european meat industry developments in a global context · © gira 2012 long term global meat...
TRANSCRIPT
© Gira 2012 1
European meat industry developmentsin a global context
Reggio Emilia Pigmeat Conference: April 27th 2012
Based on extracts from the Gira European Meat Company Panorama 2010/11-2015
Richard Brown (Direct Tel +44 1323 870144)
© Gira 2012 2
1. Global meat sector dynamics
2. pan-EU meat sector dynamics
3. Italian meat sector characteristics
4. Appendix: - Gira European Meat Company Panorama, - Other country PK overview- BF and PY EU industry overview
© Gira 2012 3
1. Global perspective
© Gira 2012
Long term Global meat consumption growth dominated by poultry, driven by its relative price
Global Meat Consumption growth by Species 2010-20f
97,301121,128
108,185
119,402
60,820
64,503
+3,683
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2010 PY PK BF SH 2020
('000
t cw
e)
SH
BF
PK
PY
Source: Gira Long-Term Meat study
282,556
322,282+23,800
+11,200 +1,000
16,250
17,250
© Gira 2012
Global meat consumption growth quite broadly based, but led by China
q Global growth is largely outside EU … (which has got off to a bad start against this forecast)
Consumption Growth by Region 2010-20(f)
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2010 CN NAFTA BR MENA RU EU JP+KR Others 2020
('000
t cw
e)
280,000 319,700
Source: Gira Long-Term Meat study
+13,000 +5,600 +2,000 +3,670+2,800 +2,600 +200 +9,500
© Gira 2012 6
Significant rise in real prices across all meats … boosted by emerging market price increases … which surpass EU prices
90
100
110
120
130
140
150
160
170
180
190
200
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
pric
e in
dice
s, c
onst
ant p
rices
All meat producer/wholesaler price indices, 2000-20 12(f) (2000 L.C.)Including China
SHEEPMEAT
BEEF & VEAL
PIGMEAT
ALL
POULTRY
Source: GIRA GMC 2011
Based on 2000 producer prices
Weighted (consumption) averages
© Gira 20127
Rising pig producer prices … especially in emerging markets … but with short-term exporter convergence
GMC Dec. 2011 –
Figure SYN-PK 9a Pig Producer Prices, 2000-2012 (current USD/t cwe)
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
RU
CN
US
BR
EU
CA
Figure SYN-PK 9b Pig Producer Prices, 2000-2012 (2010 USD/t cwe)
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
RU
CN
US
BR
EU
CA
© Gira 20128
Pigmeat Exporters: US & EU growth. BR still lacking further market access .. . and facing RU bans
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
5 500
6 000
6 500
7 000
7 500
2009 2010 2011 2012
Figure SYN-PK 7: Pork Exporters 2009-2012 (incl. l ive, '000 t cwe)
Others
Other F.E.
TW
CN
CEECs
E.U.
BR
US
CA
CA
MX
RU
JP
Other F.E.
Others
0
500
1 000
1 500
2 000
2 500
2009 2010 2011 2012
US
USCEECs
RU
JP
Other F.E.
Others
0
250
500
750
1 000
1 250
1 500
1 750
2 000
2009 2010 2011 2012
E.U.
SAm
RU
CN
Others
0
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700
2009 2010 2011 2012
BR
USA
JPRU
CN
Others
0
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1 000
1 250
1 500
1 750
2 000
2009 2010 2011 2012
CACA
GMC Dec. 2011 –
© Gira 2012 9
0
2,000
4,000
6,000
8,000
10,000
12,000
00
01
02
03
04
05
06
07
08
09
10
11e
12f
00
0 T
CW
EUS Pork Balance
Production Imports Exports Consumption
Buoyant export markets have rescued the US pigmeat chain
© Gira 2012 10
2. pan-EU meat sector perspective- total meat sector- pigmeat sector
© Gira 2012 11
Slight decrease of EU meat consumption in 2011-12 … but slight recovery subsequently … although caution is the byword
Source: GMC, Dec 2011
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
50 000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
'000
t c
we
Sheep
Poultry
Pigmeat
Beef & veal
EU 15 EU 25 EU 27
0
10
20
30
40
50
60
70
80
90
100
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Mea
t con
sum
ptio
n (k
g / c
apita
)
Sheep
Poultry
Beef & veal
Pigmeat
EU Meat Consumption, 2000-2012(f)Total ‘000t cwe and per capita kg cwe
q EU meat consumption fell in 2009, and again in 2011-12, reflecting:─ Poor EU economic situation─ Tight meat supplies (due to reduced
production and imports)─ Higher prices
q Total consumption situation is actually“not too bad ’: but underlyingdynamics are tough on the meatprocessors:─ Significant consumer trading down
through various different mechanisms─ Retailer ‘price wars’ which have more
resonance than in past
q Net effect is more margin pressure on processors
© Gira 2012
70
90
110
130
150
170
190
210
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Expe
nditu
re in
dex
2000
Beef & veal
Pigmeat
Poultry
Sheep
TOTAL
FMDFMDFMDFMD
BSEBSEBSEBSE
HPAIHPAIHPAIHPAIAI in NLAI in NLAI in NLAI in NL
EU EU EU EU CrisisCrisisCrisisCrisis
12
… but (supply driven) price increases indicating surprisingly good EU demand performance in these tough economic times
EU Meat Producer Prices (2004 EUR/t cwe), 2000-2012(f)
Source: GMC Dec11 :PY wholesale prices
and producer prices for other meats
1000
1500
2000
2500
3000
3500
4000
4500
5000
5500
6000
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2010
EU
R /
t cw
e
Sheep
Beef & veal
Average
Pig
Poultry
q Rising EU meat producer prices (in realterms) since 2001/02
q Exceptional 2011 price rises : reflectingsupply tightness (both domestically and fromimport/export balance)
q Margin squeeze on processors due todifficulty in passing through producer price rises to customers
q Rising EU meat expenditure trend (in real terms) with dramatic rises in 2007/08 and again in 2011 … but lower growththan in the developing world
q Bouyant meat marketing environment , with many differentdynamics and requiring more sophisticated marketing by processors
EU Meat Expenditure Index (base 2000), 2000-2012(f)
© Gira 2012 13
Discounters: LIDL and ALDI, entered the fresh meat market in 2002/03 … and have rapidly increased market share
Growth of hard discounter share in fresh meat retailing, 2001-2010
Impact of cooperation with HD on Tönniesoutput and turnover, 2001-2010
Tönnies’ key to success = immediate responseto the German HDs’ needs for large amounts of efficiently produced case-ready meat. Heidemark/Rothkötter (PY) have also grown fast
4. News
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
DiscountersOther full-range food storesSef-service stores (> 2,000 m2)Hypermarkets (> 800 m2)Supermarkets (<800 m2)Specialty storesOthers
Source: Gira from GfK
0
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1200
1400
1600
0
500
1000
1500
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2500
3000
3500
4000
4500
5000
2001 2003 2005 2006 2010
Pig
pro
duct
ion
('000
t cw
e)
Tur
nove
r (E
UR
mio
.)
Turnover(EUR mio.)
Pigproduction('000 t cwe)
HD share of processed meat in retail is even higher(almost 50%) … indicating the further market share gains which are possible in fresh meat
© Gira 2012 14
Recent external EU meat trade balance shifting to exports, giving advantage to the bigger processors
EU Meat 3rd country Imports*, 2000-2012(f)
EU Meat 3rd country Exports*, 2000-2012(f)
q EU meat imports have fallen since2008 reflecting:─ Poor EU economic situation─ Tight global BF and SH meat
supplies─ Brazilian BF traceability problems
which have reduced supplyavailability further
─ (After paying EU import tariff) higherFOB prices for exporters to EU in other 3rd country markets (RU, MENA etc.)
q Imports likely to rise again in the future – as EU demand recovers
q … but for the time being much less import pressure on EU prices … and a renewedretailer focus on sustainable local meat supply
q Export volumes have boomed :─ Strong 3rd country demand
─ Weaker Euro
─ Carcass meat export volumes might be difficult to sustain … but sustainable focuson 3rd country exports of offals and by-products
q Competitive advantage for processors who have scale to invest in direct (export) trademarketing.
Source: GMC Dec 11
0
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3500
4000
4500
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2004
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2011
2012
'000
t c
we
Sheep
Poultry
Beef & veal
Pigmeat
EU 15 EU 25 EU 27
*including the carcass equivalents
of live animals
0
200
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800
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1200
1400
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2000
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2001
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2004
2005
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2008
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2011
2012
'000
t c
we
Sheep
Poultry
Beef & veal
Pigmeat
EU 15 EU 25 EU 27
*including the carcass equivalents
of live animals
© Gira 2012
Ownership of primary processing is still mainly private, with family control … although coops are still important
─ Majority of meat processing is still owned by private and family firms …
─ Very little retailer ownership of slaughtering …. but there is still some
─ Municipal ownership of abattoirs has been declining for very many years …
─ Access-to-capital to finance further major consolidation – be it national or international, is a challenge.
