Meat trade emerging trends Nils Beaumond n.beaumond@girafood.com +33 45424
Who is Gira? Market due diligence Market research Consulting 45 years Focused on agribusiness Worldwide coverage Experts in the 5 continents 2
What do you Need Gira for? Off-the-Shelf Studies Individual Research Market Due Diligence Conferences Where is your market heading to? Trends & forecasts Gap analyses Market potential How to develop your business? Client and supplier searches Competitor benchmarking Branding How to develop your company? Internationalisation Search for & evaluation of potential acquisition targets New plant location and supply 3
Why Choose Gira? 1. Entire supply chain approach 2. Gira database 3. More than figures: a detailed analysis 4. Systematic quantitative and qualitative forecasting 5. Reactivity and short lead time 6. Access to top agribusiness decision-makers worldwide 7. 3 annual meetings: Gira Dairy Club Gira Meat Club Gira Asian Meat Club 8. Client in-house presentations 4
World meat market developments Actors rising share of Asia Differentiation EU situation
Millions of tons World animal-source food consumption Sharp growth in consumption World animal-source food consumption FAO Livestock and Fish Primary Equivalent, 1961-211 5 4 3 2 Seafood Cheeses Eggs Offals Meats CAGR +3.2% +2.7% +3.2% +2.38% +2.87% 1 6
7 Animal-source food per capita consumption Huge variations in quantities, CAGRs & breakdown Growth potential mainly in the developing world (kg/capita/year, max. 18kg) 2 4 6 8 1 12 14 16 18 1961 1962 1963 1964 1965 1966 1967 1968 1969 197 1971 1972 1973 1974 1975 1976 1977 1978 1979 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 Seafood Cheese Eggs Offals Meats 2 4 6 8 1 12 14 16 18 1961 1962 1963 1964 1965 1966 1967 1968 1969 197 1971 1972 1973 1974 1975 1976 1977 1978 1979 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 Seafood Cheese Eggs Offals Meats 2 4 6 8 1 12 14 16 18 1961 1962 1963 1964 1965 1966 1967 1968 1969 197 1971 1972 1973 1974 1975 1976 1977 1978 1979 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 Seafood Cheese Eggs Offals Meats 2 4 6 8 1 12 14 16 18 1961 1962 1963 1964 1965 1966 1967 1968 1969 197 1971 1972 1973 1974 1975 1976 1977 1978 1979 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 Seafood Cheese Eggs Offals Meats 2 4 6 8 1 12 14 16 18 1961 1962 1963 1964 1965 1966 1967 1968 1969 197 1971 1972 1973 1974 1975 1976 1977 1978 1979 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 Seafood Cheese Eggs Offals Meats 2 4 6 8 1 12 14 16 18 1961 1962 1963 1964 1965 1966 1967 1968 1969 197 1971 1972 1973 1974 1975 1976 1977 1978 1979 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 Seafood Cheese Eggs Offals Meats 2 4 6 8 1 12 14 16 18 1961 1962 1963 1964 1965 1966 1967 1968 1969 197 1971 1972 1973 1974 1975 1976 1977 1978 1979 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 Seafood Cheese Eggs Offals Meats 2 4 6 8 1 12 14 16 18 1961 1962 1963 1964 1965 1966 1967 1968 1969 197 1971 1972 1973 1974 1975 1976 1977 1978 1979 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 Seafood Cheese Eggs Offals Meats North America South America East Asia South Asia S.E. Asia Oceania 2 4 6 8 1 12 14 16 18 1961 1962 1963 1964 1965 1966 1967 1968 1969 197 1971 1972 1973 1974 1975 1976 1977 1978 1979 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 Seafood Cheese Eggs Offals Meats West Asia Europe Africa Seafood Cheeses Eggs Offals Meats
Millions t Animal-source food consumption trends Further decline in meat share World animal-source food consumption, OECD-FAO, 21/22 65 6 55 5 45 4 35 3 25 52.3 129 2 6 15 49 2 14 3 34 623.2 163 24 74 17 CAGR = +1.8% in total Meats: +1.6% Offal: +1.3% Eggs: +2.1% Cheeses: +1.6% Seafood: +2.4% 2 15 295 344 1 5 21 Meats Offal Eggs Cheeses Seafood 22 Source: Gira, based on OECD-FAO 8
