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Market Insights & Customer TrendsThe Developing Global Meat Industry

October 2018Bakel, Netherlands

Rupert Claxton

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Who is Gira

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A global consultancy that specialises in the food Chain… nothing else!Who is Gira?

• Data• Trends• Dynamics• Issues• Forecasts Consultancy

Strategic studies with depth of understanding based on 40 years

experience of researching food & retail markets & industry

structures.

Strategic Multi-client Market

Reports

• Market, competition & strategy consulting

• M&A, due diligence, market audits

• Distribution & export strategies• SWOT, positioning, gap

analysis• Co-operative strategy• Global dynamics• Product development

Unrivalled Global Meat Knowledge

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(for 2006‐2017, 2018e, 2019f, 2023f)Comprehensive Global Coverage

REGIONAL MARKET INSIGHTS, DATA & FORECASTS BY SPECIESSocio-economic assumptions – Pig – Poultry – Beef – Sheep meat

Global ViewGenetics – Feed – Farming – Slaughtering - Processing – Trade – Packaging – Consumption

Global ViewGenetics – Feed – Farming – Slaughtering - Processing – Trade – Packaging – Consumption

NAFTA

USAUSA

Mexico

Canada

EU

All 28 Members

Middle East / North AfricaSaudi ArabiaSaudi Arabia

TurkeyTurkeyEgyptEgyptUAEUAE

+16 others+16 others

Sub-Saharan Africa

South AfricaSouth AfricaNigeriaNigeriaAngolaKenyaKenya

+42 others+42 others

Oceania

AustraliaAustraliaNZNZ

Asia

ChinaChinaJapanJapanIndiaIndia

IndonesiaIndonesia

PhilippinesPhilippinesVietnamVietnamThailandThailandMalaysiaMalaysia

South KoreaSouth Korea

RussiaRussiaUkraineUkraineBelarusBelarus

+ other CIS+ other CIS

South America

BrazilBrazilArgentinaArgentinaUruguayUruguay

ChileChileColumbiaColumbiaParaguayParaguayVenezuelaVenezuela

PeruPeru

CIS

© Gira

Agenda

1. Global Protein Market 2. Drivers for Developing Meat Demand3. The 10 Year Outlook4. Final Thoughts

© Gira

Population – Total Global Human PopulationChina and India are 20% each of total global population.

© Gira

But few are totally unique.There are plenty of events that can disrupt forecasts…

© Gira

1) Global Protein Market

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Fish consumption growing faster than meat consumptionFish vs. meat consumption

Meat and fish consumption in the GMC countries, 2006‐2017e, 2018f & 2022f

2006‐17 CAGRFish = +2.5%Meats = +1.9%

© Gira

Disappointing 2017 growth (CN Py effect). Stronger growth outlookWorld meat consumption, 2010‐2022f

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2) Drivers for Developing Meat Demand

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2005‐2017 PC consumption growth, except in the richer countriesPer capita GDP (PPP) and Meat Consumption

South AsiaFar EastRU/CISS. AmericaN. AmericaMENA/SSAEU

?

© Gira

Complex array of intense issues with expanding geographic coverageConsumer concern about meat: not new, but growing

Public health Nutrition

Animal WelfareEnvironment

Frauds Globalisation

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Key category for increased meat consumptionImpact of Class on meat purchasing

Consumption limited by income

Eat more protein

Eat more + better protein

Eat no more, but more expensive 

protein

Food expenditure maximised

Working Class Lower Middle Class Upper Middle Class Upper Class

Price focussedTraditional marketMeat is occasional

Price importantFood safety concernsMeat regular

Food safety focusMay buy premiumMeat dailyLooking for varietyIndividualism

QualityVarietySafetyWelfare

Quantity Growth Quality Development

© Gira

Wet markets are developing as cold chain outlets…Traditional Asian Retail Model

Informal Slaughter

Wet Market

Consumer

Foodservice

Traditional Farm

(Backyard)

Modern Farm(Possibly Integrated)

Modern Slaughter

Wholesale Market

FrozenImports

© Gira

Modern retail supply chain is weak for chilled and frozen productsModern Retail Supply Channel

Modern retail penetration is growing but low in most markets in Asia.Development is focussed on urban areas. Aided by increased detachment from rural routes… 

Differentiate meat offer from wet market: Branding + Packaging.Not clear that large format stores are suited to the markets… Ecommerce challenge already present.Convenience store format is a huge driver. 7‐11 outlets: China >2,300, Thailand 10,300!

