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The global consumer A diverse and demanding beast

Scott Tolmie Market Intelligence Manager

MLA’s remit • Research, Development and Adoption • Marketing Source of Levies – Primarily producers, along with government, processors and external partners Producer Levy $5 per head Marketing per transaction

Grassfed ~45% of spend $5 per head

per transaction Grainfed 20c per head Research & per transaction Development $1.50 per head per transaction Lamb ~55% of spend 37.7c per head

per transaction Goat The global beef consumer

A diverse and demanding beast

Varied role of beef Across a range of countries, consumers reflect diversity in their protein consumption

Consumer Health Availability Income Perceptions

Culture/ Religion National Environmental History Considerations Competition Trade Policy Social Dietary Concerns Preferences

Natural Place of Resources Origin Role of beef around the world • Long history of consumption in many markets • Constitutes a major dietary protein globally • Encompasses a wide range of products (low value to high value Wagyu cuts) • In many western countries often considered the “prime” meat • This role changes as we shift to Asia and the Middle East

Source: OECD-FAO Role of beef around the world Beef as a % of Protein Consumption (excludes Seafood)

30% 28%

22% 18%

13%

10% 9%

US Australia Japan EU Asia Saudi Arabia

Source: OECD-FAO Although consumers’ protein intake varies across the globe, their perceptions of proteins remain relatively consistent

T H E S TA P L E THE CURIOSITY • Unfamiliar, occasional purchase • Premium option • Cheap and easily available • Not sure what to do with it • Versatile and easy to prepare • Fatty • Bland T H E P R I M E • Taste is a barrier for some • Not very nutritious • In MENA and Australia, lamb is a ‘Prime’

• Good quality, good taste, superior meat THE SPECIALTY • Worth paying more for THE HEALTHY ALTERNATIVE • Nutritious • Few strengths or weaknesses • Nutritious • Weakly positive on animal • Low in welfare and sustainability • Fresh • Taste is a barrier • Tricky to use • Lean/tough • Welfare is not great • Unfamiliar and uncommon except • In SEA, fish is a cheap, low value amongst certain groups protein - elsewhere it is premium The global beef consumer

A diverse and demanding beast

Popular cuts and use Destination for Australian beef exports varies by grassfed vs grainfed

Grassfed beef Grainfed beef 742,232 tonnes swt 27% 272,682 tonnes swt 73% Other Other 13% 19% US Europe 5% Indonesia 31% China Japan 6% 1,014,915 tonnes swt 10% 52% China 11% Korea Japan Korea 20% 13% 20%

Source: DAWR Cuts also vary greatly…

Saudi Japan US China Indonesia Arabia UK

*Includes loin, tenderloin, shortloin, * Mostly trimmings and *Mostly trimmings *Includes mostly trimmings and * Mostly trimmings- forequarter rib *Loins include- tenderloin, shortloin, striploin and cube roll forequarter rib forequarter rib & finely textured beef striploin & cube roll

** Includes tenderloin, shortloin, **Includes minced beef and striploin and cube roll hamburger

Source: DAWR Along with use within the market…

Brisket Noodle Gyudon Beef Rice Smoked Bowl Brisket

Chilli Brisket Brisket Barbeque Soup Along with use within the market…

Beef Beef Bento Slow Cooked (Noodle) Box Beef Top Side

Stir-Fried Philly Beef Along with use within the market…

Gyu Tan Slow Cooked Beef () Cheek Beef Skin Curry Offal

Tripe in Soup Tail Soup The global beef consumer

A diverse and demanding beast

Attitudes towards fat Consumers have a broad range of views about fat in meat Each market spans multiple viewpoints about fat, often in the same person

The choice they make will ultimately be determined by the occasion

Size of “Fat Clusters” A u s t r a l i a

11% 15% Stage 1 - Lean Meat Eaters “Fat is unhealthy” Stage 2 - Fat Apologists “I prioritise health over enjoyment” 19% Stage 3 - Fat Appreciators “Fat adds taste and tenderness to meat” 28% Stage 4 - Fat Lovers “I love marbled ” 27% Stage 5 - Fat Fanatics “I want more fat in my meat” The global beef consumer

A diverse and demanding beast

Challenges of a developed market Australia is still the largest market for our beef, but growth is difficult