1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 21 23 25 27 29 211 Millions of tons World meat consumption Growth in poultry meat and pork mainly World animal-source food consumption FAO Livestock and Fish Primary Equivalent, 1961-211 5 4 3 2 Other animal-source foods Other meats Poultry meat Pork Sheep meat Beef CAGR +3.1% +1.85% +4.98% +2.99% +1.59% +1.64% 1 9
Millions t Meat consumption trends Continuous rise in the poultry meat share of the meat basket World meat consumption, OECD-FAO, 21/22 35 3 25 2 295.4 1 +6 +3 +14 +24 +2 344.5 124 CAGR = +1.6% in total Beef: +.9% Sheep meat: +1.9% Pork: +1.2% Poultry meat: +2.1% Others: +3.% 15 11 124 1 13 16 5 65 71 21 Beef Sheep meat Pork Poultry meat Other meats 22 Source: Gira, based on OECD-FAO 1
1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 21 23 25 27 29 211 213 Millions tonnes pw Long term world meat trade developments From 3.5 to 44 mio t Dynamic markets except for sheep meat World meat trade in volumes, 1961-213 18 16 14 12 1 8 6 4 2 Beef Pork Poultry meat Sheep meat CAGR= +5.% in total Beef: +4.% Sheep meat: +1.8% Pork: +5.1% Poultry meat: +8.% Source: Gira, based on FAO Based on FAO data exports includes intra-eu trade Sheep = sheep + goat 11
1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 21 23 25 27 29 211 213 Long term world meat trade developments In indices, poultry meat changes dwarf those of other meats World meat trade indices, 1961-213 (vol., 1961=1) 6 5 4 3 Beef Pork Poultry meat Sheep meat 2 1 Source: Gira, based on FAO 12
Jan-8 Sep-8 May-9 Jan-1 Sep-1 May-11 Jan-12 Sep-12 May-13 Jan-14 Sep-14 May-15 Jan-16 Currency per USD indexed on Jan 28 215-216: global meat market context 215 was a year of dramatic currency change with sharply strengthening USD Changing domestic meat demand characteristics and apparent international competitiveness 36% 31% Currency index per USD 26% 21% 16% 11% RUB/USD BRL/USD EUR/USD AUD/USD JPY/USD CNY/USD 6% 13
(Million t cwe) World meat trade volumes Dec 15 forecasts 215: slight decrease (except Pk) with US challenges 216: positive trade growth (except for Sh) especially Py 34 32 3 28 26 24 22 2 18 16 14 12 1 8 6 4 2 Sheepmeat Pigmeat Beef & Veal Poultrymeat 1 7 9 11 Fig SYN-GEN International Meat Trade Volumes, 211-216(f) 1 8 9 12 1 8 9 11 1 7 9 11 Total: 29.1 mio t (-.2%) -4.6% 1 4.7% 8-2.1% 9-1.5% 11 Total: 29.8 mio t (+2.4%) -1.9% 1 2.4% 8.2% 9 4.5% 12 211 212 213 214 215 216 Likely to be higher growth than this 14
World meat market developments Actors rising share of Asia Differentiation EU situation
Million tonnes cwe Million tonnes cwe World beef trade GMC data Asia doubled its share of world imports in 1 years + 9 mio tcwe, c15% of world production Growing: CAGR +2.4% from 2 to 215 Asia share: Exports: from 9% in 25 to 22% in 215 (IN mainly, but also HK to CN) Imports: from 22% in 25 to 42% in 215 6 countries importing >.1 mio t each (CN direct and grey through VN/HK, but also JP, KR & MY) World beef exporters, 2-215 World beef importers, 2-215 1 1 9 9 8 7 6 5 4 3 2 1 Others NZ AU IN UY PY BR AR US CA EU 2 25 21 211 212 213 214 215 Source: Gira Meat Club 8 7 6 5 4 3 2 1 Others O.F.East KR JP ME/NA S.Am US CA SU/RU EU 16 16 2 25 21 211 212 213 214 215 Source: Gira Meat Club
Million tonnes cwe Million tonnes cwe World pork trade GMC data Asia concentrating more than 5% of world imports + 8 mio tcwe, c6% of world prodution Sharp growth in the 2s, slower now: CAGR +5.4% since 2 Asia share: Exports: from 7% in 25 to 3% in 215 (no Asian country exports >.1 mio t) Imports: from 46% in 25 to 53% in 215 4 countries importing >.1 mio t each (JP, CN, KR & HK) World pork exporters, 2-215 World pork importers, 2-215 9 9 8 8 7 6 Others CN/HK 7 6 Others KR 5 4 BR MX US 5 4 JP CN/HK US 3 2 CA CIS EU 3 2 CA SU/RU EU 1 2 25 21 211 212 213 214 215 Source: Gira Meat Club 1 17 17 2 25 21 211 212 213 214 215 Source: Gira Meat Club