� Family owned firms largely find solutionsto the challenge of succession issues …
� The Stockmarket has rarely proven an effective long term form of ownership for the meat sector
� Vion is owned by a farmers union (ZLTO) (categorised here as ‘coop/farmer’): but is a for-profit focused company rather than being a coop price maximiser …
� Danish Crown transferred operating assets to a Ltd company status in 2011, but is still 100% owned by the original coop .
� Atria and HK are Stockmarket quoted Plcs, but the original coops hold the voting majority.
─ Brazilian mega-M&A has slowed …. but some strategic infill acquisition in EU are likely
Ownership of the Top 100 EU-27 meat companies - 2010
45% 46%40%
29%
16%
7%
15%
22%
33%
8%10% 20%
3% 6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Top 100 Top 50 Top 15
Retailer
Stock market
Coop/Farmer
Private
Family owned
Source: Gira compilations
© Gira 2012 16
EU Pigmeat focus
4. News
© Gira 2012 17
EU PK balance shows small medium-term production growth for processors in spite of the pressures on the EU market … after recovery
from sow stall legislation … and huge trade volumes
EU pigmeat balance – 2001-2011(e) – 2015(f)
5. Production etc.
The ‘sum’ of balance tables from the 27 member states, illustrated here doesemphasise the enormous volume of intra-EU Member State trade, even if the net 3rd country trade figure is deceiving and is better illustrated in the overall
EU27 3rd country import and export summaries on slide 31
0
5,000
10,000
15,000
20,000
25,000
200
0
200
1
200
2
20
03
20
04
200
5
200
6
200
7
200
8
200
9
20
10
20
11
201
5
Vol
ume
('00
0 tc
we)
Net Production
Apparentconsumption
Total Exports
Total Imports
Source: GIRA
EU15 EU25 EU27
© Gira 2012 18
De, Fr, Es & It are the biggest EU meat producers … but with Italy amongst the losers in the future … to the Top 3, plus UK, Dk &
NMS
Total meat (3 species) GIP/net production by country – 2011 and change 2015/2011
5. Production etc.
1,21,5
0,61,0 0,9
0,4 0,3 0,20,5 0,4 0,2
5,5
2,3
3,4
1,6
0,81,3 1,6
1,10,6 0,2
0,4 0,3 0,2
1,9
0,40,5 0,3
1,6
1,8 1,3
1,2
1,6
0,70,2
0,3
0,3
1,3
0,4 0,40,2
8,3
5,65,2
3,9
3,2
2,4
2,01,6
0,9 0,8 0,80,5 0,4 0,3
3,5
0,9 0,9
0,50,2 0,2 0,2 0,1 0,1 0,1 0,1 0,0
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
…
1
2
3
4
5
6
7
8
9
DE FR ES IT UK NL DK BE AT IE PT SE FI EL PL RO HU CZ BG SK LT SI CY EE LV M T
Cha
nge
p.a.
201
5/11
in to
tal m
eat p
rodu
ctio
n
Net
/GIP
pro
duct
ion
(mio
tons
cw
e)
Source: GiraEU 15
EU 27
138,0
253,5
218,8
96,0
126,0
80,057,0
160,0
25,0
66,0
21,113,0
42,037,0
3,013,018,0
1,4
113,0
68,464,0
106,0
46,0
58,045,041,0
7,0
82,0 64,0
36,2
17,024,0
7,0
1 7461 848
1 2881 224
1 577
774
191252133121
336
88 104170
1 396
408393
18511486 45 72 37 18 23 7-1%
19 999%
39 999%
59 999%
79 999%
99 999%
119 999%
139 999%
159 999%
179 999%
199 999%
…
20
40
60
80
100
120
140
DEFRES IT UKNLDKBEAT IE PTSE FI EL PLROHUCZBGSKLT SI CYEELVM T
Cha
nge
2011
/06
in to
tal m
eat c
onsu
mpt
ion)
Con
sum
ptio
n (K
g/C
apita
) Poultrymeat GIP production
Pigmeat net production
Beef and veal net production
Negative change p.a. 2015/11
Positive change p.a. 2015/11
© Gira 2012
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
AT BE DK FI FR DE EL IE IT NL PT ES SE UK CY CZ EE HU LV LT MT PL SK SI BG R O
Sha
re in
vol
ume
(%)
Catering Further processing Traditional stores Modern retail Direct sales & other retail
19
Pigmeat distribution is dominated by the importance of further processing … with (low) cost ingredient focus
5.3 Production etc. - Pigmeat
q The chart is an estimate shown for illustrative purposes only, of the segmentation of the domestic markets. The distribution shares vary considerably in the different countries. However, the definitions and data are not fullycomparable: Gira has had to estimate, so readers should exercise considerable caution should they choose to drawconclusions from these data.
