a global meat industry outlook global meat... · soft drinks, wine, coffee, tea food retail...
TRANSCRIPT
Capturing business opportunities in a fast
changing world
Copenhagen
Nan-Dirk Mulder, 18 February 2017
A global meat industry outlook
216
Rabobank international introduction and global network of branches and offices
• Internationally active for over 30 years
• Highest credit rating of all private banks in the world
• Among the 25 largest financial institutions in the world
• No. 1 in Export Finance
• Global network
– Of all 60,000 employees, 16,000 work outside the
Netherlands
– More than 1,650 offices in 44 countries, of which 750
offices outside the Netherlands
• Rabo Development has non-controlling interests in six
partner banks. Finally Rabobank Foundation supports
projects in 26 countries.
Rabobank International Global network Rabobank offices and branches
Rabobank: the worldwide leading bank in Food & Agribusiness
Value added
Processing
Confectionery, bakery,
chilled, frozen,
ambient, biscuits,
breakfast cereals,
snacks
Beverages
Beer, spirits,
soft drinks, wine,
coffee, tea
Food retail
Foodservice
Farm Inputs
Farm machinery
Fertiliser
Farm chemicals
Veterinary services
Feed additives/
premixes
Food & Agri SupportPackaging, bottle manufacturing, warehouses, logistics
Dairy
Sugar
Grains & Oilseeds
Animal Protein
Cotton, wool
Forestry, paper & pulp
Fresh Produce
Commodity Traders
Packaging
Farm Inputs FarmingDom. Distr.
Export tradeProcessing low
value addedProcessing high
value addedRetail and
Foodservice
8
1 2
3
4
5
8
7
6
8
3
Animal protein is our sweet spot
EuropeNorth America South America Asia & Oceania
14 out of top 20 meat companies are client of Rabobank
Exposure in Animal Protein: EUR 19 billion
4
Table of contents
Sections
I Global meat industry outlook 2025
II Key investment themes in the global meat industry
Long Term Meat Outlook1
6
Global animal protein market to grow by 45% in the next 2 decades
+40%
+25%
+23%
+20%
+18%
Seafood. CAGR:+1.4%
Eggs. CAGR: +1.8%
Beef. CAGR +1.2%
Pork. CAGR:+1.4%
Poultry. CAGR:+2.4%
X 1,000 tonnes
Global animal protein market outlook 2015-2025
AP demand: +45%
2015-2025
Annual growth
Source: Rabobank projections based on FAO, USDA, 2017
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1985 1995 2005 2015 2025 2035
7
90% of global growth will be in emerging market, 60% in Asia
X 1,000 tonnes
First tier: 57% of growth Second tier:25% of growth 18%
Change in global demand for meat and eggs 2015-2025
Source: Rabobank projections based on FAO, USDA, 2017
-2,000
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
22,000
Poultry Pork Beef Sheep Eggs
8
Demand for meat and dairy is moving more to Asia, where resources are relatively limited
Source: Rabobank analysis based on FAO, OECD, USDA, 2017
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
0
2
4
6
8
10
12
14
16
18
20
Acre per capita Water availability per capita
0 50 100 150 200 250
Rest of World
Middle East/North Africa
South/East Asia
Eastern Europe/Central Asia
Latin America
Sub-Saharan Africa
Good logistics Bad logistics
Land and water availability per capita New land availability per region
9
Americas most competitive pork production area in terms of cost
Source: Rabobank, Smithfield,, 2016
Live hogs production costs 2013
USD/pound
0
0.2
0.4
0.6
0.8
1
1.2
1.4
United States Mexico Chile Brazil EU Vietnam Russia Korea China Japan
10
Global food supply challenge
Meat demand Fuel demand
Grains and oilseed supply
Meat supply Food supply Fuel supply
Land use
Food demand
Livestock/poultry supply
+20% in 10 years
Limited growth
ExpansionEfficiencyYield
EfficiencyCultivationYield
Source: Rabobank, 2017
11
Need for a fast modernizing of global and especially Asian dairy and animal protein industry
High land and feed prices/limited resources
Food safety, human health and other social concerns
Higher incomes and welfare
Modern distribution
Modern value chain
Larger companies
Vertical integration
Efficiency
Yield
Value chain management
SustainabilityAnimal disease threat
Fast growing and modernizing animal nutrition industry
Source: Rabobank, 2017
12
Where to produce? Limited available resources push Asian countries to import more meat products
Asian meat imports by tonnes and share in global markets
X 1,000 tonnesMeat species
Pre-Commodity boom yearsCACG: +6%
New realityCACG: +9%
Source: Rabobank analysis based on USDA, FAO, Bloomberg, 2017
Top 10 global meat importers
Tier 1: 35% of trade
Tier 2: 34% of trade
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
0.00
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
7,000.00
Meat Beef Pork Poultry Sheep
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
13
Emerging markets drive growth in global production; poultry markets in India, Africa, Indonesia and Iran will show fastest growth
Pork production outlook 2025 in volume and CAGRPoultry production outlook 2025 in volume and CAGR
Source: Rabobank projections, 2017
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
2005 2015 2025
+1.2%
X 1,000 tonnes
+1.3%
+0.2%
+2.4%+2.1%
+1.8%
+0.8%
+1.7%
+1.3%
+2.6%
+0.7%
-0.3%Po +2.5%
+1.0%
+0.7%
0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
35,000.00
2005 2015 2025
X 1,000 tonnes
+1.3%
+1.6%
+2.2%
+0.9%