Million tonnes cwe Million tonnes cwe + 11 mio tcwe, c15% of world production Growing trade (despite some recent setback): CAGR +4.3% Asia share: World poultry meat trade GMC data The least concentrated import market 38 countries >.1 mio t Asia = + ¼ of the total Exports: from 5% in 25 to 1% in 215 (HK, CN and TH >.1 mio t) Imports: from 24% in 25 to 28% in 215 8 countries importing >.1 mio t each ( HK, VN & JP >.5 mio t, + CN, TW, PH, SG & KR) World poultrymeat exporters, 2-215 World poultrymeat importers, 2-215 14 14 12 12 1 8 6 4 Others TH CN/HK BR US EU 1 8 6 4 Others JP CN/HK SSA MENA SU/RU EU 2 2 2 25 21 211 212 213 214 215 Source: Gira Meat Club 18 18 2 25 21 211 212 213 214 215 Source: Gira Meat Club
Million tonnes cwe Million tonnes cwe World sheep meat trade GMC data + 1 mio tcwe, c8% of world production Flat market: CAGR +.6%, supply is the limiting factor Asia share: Exports: from 5% in 25 to 4% in 215 (IN & PK > 1, t) Imports: from 17% in 25 to 35% in 215 5 countries importing > 1, t each (CN >.1 mio t, + MY, TW, JP, SG between 1 & 5, t) World sheepmeat exporters, 2-215 World sheepmeat importers, 2-215 1.2 1.2 1 1.8.6.4.2 Others NZ AU S.Am CEECs EU.8.6.4.2 Others O. F.East CN ME/NA N.Am SU/RU EU 2 25 21 211 212 213 214 215 Source: Gira Meat Club 19 19 2 25 21 211 212 213 214 215 Source: Gira Meat Club
World meat importers Rising Asian imports and share of the total World meat importers/region, 25/215 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 5 15 5 15 5 15 5 15 Beef Pork Poultrymeat Sheepmeat Source: Gira, based on Trademap CN by far the major player though not alone Oceania N. Asia S.E. Asia S. Asia Other Africa MENA Russia/CIS Other W. Europe EU-28 S. America C. America N. America Asia 215 imports - Beef: 2.8 mio t 5-15 CAGR +1.5% - Pork: 2.6 mio t 5-15 CAGR +5.7% - Poultry meat 3.2 mio t 5-15 CAGR +6.8% - Sheep meat.3 mio t 5-15 CAGR +9.3% - Offal 2.3 mio t 5-15 CAGR +13.5% 2
Imports ( t pw) GMC15: Total CN imports: Direct + Grey Channels Huge variation in importance of grey channel between species 4 3 5 3 2 5 2 1 5 1 5 CAGR +18% C.A.G.R 26-14 (%) Sheepmeat Grey +33.2% Sheepmeat Direct +28.9% Poultry Grey +4.5% Poultry Direct +5.8% Pork Grey +24.7% Pork Direct +46.5% Beef Grey +64.5% Beef Direct +16.5% - 26 27 28 29 21 211 212 213 214 215e 216p Source: Gira compilation Figures do not include offal which has higher grey channel shipments. 1H16 CN imports are running at higher levels than was forecast at GMC15 21
World meat exporters Asia Exports Bf and Py World meat exporters/region, 25/215 1% 9% 8% 7% 6% 5% 4% 3% 2% 1% % 5 15 5 15 5 15 5 15 Beef Pork Poultrymeat Sheepmeat Source: Gira, based on Trademap IN the major player (Bf) + CN and TH (Py) HK mostly reexports to CN (Bf, Pk, Py) Oceania N. Asia S.E. Asia S. Asia Other Africa MENA Russia/CIS Other W. Europe EU-28 S. America C. America N. America Asia 215 exports - Beef: 1,5 mio t 5-15 CAGR +13.3% - Pork:.2 mio t 5-15 CAGR -5.3% - Poultry meat 1.1 mio t 5-15 CAGR +11.2% - Sheep meat.4 mio t 5-15 CAGR -1.1% - Offal.5 mio t 5-15 CAGR +16.6% 22
World meat market developments Actors rising share of Asia Differentiation EU situation
Development of certifications Initially focused on sanitary guarantees A tool to show FBOs are doing what is needed to: Provide safe foods Meet their responsibilities Independent certifying body increases credibility Perceived by the consumer to be more solid and trustworthy than brands BRC Global Standards and International Featured Standards (IFS) based on ISO 91 (quality control and assurance) Good Manufacturing Principles (cleaning & disinfection, pest control, maintenance, training) HACCP (Hazard Analysis Critical Control Point) principles 24