q Further processing dominates the usage of pigmeat (including bacon, as well as the obvious hams, charcuterie, sausages, meatballs, elaborated etc)
Pigmeat domestic market distribution channels by country – 2010(e)
© Gira 2012 20
The EU is a major net exporter of pigmeat to 3rd countries: important, but this is threatened by lower cost competitors
EU-27 pigmeat imports by 3rd country origin 2010-2012
EU-27 pigmeat exports by 3rd country destination 2010-2012
5.3 Production etc. - Pigmeat
5
10
15
20
25
30
35
40
2010 2011 2012
Pig
mea
t im
port
s ('0
00 t
cwe)
Others
Brazil
Chile
Canada
USA
Source: Gira from Eurostat
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2010 2011 2012
Pig
mea
t exp
orts
('0
00 t
cwe)
Others
CIS - Baltics
CEECs
Africa/Middle East
USA
Central/SouthAmerica
Other Far East
China
South Korea
Japan
Russia
Source: Gira from Eurostat
q The EU pigmeat market is still effectively protected from (all but minimal) imports by TRQ and various SPS barriers. Some selective relaxation may come through FTA’s but Gira is assuming that the short-medium imports will be small …and so the domestic industry does face a significant import threat
q 3rd country exports are important at 10% of production. Current market conditions are buoyant – with high prices, giving advantage to bigger companies. However import politics are dangerous and volatile (RU, CN)
© Gira 2012
The TopCos have increased kill share in a slowly concentrating European pigmeat industry
q Top 15 EU pigmeat processors have increased EU27 share to 38%, up from 34% in 2006 … but in some countries the outright leaders have lost some share
q Slow process of consolidation and more international development than for the other species
Leaders' market share in the top 5 production countries (% cwe) –2006/2010
Share of EU-27 Top 15 – 2006/2010
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
% K
ill
Source: Gira estimates
Other Producers
N°5 producer
N°4 producer
N°3 producer
N°2 producer
Leader
22% 27%58% 63% 52% 68% 21%27% 98%95%
Percentages given on the top of each column correspond to the share of top 5
companies compared to total country's net production
34% 38%
66% 62%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006 2010
% K
ill
Source: Gira estimates
Other EU27
Top 15
215.3 Production etc. - Pigmeat
© Gira 2012 22
3. Italian meat industry structure
© Gira 2012
Gruppo Ghinzelli
Italcarni
Prosus
Martelli
Montorsi
Others
Source: Gira estimate
23
Italy - PK: A traditionally fragmented sector; relying on added-value through PDO
q Likely production downturn in spite of differentiated heavy pig focus─ pigmeat import pressure─ 2013 sow housing─ feed costs
q Fragmented slaughtering : between a few large, efficient plants & over 1,000 small firms
q Need for processing capacity consolidationq M&A activity has been limited in a sector
characterised by the predominance of coops─ the share of top producers has remained
constant over the past decadeq Gruppo Ghinzelli is by far the largest
pigmeat producer, with 11 plants in all. Slight growth
q Italcarni is the main cooperative competitor, ─ all slaughtering concentrated in a single
site q The Veronesi Group owns the No.5 pig
slaughterer Montorsi as well as the leading poultry company in Italy, Aia
IT: Top 5 companies share in pig slaughter
(in cwe) – 2010
IT: Pigmeat balance2001-2011(e), 2015(f)
4. News
-
500
1 000
1 500
2 000
2 500
'000
t cw
e
Net production
Apparent consumption
Exports
Imports
Source: GIRA
© Gira 2012 24
Concluding perspectives on Italian (pig)meat sector
q Differentiated heavy pig with large domestic market and growing FP export
q Little or no sector growth …─ Sow stalls─ Pressure on PDO products in current recession─ Fragmentation throughout chain, PDO constraints on concentration
─ Labour cost & availability issues – compared to Germany─ Import pressures : CAP reform ? FTA ?..... TRQ relaxatio n ?
q Domestic focus in an internationalising industry─ Weak domestic IT economy─ Ever increasing intra-EU meat trade … driven by price, and local
differences in supply & demand for different cuts─ Scale advantages for other competitors to benefit from exports and
the rising prices in 3rd countries (e.g. CN, RU, MENA)
─ Sector initiatives to enhance efficiency2. Executive Summary
© Gira 2012 25
Thank you for your attention