+2.3%+4.8%
+2.8%
+4.8%
+5.0%
+4.1%
+2.7%
+2.4%
+2.3%
Key investment themes in the global meat industry2
15
Six key investments for the global animal protein industry
1. Invest where the growth is
2. Focus on value added
growth potential
3. Invest in speciality markets
4.Capture the China
consumer concern market
opportunity
5. Develop a new export platform
6. Follow globalisation
trend
Source: Rabobank analysis, 2017
16
Capture the growth: pork market outlook for Asia, moderate growth in most markets, Japan is saturated
Asia pork market growth outlook 2015-2025
0
5
10
15
20
25
30
35
40
-1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%
Per capita Consumptionkg/head
CAGR Demand 2015-2025
Mature/decline moderate growth Fast growthSlight growth
Source: Rabobank analysis based on USDA, FAO, local statistics, 2017
1
17
EU meat production: shift away from traditional regions to new areas Central Europe and Spain
EU poultry production 2010-2015EU pork production 2012-2015
Source: Rabobank analysis based on Eusstat and local sources, 2017
0
1,000
2,000
3,000
4,000
5,000
6,000
2012 2013 2014 2015
X 1,000 tonnes
-
500
1,000
1,500
2,000
2,500
3,000
2010 2011 2012 2013 2014 2015
CAGR: +8.9%
CAGR: +0.5%
CAGR: +1.9% CAGR:
+1.9%CAGR:+1.4%
CAGR: +1.1%
CAGR: +4.6%
CAGR:+5.7%
CAGR: -0.5%
X 1,000 tonnes
18
LATAM poultry industry: ongoing growth potential in terms of volume and value
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
+7.1%
+6.9%
+7.0%
-1.7%
+3.5%
+7.9%
+3.5%
-0.4%+5.6%
+2.9%+6.0%
+1.4%
+2.0%
+7.2%+2.1%
Latin America Poultry production by country excluding Brazil
X 1,000 tonnes
LATAM per capita meat consumption
Source: Rabobank Analysis, MEG, USDA, 2017
X 1,000 tonnes
19
From volume to value: The journey to higher margins
Brand
Value added food
Value added chicken
Premium chicken
Standard chicken
Investors who follow this
strategy
The meat value added pyramid
Low
High
Margin
level
2
Source: Rabobank analysis, 2017
20
Speciality focus: consumer concerns to offer opportunities
Animal welfare friendly
Environmentfriendly
Consumer health
Buy local
Standard chickenStandardproduct
Differentiatedproduct
Consumer
concern
Market differentiation opportunities
Source: Rabobank analysis, 2017
3
Food safety
21
Concepts are expanding also in other markets like pork in the Netherlands and poultry in the US
Source: Company Announcements; Rabobank, 2017
?
Slow Grow
Organic
No antibiotics for human health used as growth promotants
*2024
Sp
ecia
lized
Pro
du
cti
on
Practi
ce
Producers End Users
Production Practice
*2017
Never Ever 3
No Antibiotics Ever
Raised Without Antibiotics
Antibiotic-Free
$2.50/lb.Breast
$5.00/lb.Breast
$7.50/lb.Breast
$25.00/lb.Breast
Pric
e P
rem
ium<.1%
Share
3% Share
30% Share
66% Share
Fresh porkMeat
products Frozen Average
AH 86% 42% 0% 66%
Lidl 77% 42% 0% 61%
Jumbo 78% 22% 0% 55%
Dirk 65% 32% 0% 50%
Deka 62% 35% 0% 48%
COOP 65% 25% 1% 17%
Spar 67% 20% 0% 17%
Vomar 61% 18% 0% 43%
Aldi 63% 14% 6% 43%
Deen 51% 14% 0% 36%
Emte 41% 22% 5% 33%
Jan Linders 50% 1% 0% 32%
Plus 41% 11% 0% 29%
Hoogvliet 10% 20% 3% 13%
Total 58% 23% 1% 43%
Dutch pork industry ‘beter leven’ concept market share US poultry concepts: antibiotics free as base of change
22
Capture the China consumer concern opportunity
Pro-active communication
Modernization operations
Vertical integrations
Value chain management
Modernization wet markets
Branding
Investments are necessaryChina meat market market 2012-2017
AntibioticsScandal
Local and global
Avian fluoutbreaks
Feedscandal
4
Source: Rabobank analysis based on USDA, Local Statistics, 2017
1,000 tonnes
China environmental
policy
CAGR: -3.6%
CAGR: +0.8%
CAGR: -0.1%
CAGR: +3.7%
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Chicken Eggs Pork Beef
China
2012 2013 2014 2015 2016
23
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Wholechicken
Breast Cuts Processed
Brazil US Thailand China EU Turkey Other
Develop an alternative export platform for value added meat products
Global export market shares by country
AI
AI
AI AI
Opportunities for newcomers
Product High potentials
Whole
Breast
Cuts
Processed
Source: Rabobank analysis based on FAO, USDA, local statistics, 2017
5
24
Need for differentiation even bigger in global beef industry
Global beef exports 2005-2016
X 1,000 tonnes
20%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2005 2010 2016
25
Join the globalization trend the global meat sector
Globalization in the meat industry
Africa
Middle East
SE Asia
Australia
Russia
EU
United States
Mexic
o Brazil
Argentina
China
Japan
India
6
Source: Rabobank analysis, 2017
26
Conclusions
Global meat industry will remain one of the fastest growing agri sectors with 45% more demand in 2035 and a bigger preference for chicken
Position of emerging market will fast grow with Asia in the lead. This will affect global investment significantly with two way investments from Asia in potential supply countries and
from emerged markets in Asia to capture growth
Industry will need to develop a market driven, product differentiation strategy to move out of the current commodity/bulk focus strategies to capture higher margins
Trade will become significantly more important but still 80-85% of global meat supply will come from local markets in 2035