Beef is #1 of Australians value fresh meat protein 97% considering purchasing beef

3x the size of fresh Beef vs Pork vs Chicken – Retail Price

2,500 360% index to chicken 2,000 290% index to chicken 220% 1,500 index to chicken

1,000

500

-

Jul-02 Jul-09 Jul-16

Jan-06 Jan-13

Jun-05 Jun-12

Oct-00 Oct-07 Oct-14

Apr-04 Apr-11

Sep-10 Feb-17 Feb-03 Sep-03 Feb-10 Sep-17

Dec-01 Dec-08 Dec-15

Aug-06 Aug-13

Nov-04 Nov-11

Mar-00 Mar-07 Mar-14

May-15 May-01 May-08 Beef Pork Chicken

Source: ABS Beef vs Pork vs Chicken – Retail Price

2,500 350,000 360% index to chicken 300,000 2,000 290% index to chicken 250,000 220% 1,500 index to chicken 200,000

1,000 150,000 100,000 500 50,000

- -

Jul-16 Jul-02 Jul-09

Jan-06 Jan-13

Jun-05 Jun-12

Oct-14 Oct-00 Oct-07

Apr-04 Apr-11

Feb-03 Sep-03 Feb-10 Sep-10 Feb-17 Sep-17

Dec-01 Dec-08 Dec-15

Aug-06 Aug-13

Nov-04 Nov-11

Mar-07 Mar-00 Mar-14

May-01 May-08 May-15 Consumption Beef 2 per. Mov. Avg. (Consumption)

Source: ABS The challenge has been to better demonstrate beef’s value beyond price along with it’s versatility While not forgetting nutrition, provenance, sustainability and eating quality

Easy Quality Healthy Versatile Sustainable The global beef consumer

A diverse and demanding beast

Global mega trends WHAT IS A MEGATREND “A global pattern of change in economic, social, technological or cultural context that produces changes in consumer behaviours and attitudes”

TRENDS DO NOT OCCUR OR INFLUENCE IN ISOLATION

Source: Kantar Milward Brown Mega trends: • More for less • Great expectations • Convenience • Health & Wellness • Reach of Technology Mega trend 1: More from less

Organic / Natural Organic ticks a lot of boxes and is a ‘shortcut’ for many consumers

Sources: Australian Organic Market Report 2017 Mega trend 2: Great Expectations

Socially Responsible, Sustainable, Locally Grown Mega trend 2: Great Expectations

Shoppers are very concerned about… Trends are reflected in Australian data

Air Pollution Water Supply

32% 32%

26% 29%

Climate Deforestation

Source: Canadean 2015 Q1 Consumer survey Sources: NPD Group “Tracking Food Attributes in Australia (2016) The Farmer’s Daughter

“Carefully looked after morning, noon and night to make sure they are happy”

100% Traceable Irish Beef

Sourced from free roaming animals Grass based diet Mega trend 3: Need for convenience The majority of shoppers decide what to eat for dinner in the 24 hours before the meal.

Eating and shopping habits are also changing, with the meal planning window shortening

Source: Australian Tracker, Google Trends Mega trend 4: Health & Wellness

Reflect increased awareness and taking control

TRANSPARENCY HEALTH TRACEABILITY FUNCTIONALITY SUSTAINABILITY

ORGANIC FREE RANGE GRASS FED CLEAN LABELS HORMONE FREE INSECTICIDE FREE

Source: Kantar Milward Brown Healthy lifestyle habits are becoming a normal way of life - red meat has historically been villainised with a fear of fat front and centre But the world is changing and is the new As fat makes a comeback, beef has the fat – 61% of people are avoiding sweet foods opportunity to revisit its place on global dinner vs. 36% meat tables much as butter has done in recent years

GOOGLE SEARCH TRENDS BUTTER PRODUCTION – GLOBAL (MT) 120 12000 11500 100 low carb: (Worldwide) low fat: (Worldwide) 11000 80 10500 10000 60 9500 40 9000 8500 20 8000 2010 2014 2015 2020 0 21/04/2013 21/04/2014 21/04/2015 21/04/2016 21/04/2017

Source: Kantar Milward Brown Mega trend 5: Reach of Technology

Frictionless ordering Smart Fridges and toilets

Source: Kantar Milward Brown