% $93 Foodservice 80% $310 70% 60% Supermarkets 50% $102.3 40% 711,000 restaurants, $232 Retail bars & clubs, 87,927 30% $331 hotels/motels/etc., 20% vending machines, institutions (schools, 10% hospitals, airline 0% caterers, prisons, etc.) Turnover Purchases

TURNOVER GROWTH RATE Foodservice % Y-O-Y; HK$; 2013v2014 $93.0 Convenience $112.9

Retail 0.0%

Online $5.3 Small grocers $27.5

Foodservice 2.4% Specialists $22.5 Other grocery $16.6 Retail Foodservice

Source: Coriolis from a wide range of sources 47 FOCUS MARKET – 1 – JAPAN Eight potential in-market partners are identified for Western Australian firms in Japan

POTENTIAL IN-MARKET PARTNERS – JAPAN 2015 or as available

Firm AEON Retail Seven & I Holdings Uny Group Holdings Izumi Co. Ltd. Life Arcs Lawson Family Mart

Ownership Japan; listed Japan; listed Japan; listed Japan; listed Japan; listed Japan Japan; listed Japan; listed

Website www.aeon.info www.7andi.com www.unygroup- www.izumi.co.jp www.lifecorp.jp www.arcs-g.co.jp www.lawson.jp www.family.co.jp www.maxvalu.co.jp www.sej.co.jp hds.com www.daiei.co.jp www.itoyokado.co.jp www.uny.co.jp www.ministop.co.jp www.circleksunkus.jp

Annual sales US$61.2b US$49.1b US$9.0b US$4.7b US$4.7b US$4b US$17.4b US$14b Total/Food US$16.8b US$17.5b US$6.7b US$2.1b US$3.8b US$4b

Food store Hypermarket Convenience 17,900 Supermarket Supermarkets Supermarket Convenience 12,254 Convenience 9,975 formats Supermarket (41% share) Convenience Hypermarkets (20.5% share) (19% share) Department stores Supermarkets 185 (9.6% share) Malls Convenience Department stores HBC (3.4% share) Foodservice Pharmacy/HBC

# of stores 1,882 18,262 226 102 239 290 12,254 9,975 (JP) 16,970 (Global)

Store fascia

Source: Coriolis from a wide range of sources 48 FOCUS MARKET – 2 – SINGAPORE Singapore has a robust and well-developed food retailing and foodservice sector

TURNOVER & PURCHASES ESTIMATED WHOLESALE FOOD & FMCG PURCHASES US$b; 2014 US$b; 2014

$3.9 $1.9 100% 90% $1.9 Foodservice 80% $6.3 70% 60% 50% 40% 6,500 restaurants, $3.9 Retail Supermarket 30% hawker stalls, hotels, $5.6 $2.2 vending machines, 20% institutions (schools, 10% hospitals, airline caterers, 0% prisons, etc.) Turnover Purchases

TURNOVER GROWTH RATE Foodservice % Y-O-Y; HK$; 2013v2014 $1.9

Convenience $0.4 Online $0.1 Retail 3.0% Traditional grocery $0.3 Department stores $0.3 Petrol stations $0.1

Foodservice 5.0% Wet markets, etc. $0.7

Retail Foodservice

Source: Coriolis from a wide range of sources 49 FOCUS MARKET – 2 – SINGAPORE Four potential in-market partners are identified for Western Australian firms in Singapore

POTENTIAL IN-MARKET PARTNERS – SINGAPORE 2015 or as available

Firm NTUC Fairprice Cold Storage Sheng Siong Prime Supermarkets

Ownership National Trade Union Council Dairy Farm International Listed; Singapore Private; Singapore (Singapore) (Hong Kong)

Website www.fairprice.com.sg www.coldstorage.com.sg www.shengsiong.com.sg www.primesupermarket.com www.ntuc.org.sg www.dairyfarmgroup.com www.allforyou.sg

Annual sales US$1.83b US$1.55b US$0.55b US$0.2b

Store formats Supermarket Supermarket (Cold Storage, Supermarkets Supermarkets Hypermarket Marketplace) Online Convenience (Cheers; 139) Hypermarket Online Convenience (7-Eleven; 502) Online

# of stores 285 848 38 19

Store fascia

Source: Coriolis from a wide range of sources 50 FOCUS MARKET – 3 – HONG KONG Hong Kong has a robust and well-developed food retailing and foodservice sector

TURNOVER & PURCHASES ESTIMATED WHOLESALE FOOD & FMCG PURCHASES US$b; 2014 US$b; 2014

$8.0 $3.9 100% 90% $3.9 Foodservice 80% ParknShop $12.8 $1.5 70% 60% 50% 40% 14,000+ restaurants $8.0 Retail Wellcome 1,000+ bars & clubs 30% $1.2 1,050+ hotels $11.5 20% Vending machines Institutions (1,088 schools, 10% AEON 42 hospitals, 3 main airline 0% $0.6 caterers, prisons, etc.) Turnover Purchases CRA CRE $0.3 TURNOVER GROWTH RATE $0.2 Foodservice Other retail $3.9 % Y-O-Y; HK$; 2013v2014 $0.6

Drug stores $0.6

Retail 6.7%

Wet markets, etc. $3.0

Foodservice 3.5%

Retail Foodservice

Source: Coriolis from a wide range of sources 51 FOCUS MARKET – 3 – HONG KONG Seven potential in-market partners are identified for Western Australian firms in Hong Kong

POTENTIAL IN-MARKET PARTNERS – HONG KONG 2015 or as available

Firm Wellcome Park’N Shop CR Vanguard Dah Chong Hong 759 Stores AEON Stores Convenience Retail Asia