Consumer

Food Service

Modern FarmModern Farm(Probably Integrated)

FrozenImports

Freezer Centre

Modern Retail

Retailer Depot

Cutting

Packing

Modern Slaughter

© Gira

How important is the online market?The Global Digital Market – Sept ‘17

Population InternetUsers

Active Social Media Users

Unique Mobile Users

Active Mobile Social Users

7.6 Bio54% Urban

3.8 Bio51% 

Penetration

3.1 Bio41% 

Penetration

5.1 Bio67% 

Penetration

2.8 Bio37% 

Penetration

+7%

Global 

Growth

2016

‐17

+1.12% +15% +6% +16%

SE.Asia

Growth

2016

‐17

+31%+80mio people

+31%+72mio people

+8%+62mio people

+36%+73mio people

© Gira

Highest market share in the most developed economies…E‐Commerce Share of FMCG Market

But some developing markets have a higher share than would be expected.Often developing markets have good drivers for E‐Commerce development: High mobile phone use Low wage cost – makes delivery lower cost Haven’t got to displace existing modern retailBut barriers exist for FMCG, and particularly meat; Lack of chill chain consistency and trust. Payment issues.

E‐Commerce Share of FMCG Market

© Gira

Smaller, time poor households ‐ Convenience vs Value…Changing Consumer Raw Meat Requirements

© Gira

Individualism, food miles, on the go, time poor… open to interpretation.New Trends – From Other Food Groups

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Likely to have a bigger impact in developed markets… 2‐3% of meat?Meat alternatives: market risk

Potential to cannibalise a significant share of the meat market

Appeals to ‐ Ethical market segments:Welfare and Environmental Dietary trends (inc. Human Health): Flexitarian, vegetarian and vegan consumers Commodity meat … especially as ingredient in further processed foods

Assumptions ‐ Can be sold at consumer prices cheaper than those of meat And cheaper to produce Taste just as good Good nutritional impact Genuinely safe (regulators are looking at it) No 'Frankenstein foods' image Well marketed

© Gira

3) The 10 Year Outlook

© Gira

Population size is a major consumption driversPopulation trends ‐ conclusions

Population growth mathematic increase in meat demand +0.8 bio people from 2017 to 2027 At 46kg/capita (present world average) = ~37 mio t = +11%

Most growth  developing markets, especially from lower middle class consumers Demographics will favour the cheaper Py and Pk (although Bf or Sh may be traditional preference) Fish will remain a serious competitor in many markets, due to price About 1/3 of total growth will come from countries where Islam dominates, essentially precluding Pk consumption 18% will come from IN: ~40% vegetarians, strong bias against Bf and no Pk Higher share of >65 years old  preference for Py over Bf

Gira expects a higher average PC consumption, adding to the impact of population growth 

Increasing urbanisation will change where and how meat is purchased

© Gira

Most PC meat consumption growth in developing marketsPer capita consumption

Animal source food PC consumption per region, 2007/2017/2027f

© Gira

4) Final Thoughts

© Gira

Consumer specifications will drive development of processing.Final Thoughts

Rising populations + increased disposable incomes = increased meat demand. Led by the developing world, and increasing disposable incomes. Focus of meat purchases remains price.

Developed world consumers increasingly focused on differentiation of meat. Process is about self; pro environment / welfare choices, or premium / reward choices Commonly decisions are not from an informed position… and add cost and complexity to sector. Can afford to pay small premium, but often expect it as part of the current process.

Globalised industry means that developments in one market are quickly copied in another. Demand for cuts and recipes transfers easily and quickly… New trend in “me too” from developing world. Expect same standards as western production.

Future developments are propelled by technology refinements; Saving time, energy and materials… and reducing waste throughout the supply chain. But must be in conjunction with consumer acceptance! 

Rupert Claxtonrclaxton@girafood.com

+44 1323870137

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