The connected consumer: a snapshot of global consumer megatrends

Consumers hold the key to the red meat industry’s prosperity

Michael CrowleyPCA General Manager, MLA

1. Global demand2. Supply3. Headwinds4. How to compete

Australia's place in the world

17%

US

Brazil

EU

IndiaArgentina

Mexico

Other

3%

US

Brazil

EU

ChinaIndia

ArgentinaMexico

Other

Global production Exports

Source: FAOSTAT, OECD-FAO

<Boxed beef>

We are a small producer with a large global presence

Our national export destination mix is changing

US Japan South Korea China Indonesia Other

In 2004-05, top two markets accounted for 82% of exports

In 2018-19, top two accounted for 47% -and 53% went to the rest of the world

Source: DAWR

Our mix of destinations is changing and expanding

All competition is not equal

1

2

3

4

5

6

7

8

9

10

2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

A$/k

g

Source: GTA

Average beef export prices ($/kg)

The gap between premium and commodity is widening

Global market overview: export value

Total exportsA$10.1billion

Strong demand from global markets

North America

A$1.90b

North AsiaA$5.27b

A$293m

EU

A$264m

MENAA$273mA$8.4m Southern Asia

A$835mA$1.01b

Australia

A$8.53b*

Source: GTA, ABS, DAWR and MLA estimates, 2018 CY*please note the Australian figure is calculated using average retail price, whereas export figures are wholesale

Annual slaughter increased 3% to 8.1m head in 2019

Source: ABS, MLA forecasts.

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

10.5

11.020

00

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

f

2020

f

2021

f

2022

f

Mill

ion

head Slaughter Live Export

Slaughter Live exports

2018 7.87 1.092019 8.10 1.15

2020f 6.90 0.902021f 7.15 0.902022f 7.50 0.95

(million head)

Herd liquidation continues with high female slaughter

Source: ABS

37%

39%

41%

43%

45%

47%

49%

51%

53%

55%

57%

59%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Female percentage of kill

Female % of slaughter Rolling 12 month average Long run average

Herd to fall to 26m head by June 2019

Source: ABS, MLA forecasts.

24

25

26

27

28

29

3019

95

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

e

2020

f

2021

f

2022

f

Mill

ion

head

NOTE: June herd estimates

Average herd size 2000-2018:28m head

Record numbers on feed maintain production

Source: MLA/ALFA

400

500

600

700

800

900

1000

1100

1200

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Head

on

feed

(‘00

0s)

June quarter 2019: 1.15 million

head on feed

50

55

60

65

70

75

80

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

m to

nnes

Global beef demand is forecast to grow, but there are headwinds

Forecast

Global beef consumption African Swine Fever

Economic expansion slowing

China-US trade war

Brexit

Source: OECD-FAO

Global trade: heading in the right direction?

Competition is intensifying

Indonesia issues 100,000 tonnes of

Indian buffalo meat permits

China lifts ban on meat imports in boost for Brazil

A wall of US meat, or a tidal wave?

Brexit: the uncertainty continues

Industry taskforces prepare for headwinds– in partnership with government

Source: Beyondmeat.com

New competitors: those mirroring meat are making claims against meat

Ground beef – USD $3.52 per pound

Memphis Meats meatball – USD $2,400 per pound

Source: US Bureau of Labor Statistics Dec 2017; Forbes January 2018. Image sources: Alpha Stock Images - http://alphastockimages.com; Forbes.com

Lab grown protein is the other alternate emerging

The global market is big

China1,435m

26m

US339m

Japan126m

Korea52m

Indonesia280m

6m

34m10m

36m

EU443mUK

68m

MalaysiaSaudi Arabia

UAE

AustraliaSingapore

39m Canada

Our production can't meet the demand of 6.5 billion people

Source: Fitch Solutions, 2023 forecast

Households earning a disposable income above US$35,000 (2023 forecast)

China33.3m

11m

US103m

Japan39m

Korea18m

2m

2m1m

EU117m

UK26m

MalaysiaSaudi Arabia

UAE

AustraliaSingapore

12m Canada

3m Indonesia

‘Ability to purchase’ is a better indicator

2m

Source: Fitch Solutions, 2023 forecast

We have a more premium consumer

Channel: where does our consumer purchase beef?

City

Country

Consumer: who is our consumer?

There are markets within markets

We need to focus our efforts, deeper than thinking about a whole country

Australian beef has a clear target consumer

Beef

Australian beef

Imported beef

0% 10% 20% 30% 40% 50% 60% 70% 80%

Bangkok

Ho Chi Minh City

Singapore

Kuala Lumpur

Jakarta

Eaten imported beef at least once a week

City Average City Wealthy

Source: MLA/GlobalData ASEAN Attractive Cities Study

Community engagement

Direct consumer advertising