Anti-meat lobbying is not a new issue But it is gaining strength due to: New arguments Nutritional risks Public health fears (incl. AB) Animal welfare Environmental protection Frauds scandals What next? Modern communication More books, publications, documentaries, etc. Social networking Camera developments Consumer questioning Continued suspicions about meat In a context of much anti-meat communication Frauds Environment Public health Animal Welfare Nutrition Dissemination of revolting images of cruelty to animals High profile people taking side Shoppers unconsciously looking for a justification to reduce their purchases due to economic difficulties 25
A saturated market More food options and less needs With the added impact of the economic crisis Shoppers overwhelmed by a variety of options And store owners have to make a preselection, deciding which products to put on the shelves Raw meat purchase no more a daily must: Reduced energy needs Development of further processed meat products, with higher convenience content Widespread availability of other animal proteins Development of meat substitutes often with taken names from the butchery vocabulary Economic crisis Meat remains an expensive item Reduction of consumer spend Reduce meat quantities: less on each purchase occasion or less frequently Switch to cheaper products: species (Bf Pk or Py) or cuts (fillet minced) % of shoppers "satisfied with the price of meat", 211 26
Vegetarianism Vegans Vegetalians Vegetarians and Flexitarians... 4-5% vegetarians in the EU Estimates only given a lack of hard data % of vegetarians in the EU, 214 Developing Great increase in number of products in modern retail and catering Multiplication of specialised retailers and restaurants Flexitarianism likely a more serious threat 27
Need to differentiate Certification to meet society demands and avoid/delay price wars Competition (incl. HD dvpt) Regulatory pressure Consumer demands Need to differentiate Branding Trust? Value/cost? Price No win Certification 3rd party Premium price 28
Raw meat modern retailing differentiation schemes Quality differentiation (if any) mainly through quality assurance schemes Huge variations in % of differentiated Reputed brands may reduce the need for quality certification Highest share in Py Official quality signs (organic, PDO/PGIs) have small market shares Severe constraints and high added costs Possible overlap between differentiation schemes (e.g. organic within a PDO) Raw meat retailing by quality differentiation scheme & country, EU, 214 Quality differentiation set to increase Organic to record the highest CAGR 29
Quality certification Little focus up to now on sustainability Origin (local vs. national) Breed Animal category Production method Feed Extensive vs. intensive (grass-/grain-fed, free range ) Organic Animal welfare requirements Halal and Kosher production & slaughter methods Emerging trends Environmental protection lack of common understanding on methods and indicators Social values (as part of sustainability) even less understood! Presently focusing on "small local producers" Definition difficulties means these are presently used in communication more than in certification 3
Conclusions Developing world meat trade Mainly in Py and Pk Sharp rise in Asian imports But rise in share of total imports mainly in Bf and Sh CN accounts for the bulk of this rising Asian importance Even more when taking Grey trade into account Quality certification gaining importance in the developed markets At retail level mainly In many markets a large share of international trade focuses on the catering channels Need for environmental/sustainability certification Definition? 31