mastering market realities in global meat industry
TRANSCRIPT
Dr. David Hughes
Some Reflections on China and Global
Trends for Chicken and Other Meat Products
Emeritus Professor of Food Marketing
@profdavidhughes
World Population: Who's Going Up and Who’s Going Down?
2010 2030 2050
- billion-
World 6.9 8.2 9.0
Africa 1.0 1.5 2.0
Asia 4.1 4.8 5.1
Europe 0.7 0.7 0.7
LAC* 0.6 0.7 0.8
North America 0.3 0.4 0.5
Oceania 0.04 0.04 0.05
*Latin America & Caribbean
Source: UN (population scenario planning)
Asian Mega-Cities Dominate Globally by 2030
China 2030 Demographic Profile Strikingly Similar to Japan Profile Now!
China Gets Old Before It Gets Rich (with all the associated social and health problems).
What Does This Mean for Chinese Meat Consumption Market Dynamics?
Strong Growth in Global Meat Demand Projected to 2030
Source: Nan-Dirk Mulder, Rabobank, 2015
Source: FAO
But, Look Out for an Increasingly Volatile
International Price Environment for Meat
and for Feed Inputs
(US$/M.T.)
2012 2013 2014 2015 2016
Roller Coaster Global Dairy Prices
Buckle Up Seat Belts
Crash Helmets On!
FAO Global Food Price Index: 1961 to 2016*
Source: FAO * to October 31st, 2016, released November 10th, 2016
Source: The Economist , June 27th, 2015, from Lancet Commission
on Climate Change, UK, 2015
High Population, Food Insecure Countries Expand Staple Food Production
Into Increasingly Marginal Land with Less Predictable (Highly Variable) Yields
Input Industry and
Environmentalists
Tussle Over GM
Drought-Tolerant
Grains & Oilseeds
January 4th and again January 7th, 2016
Reflective Tweet
mid-2014
January 11th, 2016
May, 2016
Importance of Food in the CPI*, Selected Countries
Volatile Prices for Food Staples Will Have a Huge Impact on Demand for
Discretionary Premium Foods
* CPI Consumer Price Index
World Meat Consumption With & Without China, 2016*
Source: GIRA, FAO and Hughes * forecast
430 mill.t.% 312
Fish & Seafood 33 34
Pork 25 17
Poultry 25 32
Beef 15 15
Sheep/lamb 2 2Pork and fish/seafood are the dominant meats in China, with chicken a late starter
and a slowing rate of growth most recently reflecting safety concerns, dietary
preferences, income pressures, etc.
Source: Nan-Dirk Mulder, Rabobank, 2016
Approved by US FDA
November, 2015
32 linear metres x
4 shelves of eggs!
Wu Mart, Hangzhou,
China (Nov. 19th, 2016)
“Free Range” Eggs
Popular for Food
Safety Attributes NOT
for Bird Welfare
Hangzhou, China
Meal for Six
Apartment in
Ningbo, 2006
Meal for Seven.
Apartment in
Hangzhou, 2016
For the Global Meat industry, There May Be Storm Clouds Ahead!
Markets for Protein are MUCH MORE than Meat and
Red Meat is in the Firing Line from Messaniac Zealots
Peak Meat: Per Capita Meat Consumption
Static or Declining in Most Developed Countries
Health 58%
Saving money 21
Animal welfare concerns 20
Food safety concerns 19
Environmental concerns 11
Groups more pre-disposed to reduce meat consumption:
• Women
• Older consumers (65+ years)
Source: NatCen Survey of British Social Attitudes, February 2016
Wonderfully Dated!
Now, “What’s for Dinner?”:
• Chinese
• Pasta
• TakeawayGone .. the way of all flesh!
Or, Increasingly for Millennials “What’s Dinner?”!
1992
(October, 2015)
Backed by Well-Heeled
Investors
Plant-Based Egg and Meat
Analogues Have Market Traction
And Don’t Forget Insect Protein!
What’s the Demographic Scene Like in Some Higher Income “Western” Countries?
And What are the Implications for the Food & Grocery Industry?
Single diners 42
2 diners 36
3 diners 11
4 or more
diners
11
2015 30 mins
1990 45 mins
1980 60 mins
1950 90 mins
5% more For healthy
22% more For better taste
Considerably more For ready made meal solution!
Source: Kantar Worldpanel UK
A One Person Portion Pack:
• 30+% of many high income
households are “solo” (1 person);
• salmon quick to cook and no mess;
• compelling health benefits;
• loved by ageing rich consumers
and women;
Albert Heijn’s “One-a-Day”
Egg Pack. Remember, 30+%
of Northern European urban
households are 1 person!
Increasing Complexity Driving Food Purchasing Behaviour
Consumers Want VALUE
but, increasingly, They
Want To Know Your About
VALUES
• savvy shopping
• local/national
- place of production
- care of local economy
- local is fresh/healthier
• provenance
• heritage
• sustainability
• animal welfare
• worker welfare
Source: Deloitte Inc. Food Value Equation Survey, 2015 and Hughes
“How’d You Like Your Meat?”
“With Adjectives, Please”:
• free-range ….;
• grass-fed
• free-from ..
• known provenance …
• Farmer Han ….
• Silkie ..
• rare breed …
• slow-growing …
• vegetarian diet …
• organic …..
• Omega-3 rich …...
