POTENTIAL to grow Australian sheep meat exports continues in major export markets, but with the opportunities there are also challenges on the domestic market and overseas, according to Meat & Livestock Australia’s new online market snapshots.
MLA’s market intelligence manager, Scott Tolmie, said Australia supplies red meat to over 100 countries and with trade heavily influenced by changing consumer demand in those markets, it was important producers had access to detailed insights.
“The snapshots are designed to enable producers to be more informed when having discussions with their supply chain partners and – armed with a better understanding of where their product is going – make more informed business decisions about their own production and on-farm investments.
“Knowing the consumer and operating environment in key markets is critical to ensure the right product is being sent to the right market,” Mr Tolmie said.
The snapshots cover 11 key markets for beef and eight key markets for sheep meat, including Australia, the United States, Japan, Korea, China, Taiwan, Hong Kong, South-East Asia, Indonesia, the European Union, and Middle East and North Africa (MENA) region. There is a separate global snapshot for goat meat
“The snapshots aim to not only provide information around what is driving export volumes and values, but a more forward looking analysis of what are the consumer and industry trends that will influence Australia’s future red meat exports into each market.
Lamb faces challenges in Australia
Domestically, challenges include demographic changes favouring pork and chicken consumption, the higher profile of fish protein and rising living costs limiting disposable income.
Maintaining value share will be a challenge if lamb’s domestic price premium to chicken/pork grows larger, as the primary reason for consumers eating less red meat is currently due to cost and not health, the snapshot said.
However, the ‘premiumisation’ trend in retail and foodservice indicated Australian consumers are willing to pay more for the right offer, including fresh meats such as lamb.
“Messaging around factors such as country of origin, environmental impact, animal welfare, health and safety, along with food integrity and transparency, provide opportunities to consider in consumer communication.”
US sheep meat consumption growing
American consumption of Australian sheep meat grew 6pc last year, with opportunities coming out of consumer willingness to try lamb, although it continues to be an unfamiliar protein for most US consumers.
Opportunities for growth of Australian lamb are seen in the quick service restaurant and casual dining sectors and the US will continue to rely on imported sheep meat to satisfy consumer demand, as local production is expected to continue declining.
“However, differentiating Australian from New Zealand lamb remains a challenge, as many US consumers are still not able to accurately distinguish between the origins.”
Post-Brexit negotiations key to EU and UK lamb markets
The MLA said market access is the primary barrier preventing higher Australian sheep meat exports to this market, although formal Australian-EU Free Trade Agreement negotiations are expected to begin in early 2018.
Despite the volume limitations, the EU is one of Australia’s most valuable export markets and, with a large and growing number of wealthy consumers, remains a key region for our premium product, the snapshot said.
The United Kingdom is Australia’s largest market within the 28-member union and its exit from the EU in March 2019 may impact Australia’s sheep meat trade to the region.
“The UK must finish negotiating the terms of its exit from the EU, prior to engaging other countries in formal trade negotiations.
“The Australian Government has expressed an appetite to pursue future trade opportunities with the UK through an eventual FTA.
Abattoir eligibility with China is a priority
China is the world’s largest importer of sheep meat, but import demand is volatile and heavily impacted by domestic production cycles and opportunistic small farmers.
The MLA snapshot said there is a small but growing niche market for premium Australian lamb in the high-end foodservice and retail sectors of the larger coastal cities.
While the China-Australia FTA is reducing tariffs on Australian sheep meat, increasing the number of plants eligible to export to China remains a priority, particularly for chilled product, the report said.
Australia has had one plant granted access to China for chilled sheep meat since early 2016. In 2017, New Zealand began a six-month trial access to China for chilled sheep meat involving 10 plants.
Strong NZ lamb competition in Japan
Japan is Australia’s largest chilled lamb customer within Asia and there are currently no sheep meat import tariffs or volume-technical access issues.
Australian sheep meat has opportunities to further expand its presence beyond Genghis Khan (sliced lamb shoulder cooked on a table-top grill) dishes, but increasing awareness and familiarity for lamb among consumers remains crucial to unlocking future growth, the snapshot said.
Australia is well-placed as the largest supplier to capture any growth in the sheep meat market, but competition from New Zealand remains strong, particularly in the retail channel.
Australia well-placed in Middle East and North Africa
Australia has been a key sheep meat supplier to Middle East and North African markets for many decades and has built a strong, positive reputation, the snapshot said.
Mr Tolmie said premium lamb consumption and import demand in MENA are forecast to continue to grow, driven by increasing disposable incomes, ongoing urbanisation and westernisation, and large wealthy expat populations.
“Australia is well-placed to meet the growing demand in this higher value segment of the sheep meat market,” the snapshot said.
Technical barriers to trade are significant in the region and differ between countries.
“Removing these barriers is a priority for Australia to improve trade, competitiveness and the ease of doing business in the region.”
Consistent export growth into Korea
Sheep meat is a minor protein in Korea but is rapidly gaining popularity, particularly in the foodservice sector, the snapshot said.
There are a growth opportunities, especially for chilled product, and one key is establishing lamb as a protein option, using naturalness and safety claims on packs to help attract shoppers’ attention.
Although Australian lamb’s presence in the retail environment remains limited, exports increased seven-fold to 12,777 tonnes in the last 10 years.
“This consistent growth in demand indicates there is an emerging appreciation for this protein and a growing consumer base.”
Australian lamb battles pork and chicken in South East Asia
MLA said consumers’ lack of awareness and familiarity with sheep meat, coupled with the high prices, have led to a limitation in consumption in South East Asia.
However, sheep meat consumption across SEA is forecast to grow, supported by its large Muslim consumer base, the expanding young and urban populations, robust growth in the tourism sector, increased expansion of barbecue and hot pot restaurants in large cities and the growing amount of consumers dining out.
Sheep meat is a niche meat protein and consumed far less than chicken, pork, and beef in the region. With many consumers not growing up eating sheep meat, it remains rather unfamiliar, the snapshot said.
Goat meat opportunities with adventurous cooks
Goat meat is seen as ethical, sustainable and safe, according to MLA’s global snap shot for the meat.
But familiarity and availability are key challenges for goat meat consumption, with some consumers also concerned with its strong flavour and texture.
Many consumers not considering goat meat are not sure where it comes from and they don’t know about production systems. However, growth opportunities for the meat are believed to be highest among home cooks who are potentially seeking a challenge.
“For these consumers, a strong taste and an association with exotic cuisines may be an advantage,” the MLA snapshot report said.
To read the snapshots, click here.