Ownership Dairy Farm A.S. Watson/ CRE/China Resources Dah Chong Hong/ Private; Hong Kong AEON (Japan) Fung Group International/Jardine Hutchison Whampoa (SOE; China) CITIC Pacific/CITIC (Lam Wai Chun) Matheson (SOE; China)

Website www.wellcome.com.hk www.parknshop.com www.crvanguard.com.hk www.dch.com.hk www.759store.com www.aeonstores.com.hk www.circlek.hk/en www.crc.com.cn www.aeon.info www.cr-asia.com

Annual sales $2.2b+ $2.8b ~$0.8b (food/FMCG) N/A N/A $0.8b $0.4b (in HK)

Food store Supermarkets 318 Supermarkets 260+ Supermarkets Supermarkets Grocery 247+ Dept. stores (w/food) 8 Convenience 600+ formats Convenience 921 Convenience Convenience Supermarkets 5 Bakery Health & Beauty 369 Restaurants 676

# of stores Wellcome 280+ ParknShop 175 CR Vanguard 100+ DCH Food Mart 80+ 759 Stores 247+ AEON 13 Circle K Marketplace 31 PnS Superstore 50+ VanGo 79 DCH Food Mart Deluxe Saint Honore Cake 7-Eleven 900+ PnS Taste 10 Olivers the Delicatessen PnS Fusion 14 ThreeSixty

Store fascia

Source: Coriolis from a wide range of sources 52 DOCUMENT STRUCTURE

What is the global situation?

What is the strategic situation in the market?

In this environment, what is the opportunity for Western Australia?

Who are the potential in-market partners?

Who are the key firms in Western Australia capable of delivering?

53 IDENTIFIED WA COMPANIES

FLETCHER INTERNATIONAL HARVEY BEEF HILLSIDE MEAT PROCESSORS

ADDRESS: 520 Settlement Rd, Narrikup, WA 6326 ADDRESS: Lot 113 Seventh St, Harvey, WA 6220 ADDRESS: 148 Boxsell Road, Narrogin, WA 6312 PHONE: 08 9892 4000 PHONE: 08 9729 0000 PHONE: 08 9881 1016 WEBSITE: www.fletchint.com.au WEBSITE: www.harveybeef.com.au WEBSITE: www.hillsideabattoirs.com.au www.livestockshipping.com.au

V&V WALSH WAMMCO INTERNATIONAL WELLARD GROUP

ADDRESS: South Western Hwy, Bunbury, WA 6230 ADDRESS: 1/3 De Vlamingh Av, East Perth WA 6004 ADDRESS: 1A Pakenham Street, Fremantle, WA 6160 PHONE: 08 9725 4488 PHONE: 08 9262 0999 PHONE: 08 9432 2800 WEBSITE: www.vvwalsh.com.au WEBSITE: www.wammco.com.au WEBSITE: www.wellard.com.au

WESTERN MEATPACKERS

ADDRESS: 37 King Edward Rd, Osborne Park WA 6017 PHONE: 08 9241 4600 WEBSITE: www.wmpg.com.au

Sources: Coriolis from a wide range of sources 54 AUSTRALIA Coriolis is the leading Australasian management consulting firm Coriolis advises clients on growth strategy, mergers and acquisitions, Coriolis Australia Pty Ltd specialising in the wider food value chain. We work on projects in operational improvement and organisational change. Typical PO Box 5831 agriculture, food and beverages, consumer packaged goods, retailing & assignments for clients include… St Georges Terrace foodservice. In other words, things you put in your mouth and places Perth, WA 6831 that sell them. FIRM STRATEGY & OPERATIONS Australia +61 8 9468 4691 WHERE WE WORK We help clients develop their own strategy for growing sales and profits. We have a strong bias towards growth driven by new products, new NEW ZEALAND We focus on the Asia Pacific region, but look at problems with a global channels and new markets. Coriolis (New Zealand) Limited point-of-view. We have strong understanding of, and experience in, PO Box 90-509 markets and systems in Australia, China, Japan, Malaysia, New MARKET ENTRY Victoria Street West Zealand, Singapore, South Korea, Thailand, the United Kingdom and Auckland, 1142 the U.S. We regularly conduct international market evaluations and We help clients identify which countries are the most attractive – from a New Zealand benchmarking. consumer, a competition and a channel point-of-view. Following this we +64 9 623 1848 assist in developing a plan for market entry and growth. WHAT WE DO www.coriolisresearch.com VALUE CREATION We help our clients assemble the facts needed to guide their big decisions. We develop practical, fact-based insights grounded in the We help clients create value through revenue growth and cost reduction. real world that guide our clients decisions and actions. We make practical recommendations. We work with clients to make change TARGET IDENTIFICATION happen. We assume leadership positions to implement change as necessary. We help clients identify high potential acquisition targets by profiling industries, screening companies and devising a plan to approach targets. HOW WE DO IT DUE DILIGENCE All of our team have worked across one-or-more parts of the wider food value chain, from farm-to-plate. As a result, our We help organisations make better decisions by performing consumer recommendations are grounded in the real world. Our style is practical and market-focused due diligence and assessing performance and down-to-earth. We try to put ourselves in our clients’ shoes and improvement opportunities. focus on actions. We listen hard, but we are suspicious of the consensus. We provide an external, objective perspective. We are EXPERT WITNESS happy to link our fees to results. We provide expert witness support to clients in legal cases and WHO WE WORK WITH insurance claims. We assist with applications under competition/fair trade laws and regulations. We only work with a select group of clients we trust. We build long term relationships with our clients and more than 80% of our work comes from existing clients. Our clients trust our experience, advice and integrity.