• happy …
• environmentally-friendly …
Explosion of Premium Beef Brands for Export from Australia
The “Big 3” in USA:More ConvenienceStronger the Brand
Consumers Want
Adjectives in Their
Meat in Thailand
Consumers Want Their Meat “Free” Across the Globe!
And They Want Adjectives Added and Not Additives Added!
• Antibiotic-free
• Hormone-free
• Additive-free
• Campylobacter-free
• Salmonella-free
• E.coli-free
• GMO-free
• Free-range
• Gluten-free
• Woody breast-free
• Tropical rain forest devastation-free (beef from Brazil)
Bewildering Array of Labels
to Confuse the Shopper!
Source: “The O’Neill Report” on AMR, May, 2016 & The Economist (May 21-27th, 2016) and
The New Straits Times (August, 2016)
Scientists, Special Interest Groups,
Media Coalesce to Place Huge
Pressure on Global Meat Industry
(August 12th, 2016)
(August 12th, 2016)
Traceability in Meat: Home plus
in South Korea with TV Monitor
and Shoppers can Scan QR Codes
to Trace the Meat Back to the Farm
and Follow the Meat Story
Do Asian Consumers Differ From “Westerners” on Trends Relating to
Ingredients in Their Food Products? No!: Want to:
• recognise all ingredients on the label/list
• short and simple list
• natural/all natural*
• no artificial ingredients
• low or reduced fat/sugar/salt
• Asians much more aware of health attributes of food
• including “beauty” ingredients (e.g. Japan – collagen)
• but, simmering concerns about food safety aspects
• “Free From” trend not widespread
Source: Ingredion, 2015 and Hughes
* natural starch more acceptable than modified starch
The cost of Food FraudImpact of Food Fraud
Brand Damage• Tesco
Management
distraction• Fonterr
a (Melam
ine)
Legal costs• Fonterr
a (Botulis
m)
Increased Complianc
e• Meat Industry
(DNA testing)
Margin erosion• Tesco
Diminished Market
Share• Chipotl
e
The brands of Retailers, Food Service and Restaurants are reliant on all suppliers sharing the same level of integrity as the person whose brand and reputation is at stake.
Three Meal Solutions
For 2 People for £10.
That’s Tues-Thursday
sorted for RMB14/person
per meal – VERY good
value in the UK
The £10 (RMB85)
M&S Meal Deal
Food Retail and Food Service Converge
Types of Snacks Consumed in Past 30 Days, Globally and By Region
(Where’s the Egg On-the-Go Mini-Meals and Nibbles?!)
Source: Nielsen Global Snacking Report, 2014
A Rush of British Meat Snacks
Salmon Serious Competitor for PREMIUM MEATS in Global Meal & Snack Markets
• healthy
• calorie-controlled
• snack/mini-meal
• 5-a-Day claim
• simple ingredients
• convenient
• portable
• no refrigeration
• “fish-friendly”
• recyclable
• brand reassurance
• YES – it’s tasty
• and affordable!
Ticking the Trend Boxes
Four Major Factors Slowing Rate at Which
Value-Added Convenience Meat Products
Will Expand Market Share in Emerging Asian
Economies:
• Relatively Low Level of Household Income;
• Grandparents and Maids;
• Strong Family & Food Cultures in Asian Countries;
• Competitively-Priced Street Food.
But, From a Low Base, Convenience Meat Meals
and Snacks (particularly chicken) are Expanding
Rapidly!
Branded, Value-Added Chicken in China
7-11 is a serious
food service player
in Most Asian Markets.
- Market Cap Alibaba x3 Walmart
Source: UK IGD, 2016
Retailers Target
Fast-Growing
Meal Kit Market
in UK
Raised US$500 Million in Venture Capital
Operating in 12 Countries To-Date
Some Examples of Sydney Restaurants Serviced by Deliveroo
• Globally, consumers less trusting of government, industry, “Big” Science, “Big” Farming, big anything!
• Pervasive media coverage of food scandals
• Shoppers want to know much more about where their food comes from & how animals/environment treated
• Most shoppers believe food companies should know “exactly” where everyingredient comes from
• Speed of social media communication both a blessing and a curse but, irrespective, a game changer
• Traceability & transparency in supply chains essential to building trust with all stakeholders. Understanding & compatibility with consumer values vitally important.
Source: Joanne Denney-Finch, IGD UK, October 8th, 2013, and Hughes
100% Purity is a Tough Ask! But Excellence in Supply Chain
Integrity is the Bed Rock of International Reputation for Food
Concluding Thoughts on Meat Marketing• meat demand (particularly chicken) will grow strongly this decade* - with
most of the growth coming in emerging markets )”peak meat” elsewhere
• expect strong competition from cheap farmed fish and, in the longer term, tasty, affordable plant protein products
• “commodity” chicken (noun) will struggle for good margin. Look for value-adding (adjectives) opportunities
• “slower-growing” chicken (more “natural”) with a story attract premiums
• meat “free-from” (antibiotics, hormones, cruelty) will become standard –no premium but penalty if not!
• emerging market consumers more focused on safe food than high animal welfare (in China, “green” relates more to food safety than environment
• expect more challenging business environment: more volatile feed prices, disease outbreaks, trade issues because of politics, economic boom/busts, etc.
• and for eggs (particularly for processing as demand for convenience
foods/snacks increase strongly
CONTACT POINTS:
e-mail:
Telephone contact:
mobile +44(0)7798 558276
@ProfDavidHughes
Consumer Blog: www.drfood.ca
Retail Blog: www.supermarketsinyourpocket.com
