USMEF Strategic Market Profile

ASEAN

• Prior to BSE, this region represented the fifth largest export market for U.S. beef. Today, all countries in the region, except Indonesia, have reopened to U.S. deboned and deglanded beef from cattle under 30 months of age.
• Per capita income is on the rise with an increasing share being spent on food. For example, the middle to upper income group in Indonesia is made up of 30 million consumers and is a target market for U.S. short rib products.
• As a reaction to the growing cost of Australian and New Zealand beef due to their shifting of product to premium markets like Japan and Korea, importers are finding that their customers’ demand for beef is declining. However, improved access to increasingly competitively priced U.S. beef is allowing importers to start regaining their beef customers.

• Australian and New Zealand beef in the retail sector typically compete on price, leaving little room for profits for the outlets. U.S. beef, though only selectively available, is developing a niche market in upper-class stores, providing opportunities for higher margins.
• As a whole, ASEAN consumers are extremely price sensitive and many markets are turning to South America for beef which is identical in attributes to Australian and New Zealand product and is more competitively priced.
• There are several brands of locally processed/slaughtered beef from domestic cattle (i.e. water buffalo type breeds) and imported Australian livestock that are presenting increased competition.
• In Singapore, beef is facing increasing competition from cheaper protein sources, with most beef consumed by middle-lower income Malays who typically buy cheaper items. Wealthy Chinese and expatriates are the main consumers of high quality beef.

• Tight regulatory conditions for importation of de-boned U.S. beef limits U.S. beef exports, though limited quantities are prominently identified in the meat counters/chillers of supermarkets when available.
• Non-loin cuts of U.S. beef like short plate, rib finger and hanging tender are well-received because of their price competitiveness. Some of these cuts have entered the Philippines at prices lower than that of domestic product.
• Supermarket shopping is quickly overtaking wet market shopping in ASEAN countries, and the modern supermarket format allows for more creative marketing to promote U.S. beef. The increasing number of upscale supermarkets creates opportunities for new-to-market U.S. beef.
• Some retailers are reluctant to carry U.S. beef or expand their purchases due to the high prices and the limited range of cuts, thus resulting in limited exposure for U S meat. It may also be difficult to gain a greater presence on supermarket shelves due to the fact that U.S. beef is normally shipped frozen by sea-freight, and beef needs to be merchandised fresh/chilled if it is to capture a significant share of the retail market.
• The HRI sector still utilizes steak cuts in places where the concept of high-quality beef is critical; however, non-loin cuts are generally preferred especially in the current competitive foodservice environment. USMEF takes advantage of this situation to introduce foodservice managers and chefs to competitively price non-loin cuts of high-quality U.S. beef.
• Projected growth in four- and five-star restaurants, U.S. food service franchises and first-class catering operations should result in increasing demand for U.S. beef.

Product/Industry Image

• Importers recognized that the quality of U.S. beef is unparalleled.  The U.S. can differentiate its products and introduce non-loin cuts to replace loin cuts of Australian, New Zealand and Argentine beef which are less tender.
• U.S. beef has maintained a high-quality image, and 5-star hotels use and identify U.S. beef in their restaurants to maintain their upper-class market status. High quality U.S. beef is well recognized in the HRI sector, and having U.S. beef on the menu is a status symbol and good branding.

Operating/Marketing Environment and Trade/Distribution Issues

• When the markets in Japan and Korea were closed, the ASEAN region had great success in promoting U.S. beef non-loin cuts like short plate and hanging tender. However, with those markets open, prices of these non-loin cuts have increased, and if this trend continues, these cuts will not be within reach of ASEAN consumers.
• USMEF’s activities in promoting non-loin cuts are prompting the trade to realize that U.S. pricing for these cuts is even more competitive when compared to similar Australian and New Zealand cuts.   For example U.S. short plate, which has captured only a limited market, is priced very attractively for countries like the Philippines and Vietnam.

Access Conditions

• Bans on bone-in beef and age limits of U.S. beef are challenges for U.S. suppliers and hamper sales by not allowing development of full market potential. Further expansion of U.S. high quality beef will remain limited until bone-in beef cuts are allowed.
• U.S. beef is still banned in Indonesia which previously represented a significant market for U.S. beef. The Indonesia beef offal market has tremendous growth potential as the average consumer considers beef livers and hearts to be good sources of affordable protein. Other variety meats, such as lungs, are also widely consumed in Indonesia and the market potential is immense.

Import and market share data is based on import data of the Philippines and reported exports to Vietnam (from GTA), and U.S. export data is from the U.S. Department of Commerce, Trade Census Bureau.

Long-term Strategy:

• Develop the image of U.S. beef as the premier beef available on the market, from five-star establishments to family-style caterers. Introduce U.S. Waygu beef to the top end of the market and introduce the American Beef Club concept of exclusiveness.
• Increase purchases of U.S. beef by educating HRI end users about the profitability of underutilized U.S. beef cuts and teaching them how to incorporate these cuts into their restaurant concepts.
• Increase purchases of U.S. beef by demonstrating the profit potential of U.S. beef through demonstrations and promotions at selected retail outlets.
• Resume and increase U.S. beef imports by promoting the image of a “good eating experience with U.S. steak,” and subtlety advising consumers that U.S. beef is back in the market—while refraining from mentioning BSE, as it has been largely forgotten by consumers.
• Position U.S. beef hearts and livers as a standard material in the production of Bakso (meat balls) in Indonesia (once the market opens), and introduce this raw material to the processors in the Philippines.
• Introduce U.S. beef variety meat to importers in Vietnam through extensive trade servicing.
• Provide up-to-date market intelligence so key accounts and decision makers are able to make informed decisions.

USMEF Export Forecasts: