in-progress review draft - agric.wa.gov.au market... · document) including any accompanying...

TARGET MARKET OPPORTUNITIES IN ASIA FOR BEER Part of Asia Market Success, April 2016

IN-PROGRESS REVIEW DRAFT Pre-release copy of significant commercial value to industry Document contains incomplete & in-progress research for comment For named reviewer/firm only; do not duplicate or distribute

RECIPIENT

FIRM

IINNHHEERREENNTT LLIIMMIITTAATTIIOONNSS This work was commissioned by the Department of Agriculture and Food Western Australia (DAFWA), with funding through the State Government’s Royalties for Regions program and prepared by Coriolis. This work is based on secondary market research, analysis of information available or provided to Coriolis by our client, and a range of interviews with industry participants and industry experts. Coriolis have not independently verified this information and make no representation or warranty, express or implied, that such information is accurate or complete. Projected market information, analyses and conclusions contained herein are based (unless sourced otherwise) on the information described above and on Coriolis’ judgement, and should not be construed as definitive forecasts or guarantees of future performance or results. Neither Coriolis nor its officers, directors, shareholders, employees or agents accept any responsibility or liability to readers or recipients of this report other than DAFWA or people other than DAFWA who rely upon it (described below as Recipients) with respect to this document. Coriolis wishes to draw Recipients’ attention to the following limitations of the Coriolis document “Target Market Opportunities in Asia for the Western Australian Premium Products” (the Coriolis Document) including any accompanying presentation, appendices and commentary (the Coriolis Commentary): a. Coriolis has not been asked to independently verify or audit the information or material provided to it by or on behalf of the Client or any of the parties involved in the project; b. the information contained in the Coriolis Document or any Coriolis Commentary has been compiled from information and material supplied by third party sources and publicly available information which may (in part) be inaccurate or incomplete; c. Coriolis makes no representation, warranty or guarantee to Recipients, whether express or implied, as to the quality, accuracy, reliability, currency or completeness of the information provided in the Coriolis Document and any Coriolis Commentary or that reasonable care has been taken in compiling or preparing them; d. the analysis contained in the Coriolis Document and any Coriolis Commentary are subject to the key assumptions, further

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Forest Food Council photo or (3) are low resolution, complete product/brand for illustrative purposes used under fair dealing/fair use for both “research and study” and “review and criticism”. Our usage of them complies with Australian law or their various license agreements (© Dollar Photo Club). CCOOPPYYRRIIGGHHTT Copyright © Western Australian Agriculture Authority, 2016 IIMMPPOORRTTAANNTT DDAAFFWWAA DDIISSCCLLAAIIMMEERR The Chief Executive Officer of the Department of Agriculture and Food and the State of Western Australia and their employees and agents (collectively and individually referred to below as DAFWA) accept no liability whatsoever, by reason of negligence or otherwise, arising from any use or release of information in this report or any error, inaccuracy or omission in the information. DAFWA does not make any representations or warranties about its quality, accuracy, reliability, currency, completeness or suitability for any particular purpose. Before using the information, you should carefully evaluate these things. The information is general in nature, is not tailored to the circumstances of individuals or businesses, and does not constitute financial, taxation, legal, business or management advice. We recommend before making any significant financial or business decisions, you obtain such advice from appropriate professionals who have taken into account your individual circumstances and objectives. The information in this report should not be presumed to reflect or indicate any present or future policies or decisions by the Government of Western Australia.

2

FFIINNAALL vv110000;; AApprriill 22001166

SCREENING OVERVIEW In Phase One of the Target Market Opportunities in Asia for WA Premium Products Report (TMO Report), extensive import/export trade data was fed through a multi-stage screening process to “hone-in” on potential opportunities for Western Australia; stakeholder interviews also fed into this process

3

STRUCTURE OF MULTI-STAGE SCREENING PROCESS USED IN THIS PROJECT Model; 2016

INDIVIDUAL FIRM ROLE & RESPONSIBILITY STAGE I STAGE II STAGE III STAGE IV

PLATFORM PRODUCT POSITIONING TARGET MARKET

FIT WITH WA

WA INDUSTRY-GOOD RESEARCH

9 PLATFORMS

679 TRADE CODES

47 QUAL/QUANT

SCREENS

Project does not attempt to address firm-level operational or executional activities: -  R&D

-  Product development

-  Sourcing & supply chain

-  Production & operations

-  Marketing & branding

-  Sales & sales structure

-  Capital structure

-  Negotiation

-  Distributor appointment

20 OPPORTUNITIES

YOU ARE

HERE

4 This project is focused on “market demand” from the following twenty-four Asian/Middle Eastern markets

Note: Complete list for analysis purposes, some countries excluded from list if no/limited trade data available (e.g. Iran)

24 COUNTRIES DEFINED AS HIGH POTENTIAL TARGET MARKETS FOR WESTERN AUSTRALIA Target markets; 2016

MIDDLE EAST

Bahrain Egypt Israel

Jordan Kuwait

Lebanon Oman Qatar

Saudi Arabia UAE

24 defined target markets for this project

4

SOUTH ASIA

India Pakistan Sri Lanka

Western Australia

SE ASIA

China Hong Kong

Japan South Korea

Taiwan Indonesia Malaysia

Philippines Singapore Thailand Vietnam

PRODUCT PROFILE

HS Code 220300

Product Beer made from malt

Out-of-scope Cider, perry, mead, other fermented beverages, mixtures of beverages, non-alcoholic beverages, wine, spirits etc. as all are covered under other screened trade codes

Origin One of the oldest human produced beverages, c. 5000 BC

Example ingredients

Water, malted barley, hops, yeast

Forms/usage -  Drinking out with meals at casual market restaurants

-  Drinking at bars and home

Drivers of consumer/market success

-  Long history of domestic consumption

-  Imported beer considered safer

-  Imported beer confers status; major brands are heavily marketed

-  Region contains tourist destinations and expat communities

WHAT IS THE PRODUCT? Beer emerged in Phase I as one of twenty “high growth, high potential” opportunities for Western Australia; beer is an alcoholic beverage consumed in a range of situations

5 Source: photo credit (Dollar Photo); Coriolis analysis

PRODUCT OVERVIEW Example; 2016

DOCUMENT STRUCTURE

What is the strategic situation in the market?

In this environment, what is the opportunity for Western Australia?

Who are the potential in-market partners?

Who are the key firms in Western Australia capable of delivering?

6

Western Australia can grow beer exports to Asia

7

-  Asian beer imports are rising, with import value growth being driven by increasing volume and increasing average FOB (free-on-board) prices

-  Asian & Middle Eastern beer imports predominantly come from Europe or other Asian countries; the USA, Mexico and India are a second tier

-  The Netherlands, Germany and Belgium stand out for driving beer import value growth in Asia & the Middle East

-  European beers have dominated target market beer import growth over the past five years

-  Average FOB price to target Asian markets vary by supplier, with the UK standing out for achieving a good premium

-  Beer goes to a wide number of the target markets in Asia; however, China, Singapore, Taiwan and Malaysia stand out

-  Long term growth in beer imports is coming from across multiple markets

-  China stands out for driving growth over the past five years

-  Average beer import prices vary by country, with parts of SE Asia paying slightly better prices

-  Imported beer consumption and aggregate beer imports appear partially driven by income per capita in East/South-East Asia and religion in the Middle East; a number of markets appear to have long-run penetration upside

-  Market share varies by country; European countries strong across most markets other than SE Asia

-  Western Australia has opportunities for beer export growth in East & South-East Asian markets

-  Data supports new high value, premium beer opportunities being initially launched in (1) Japan, (2) Singapore and (3) Hong Kong

-  As a “Straw Man” for discussion, we identify an export market roll-out plan

Asian beer imports are rising, with import value growth being driven by increasing volume and increasing average FOB (free-on-board) prices

0

200

400

600

800

1000

1200

1400

1600

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

8 * Compound Annual Growth Rate; Source: UN Comtrade database; Coriolis analysis and classifications

VOLUME L; m; 2004-2014

$-

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

AVERAGE PRICE PER LITRE US$; 2004-2014

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

200

4

200

5

200

6

200

7

200

8

200

9

2010

2011

2012

2013

2014

VALUE US$m; 2004-2014

CAGR* 9%

CAGR 4%

CAGR 14%

TOTAL IMPORTS TO ASIA/MIDDLE EAST TARGET REGION (24 COUNTRIES)

Asian & Middle Eastern beer imports predominantly come from Europe or other Asian countries; the USA, Mexico and India a second tier

9 NA/ME/CA = North Africa/Middle East/Central Asia; Note: data is as reported by sender(FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications

EXPORT VALUE BY SUPPLIER TO TARGET REGION US$m; FOB; 2014

N. A

merica

Australia

Europe

Other

E/SE Asia

China $93

$817 $613 $84 $6 $40

United Kingdom $66

Other Europe $123

Mexico $39

Belgium $134

Australia $6

Netherlands $281

Germany $212

USA $45

Singapore $160

Japan $48

South Korea $57

Other $8

India $31

Other E/SE Asia $109

Malaysia $147

TOTAL = US$1,561m

The Netherlands, Germany and Belgium stand out for driving beer import value growth in Asia & the Middle East

10 Note: data is as reported by sender(FOB), not receiver; Source: UN Comtrade database; Coriolis analysis and classifications

EXPORT VALUE BY SUPPLIER TO TARGET REGION US$m; FOB; 2004-2014

Other E/SE Asia

Malaysia

South Korea

Other

Singapore

Japan

2009 2008 2004 2010

Mexico

China

10y ABS

Germany

United Kingdom

2005

Other Europe

2007 2006 2011 2013

USA

2012 2014

India

Australia

Belgium

Netherlands

$180

$436

$126 +$33

+$89 $160

+$100

+$50

$152

+$29

+$34

+$95

$977

$60

$790

$80

$1,386

$1,561

$1,155

$54

$487

$581

$446

$100 $91

$677

$81

$710

$57 $23 $56 $52 $34

$17

$55 $47 $43 $41

$52 $30 $25 $32 $22

$48 $42

$35 $32

$43

$31

+$194

$15

+$204

$13

+$6

+$14 +$6

+$106

+$121

+$45

-$1

$66 $72 $80 $78

$17 $19

$93 $90 $16

$79

$71

$134

$21

$64

$101

$26

$31

$22 $25 $14

$22

$14 $15

$29

$43

$29 $26 $20 $32

$46

$31

$32

$90 $123

$50

$70

$36

$54

$24

$27

$17 $17

$66

$17

$6

$77

$9

$8

$110

$139

$82 $100

$8

$13

$8 $12

$9

$11

$15 $10

$130

$45

$56

$30

$38

$172

$212

$82

$121

$211

$226

$159

$191

$17 $21

$281

$18

$109

$47

$109

$108

$80 $71

$58 $67 $19

$29

$15 $15

$52

$80

$59 $65

$68

$6

$6

$4

$8

$7 $8

$6

$8

$105

$139

$118

$124

$2 $1

$147

$3

$39

$38

$37

$37

$32

$33

$37 $29

$27 $25

$26 $28

$27

$27

$31 $28

$27

$9

$14

$4

$7

$32 $31

$21

$26

$33

$43

$27

$32

$3 $4

$45

$2

CAGR 14%

European beers have dominated target market beer import growth over the past five years


FIVE YEAR EXPORT GROWTH MATRIX: CHANGE IN VALUE VS. RATE OF GROWTH VS. ABSOLUTE VALUE US$m; 2009 vs. 2014

$120 $100 $140 $180 $160 $80 $0 $-20 $20 $60 $40 -10%

30%

25%

35%

45%

40%

20%

0%

-5%

5%

15%

10%

Belgium

Malaysia

India

$50m

Netherlands

Germany

Other E/SE Asia

South Korea

Mexico

Japan

Australia

China

USA

United Kingdom

Other

Other Europe

Singapore

5y absolute change in value

5y CAGR

Bubble scale: US$m; 2014 A bubble this size =

Average FOB price to target Asian markets vary by supplier, with the UK standing out for achieving a good premium


AVERAGE EXPORT VALUE COST CURVE BY SUPPLIER US$/l; FOB; 2014

Australia

Japan

Belgium

Malaysia

Mexico

Singapore

Other E/SE Asia

USA

South Korea China

India

Other Europe

Netherlands Germany

Other

United K

ingdom

$0.91 $0.91

$1.01

$0.89

$0.63 $0.66

$1.05

$1.39

$1.38

$1.47

$2.41

$1.40

$1.04 $1.12

$1.15

$1.05

Average FOB

value

Volume imported by defined target market

Beer goes to a wide number of the target markets in Asia; however, China, Singapore, Taiwan and Malaysia stand out


IMPORT VALUE BY MARKET BY REGION US$m; FOB; 2014

Indian Sub NA/ME/CA East Asia SE Asia

Other $19

$165

Other $5

India $7

$900

Egypt $0

audi Arabia $0

$12

Israel $33

$484

Japan $86

Qatar $8

South Korea $111

Bahrain $15

Indonesia $40

Vietnam $36

Philippines $23

Thailand $49 China

$407

Singapore $190

Kuwait $0

Malaysia $144

Taiwan $175

United Arab Emirates $89

Hong Kong SAR $120

TOTAL = US$1,561m

Long term growth in beer imports is coming from across multiple markets


IMPORT VALUE BY MARKET BY REGION US$m; FOB; 2004-2014

Taiwan

Israel

2004

Thailand

2005

India

Bahrain

Saudi

2006

Qatar

2013 2012

Kuwait

Vietnam

Japan

Other ME

2014

Philippines

2009 2007 2008

South Korea

Indonesia

2010 2011

Hong Kong SAR

Egypt

Other Ind. Sub

China

Malaysia

Singapore

UAE

$77

$117

$1,155

$54

$103

$39

$69

$51

$15

$17

$104

$977

$14

$86

$53

$95

$15

$790

$95

$18

$86

$47

$36

$2

$23

$46

$55

$25 $28

$3

$38

$37

$46

$2

$47

$2

$1,386

$120

$49

$35

$54

$1,561

$23

$51

$35

$11

$73 $236

$70

$89

$9

$83

$63

$69

$487

$69

$72

$11

$142

$157

$126 $407

$150

$89

$8

$98

$446 $436

$175

$104

$70

$35

$94

$50 $44

$10

$710 $65

$30

$21

$677 $11

$40

$98

$72

$581

$111

$136

$10

$65

$94

$88

$81

$11

$58

$3

$1 $1

$1

$16

$7

$5

$17

$0 $3

$1 $0

$7

$1

$1

$1

$2

$1

$134

$152

$106

$0

$1

$0

$50

$194

$190

$62 $64

$54

$0

$1

$2

$99

$88

$110

$8

$10

$15

$18

$11

$12

$23

$21

$14

$14

$29

$20

$25

$27

$32

$13 $10

$33

$23 $3 $4

$5

$0

$0

$0

$6

$5

$5

$19

$19

$15

$19

$0

$0

$2 $2 $2

$34

$17 $21 $18

$0

$32

$30 $37

$26

$8

$22

$28

$17

$0

$0 $0

$23

$27

$25

$7

$4

$4

$7

$19 $22

$34

$31

$5 $48

$5

$6

$48

$42

$3 $4

$40

$5

$16

$171

$0 $0

$123

$144

$30

$0

$5 $11

$40

$0

$3

$32

$59

$64

$87

$51 $0

$0

$13

$42

$49

$9

$8

$0 $1

$3

$0

$22

$26

$26

$40

$31

$0

$0

$35

CAGR 14%


China stands out for driving growth over the past five years


FIVE YEAR IMPORT GROWTH MATRIX: CHANGE IN VOLUME VS. RATE OF GROWTH VS. ABSOLUTE VALUE US$m; l; 000; 2009 vs. 2014

40%

70%

150,000 100,000 0

60%

-50,000

50%

50,000 -100,000

0%

250,000 350,000

10%

300,000 200,000 -5%

20%

30%

Egypt

UAE

Thailand

Jordan

Japan Israel

Kuwait

South Korea Sri Lanka

$200m

Bahrain Indonesia

Hong Kong SAR

China

Lebanon

India

Saudi Arabia

Qatar

Vietnam

Singapore

Taiwan

Malaysia

Philippines

Pakistan

Oman

5y absolute change in volume

5y CAGR Shift to quality

Average beer import prices vary by country, with parts of SE Asia paying slightly better prices


AVERAGE IMPORT VALUE COST CURVE BY MARKET/REGION US$/l; l; FOB; 2014

Saudi

Qatar

Vietnam

China

Bahrain

Malaysia

Singapore

Om

an

Indonesia

Jordan

Pakistan

Taiw

an

Lebanon

Sri Lanka

UA

E

India

Hong K

ong SAR

South Korea

Thailand

Japan

Egypt

Israel

Philippines Kuw

ait

$1.07

$1.39

$1.53

$1.41

$0.98

$1.12

$1.23

$0.90

$0.58

$1.13

$1.21

$0.67

$0.92

$1.12

$1.41 $1.17

$2.64

$0.93

$0.90

$1.38

$0.76

$3.44

$1.16

$1.61

Volume imported

Average import

value

Imported beer consumption and aggregate beer imports appear partially driven by income per capita in East/South-East Asia and religion in the Middle East; a number of markets appear to have long-run penetration upside

17 Note: data is as reported by sender(FOB), not receiver; Source: UN Comtrade database; Wikipedia (GDP/capita); Coriolis analysis and classifications

MARKET SIZE DRIVERS: GDP PER CAPITA VS. IMPORTS PER CAPITA VS. MARKET SIZE L; US$; l;000; 2014

$20,000 $0 $60,000 $40,000 $10,000 $50,000 $30,000

30.0

10.0

5.0

25.0

20.0

15.0

35.0

0.0

Kuwait

Jordan

South Korea Malaysia

Taiwan

Oman

Lebanon

China

Sri Lanka

100,000

Bahrain

Hong Kong SAR

Japan

Israel Indonesia

Singapore

India Vietnam

Qatar

Saudi Arabia

Philippines

Thailand

Egypt Pakistan

UAE

GDP per capita

Imports per capita

Bubble scale: l; 000; 2014 A bubble this size=

Market share varies by country; European countries strong across most markets other than SE Asia

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Indonesia

Philippines

Sri Lanka

Malaysia

Thailand

Singapore

Hong K

ong SAR

Vietnam

South Korea

India

UA

E

Egypt

Japan

Taiw

an

Bahrain

Qatar

Om

an

Pakistan

Saudi Arabia

Israel

China

Jordan

Lebanon

Kuw

ait

China

South Korea

Japan

Singapore

Malaysia

Other E/SE Asia

India

Other

Other Europe

United Kingdom

Belgium

Germany

Netherlands

Mexico

USA

Australia


IMPORT VALUE MARKET SHARE BY MARKET BY KEY SUPPLIER % of value in US$m; FOB; 2014

Western Australia has opportunities for beer export growth in East & South-East Asian markets


AUSTRALIAN IMPORT VALUE MARKET VS. MARKET VALUE US$m; FOB; 2014

Singapore

Hong K

ong SAR

Om

an

Japan

Thailand

Indonesia

Saudi

Malaysia

South Korea

Lebanon Jordan

India

UA

E

China

Israel

Philippines

Egypt

Pakistan

Taiw

an

Bahrain

Vietnam

Sri Lanka

Kuw

ait

Qatar

0.0

%

0.0

%

0.0

%

0.0

% 0.0%

0.1%

0.1% 0.0

%

0.1%

0.2%

0.0

%

0.0

%

0.1%

1.1%

1.0%

0.0

%

0.1%

0.4

%

0.0

%

2.4%

0.6%

0.0

%

0.7%

Total value of imports

Australian market share


Data supports new high value, premium beer opportunities being initially launched in (1) Japan, (2) Singapore and (3) Hong Kong


WHERE TO FOCUS FOR NEW HIGH VALUE, PREMIUM PRODUCTS: AU SHARE VS. AVERAGE VALUE VS. MARKET SIZE % of value; US$; US$m; 2014

2.0% 1.5% 2.5%

$1.00

0.5% 0.0%

$2.00

1.0%

$1.50

$0.00

$0.50

Jordan Malaysia China

$100

India

Pakistan

Singapore

UAE

Oman

Indonesia

Sri Lanka

Vietnam

Kuwait Saudi

Bahrain Qatar Israel

Philippines

Taiwan

Egypt

South Korea

Thailand

Japan

Hong Kong SAR

AU share of total import value

Value Average FOB $/l

2014

1 2

3

As a “Straw Man” for discussion, we identify an export market roll-out plan

21

PRELIMINARY “STRAW MAN” DEVELOPMENT & ROLLOUT PLAN FOR BEER OPPORTUNITY Model; 2016

1 Export market launch in Japan

2 Export market launch in Singapore

3 Export market launch in Hong Kong

0 Product development and testing

-  High income, sophisticated market and consumers

-  Receptive to a wide range of source countries

-  AU already has a position in the market (2.4% import share)

DOCUMENT STRUCTURE





22

Western Australia is well-positioned to grow beer exports to Asia

23

IS THE MARKET DEVELOPED & COMPETITIVE?

-  The flow of beer from the farm through to the consumer is relatively straight forward and simple

-  Beer prices are competitive in Asia, with a premium for prestigious imported products

-  Asian markets have a much less developed Australian beer range and offer

-  “Leading indicator” Western markets strongly suggest depth of beer range in Asian markets will increase going forward

-  While Western markets vary their preference for lager or ale style, Asian markets show a marked bias for lager or lighter European style beers

-  Beer appears to support a very diversified market; while global brands exist, markets have room for own national brands

-  WHAT IS WA CAPABLE OF DELIVERING?

-  A wide range of premium, value-adding product attributes emerged from our cross-country retailer survey

-  Western Australian beer producers need to continue to move forward and improve through new products and positioning

-  Multiple potential positions exist to develop a premium beer offer for Asia

-  Products from other processors in other markets demonstrate what is possible in terms of developing a premium Western Australian beer offer

-  There are a wide range of potential product positions or claims available for a premium beer product from Western Australia targeting Asia

-  As a “Straw Man” for discussion, we identify an opportunity for a high value, premium beer product with select characteristics for export market launch

HOW IS THE MARKET STRUCTURED? The flow of beer from the farm through to the consumer is relatively straight forward and simple

24 Source: Coriolis

SIMPLIFIED MODEL OF SUPPLY CHAIN: BEER Model; 2016

Retailers

Foodservice & Hospitality

Exports

Wholesalers

Distributor(s) (multi-layered in large markets)

Agent/Broker/ Distributor

Logistics Providers

(Airfreight, Seafreight, Trucking)

WA Brewing Company

Other Australian Brewing Companies

WA Grain Farmer

International Brewing Companies

WA Hops Farmer

WHO IS THE COMPETITION? PRICING Beer prices are competitive in Asia, with a premium for prestigious imported products

$2.72 $3.28 $3.33

$6.12

$8.36

$10.75

$5.88 $6.10 $6.47

$6.77

$7.48

$8.41

$10.95

$3.87 $4.08 $4.52

$4.97

$5.81 $5.87 $6.13

$6.42 $6.78

$7.12 $7.61 $7.69

Singha 6 cans 330

ml x 6

Heineken 6 cans

320m

l x 6

Asahi 6 cans 330

ml x 6

Budweiser bottle 355m

l

Coopers Pale A

le bottle 375m

l

Stella Artois 330

ml

Carlsberg 6 cans

323ml x 6

Singha 6 cans 330

ml x 6

Budweiser 6 cans

355ml x 6

Heineken 6 cans

330m

l x 6

Asahi 6 cans 350

ml x 6

Cow

n Lager 375m

l x 6

Little Creatures Pale

Ale 330

ml x 6

Stella Artois 6 Bottles

330m

l x 6

Corona 6 bottles

355ml x 6

Carlsberg 12 cans

330m

l x 12

Tsing T

ao 12 cans 330

ml x 12

Heineken 12 cans

330m

l x 12

Budweiser 12 cans

330m

l x 12

Asahi 12 cans 330

ml x 12

Heineken 6 bottles

330m

l x 6

Corona 6 bottles

355ml x 6

Asahi 6 bottles 330

ml x 6

Little Creatures Pale

Ale 330

ml x 6

Coopers Pale A

le 375m

l

25 Source: Coriolis from store checks

SHELF PRICE PER LITRE ACROSS SELECT SE ASIAN MARKETS AND AUSTRALIA: SELECT BEER PRODUCTS US$/l; Feb 2016

SELECT SE ASIAN RETAILERS AUSTRALIA

AU

Hong Kong Thailand Singapore

WHAT IS ON THE SHELF? RANGE IN MARKET Asian markets have a much less developed Australian beer range and offer

26 Source: Coriolis from store checks; photo credit (fair use/fair dealing; low resolution; complete product/brand for illustrative purposes); Coriolis analysis

EXAMPLE: ACTUAL AUSTRALIAN BEER RANGE ON SHELF Presence; actual; Feb 2016

Total sku = 5/178 Total sku = 0/117 Total sku = 4/60 Total sku = 0/61 Total sku = 2/82 Total sku = 0/93

IS THE MARKET DEVELOPED & COMPETITIVE? RANGE “Leading indicator” Western markets strongly suggest depth of beer range in Asian markets will increase going forward

880

702

499

279 253 241

178

117 93 82 61 60

Wegmans (NY)

Dan Murphy's (AU)

Walmart (US)

Tesco (UK)

Sainsbury (UK)

Waitrose (UK)

Wellcome (HK)

Park'N Shop (HK)

Carrefour (CN)

Tesco (TH)

Fairprice (SG)

Cold Storage (SG)


NUMBER OF LINES ON SHELF: SELECT RETAILERS FROM ACROSS MULTIPLE MARKETS SKU; actual; Feb 2016

SE Asia Anglo-American

Average 98.5 sku/store

Average 475.7 sku/store

4.8x

IS THE MARKET DEVELOPED & COMPETITIVE? SEGMENTATION While Western markets vary their preference for lager or ale style, Asian markets show a marked bias for lager or lighter European style beers

182

341 370

117 122 90 141

97 78 74 49 54

698 361

129

162 131 151 37

20 15 8

12 6

Wegmans (NY)

Dan Murphy's (AU)

Walmart (US)

Tesco (UK)

Sainsbury (UK)

Waitrose (UK)

Wellcome (HK)

Park'N Shop (HK)

Carrefour (CN)

Tesco (TH)

Fairprice (SG)

Cold Storage (SG)

Ale/Stout

Lager


NUMBER OF LINES ON SHELF BY BEER TYPE: SELECT RETAILERS FROM ACROSS MULTIPLE MARKETS SKU; actual; Jan 2016

SE Asia Anglo-American

IS THE MARKET DEVELOPED & COMPETITIVE? SEGMENTATION Beer appears to support a very diversified market; while global brands exist, markets have room for own national brands


MARKET SHARE BY BRAND: SELECT RETAILERS FROM ACROSS MULTIPLE MARKETS % of SKU; actual; Feb 2016

Miller 18%

Budweiser 13%

Coors 12%

Bud Light 9%

Michelob 6%

Heineken 5% Samuel Adams

4%

Other 33%

Walmart (US) Sainsbury (UK) Dan Murphy’s (AU)

Chang 8%

Heineken 9%

San Miguel 9%

Singha 9%

Paulaner 7%

Leo 6%

Cheers 6%

Fullers 5%

Tiger 5%

Asahi 4%

Budweiser 2%

Coopers 2%

Other 28%

Tesco (TH) Tsing Tao

8% San Miguel 7%

Asahi 4%

Blue Girl 4%

Carlsberg 4%

Heineken 4%

Guinness 4%

Kronenbourg 4%

Kirin 3%

Skol 3% Tiger

3%

Other 52%

Park ‘N Shop (HK)

Tiger 13%

Carlsberg 11%

Heineken 8%

Anchor 7%

Barons 7% Skol

5%

Other 49%

Fairprice (SG)

Fullers 6%

Badger 6%

Greene King 6%

Foster's 5%

Becks 4%

Stella Artois 5%

Budweiser 4%

Guinness 4% Peroni

3%

Other 57%

Coopers 3%

Little Creatures

2%

4 Pines 2%

Carlton 2%

Mountain Goat 2%

XXXX 2%

Sierra Nevada 2% Gage Roads

1% MOA 1%

Other 83%

IS THE MARKET DEVELOPED & COMPETITIVE? PRODUCT ATTRIBUTES A wide range of premium, value-adding product attributes emerged from our cross-country retailer survey

64%

56%

38%

34%

22%

21%

17%

16%

16%

12%

12%

7%

7%

7%

6%

Country

Year established

Premium

Original

Genuine

Quality

Great

Fresh

Cold filtered

Natural

Authentic

No preservatives

Expertly brewed

Finest ingredients

Imported


PERCENT OF OBSERVED PRODUCTS ON SHELF MAKING THE CLAIM ON PACK % of SKU; N=544; Feb 2016

-  This provide very clear instruction on what product attributes are succeeding the most across markets

-  Western Australian beer manufacturers looking to grow value and share should focus in these areas

-  Specifying country stands out, with ~2/3 observed product SKU having country of origin on front of label

-  Survey universe is all products in all listed retailers (across multiple countries)

TAKEAWAYS

WHAT IS WA CAPABLE OF DELIVERING? STRATEGIC DIRECTION Western Australian beer producers need to continue to move forward and improve through new products

31

SUGGESTED STRATEGIC DIRECTION: WESTERN AUSTRALIAN BEER Model; 2016

Local beer Locally produced

international brand

Mass produced imported beer

Premium local ingredients

Renowned beer region

Local suppliers are here

AU suppliers are here in Asia

High growth, high potential opportunities

are here

USA & UK suppliers are here

Prestigious breweries

Craft lager styles

WHAT IS WA CAPABLE OF DELIVERING? CLAIMS Multiple potential positions exist to develop a premium beer offer for Asia

32 Source: Coriolis; photo credit (Dollar Photo and Southern Forests Food Council Inc.)

IDENTIFIED POTENTIAL PREMIUM POSITIONS Model; 2016

Organic Premium ingredients Variety of sizes Preservative free

Identified source region Regional specialities Home kegs Source of B vitamins

Specialty variety of hops & malts Unique WA flavours Recyclable packaging 99.9% sugar free

Track & trace Beer tourism Increased bone density

Prevention of dementia

Home delivery

HEALTH PROVENANCE INDULGENCE CONVENIENCE

Water purity

Traditional styles

Traditional methods

Prevention of coronary disease

Aid to digestive system

Anti-ageing properties

Boosts immune system

Attractive packaging

Gift packaging

WHAT IS WA CAPABLE OF DELIVERING? GLOBAL PEERS Products from other processors in other markets demonstrate what is possible in terms of developing a premium Western Australian beer offer

33 Source: photo credit (fair use/fair dealing; low resolution; complete product/brand for illustrative purposes); Coriolis analysis

EXAMPLES OF PREMIUM PRODUCTS FROM OTHER MARKETS Select; 2016

Numbered styles Gift box Lager style Organic

Descriptive names Traditional beer glasses King of beers Locally sourced ingredients

Tasting notes on front Tasting notes Striking packaging Traditional methods

Clean, simple label Brewery backstory Recloseable

Lighter style beers Traditional European style

Tourist location

Keepsake box

Excellent water quality

Attractive bottles

Provenance

Delicate, clean, crisp

Aluminium

Retro limited edition

WHAT IS A POTENTIAL WA OFFER? There are a wide range of potential product positions or claims available for a premium beer product from Western Australia targeting Asia

34 Source: Coriolis; photo credit (Dollar Photo and Southern Forests Food Council Inc.)

HYPOTHETICAL EXAMPLE OF POTENTIAL PREMIUM PRODUCT FROM WA Model; 2016

Preservative free 99.9% sugar free

From West Australia

Brewery backstory WA barley

Traditional methods

Home delivery Beer

Source of B vitamins

Attractive packaging

HEALTH

PROVENANCE

INDULGENCE

CONVENIENCE

WHAT IS THE IDENTIFIED OPPORTUNITY? As a “Straw Man” for discussion, we identify an opportunity for a high value, premium beer product with select characteristics for export market launch

35 Source: photo credit (fair use/fair dealing; low resolution; complete product/brand for illustrative purposes); Coriolis analysis

PRELIMINARY “STRAW MAN” DEVELOPMENT & ROLLOUT PLAN FOR BEER OPPORTUNITY Model; 2016

CURRENT AU POSITIONING IN ASIA

IDENTIFIED HIGH GROWTH, HIGH VALUE OPPORTUNITY FOR WA

Preservative free

99.9% sugar free

From West Australia

Brewery backstory

WA barley Traditional methods

Home delivery

Beer tourism From

Australia Mainstream beer

POTENTIAL FUTURE PRODUCT LINE EXTENSION

Premium ingredients

WA grown hops

WA flavours

Lager style

DOCUMENT STRUCTURE





36

FOCUS MARKET – 1 – JAPAN Japan has a robust and well-developed food retailing and foodservice sector

$331

$232

$310

$93

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Turnover Purchases

37 Source: Coriolis from a wide range of sources

TURNOVER & PURCHASES US$b; 2014

ESTIMATED WHOLESALE FOOD & FMCG PURCHASES US$b; 2014

Foodservice Retail

Convenience $112.9

$93.0

Small grocers $27.5

Specialists $22.5

Foodservice $93.0

Other grocery $16.6

$287.1

Supermarkets $102.3

Online $5.3

Foodservice

Retail 711,000 restaurants, bars & clubs, 87,927 hotels/motels/etc., vending machines,

institutions (schools, hospitals, airline

caterers, prisons, etc.)

0.0%

2.4%

Retail

Foodservice

TURNOVER GROWTH RATE % Y-O-Y; HK$; 2013v2014

FOCUS MARKET – 1 – JAPAN Eight potential in-market partners are identified for Western Australian firms in Japan


POTENTIAL IN-MARKET PARTNERS – JAPAN 2015 or as available

Firm AEON Retail Seven & I Holdings Uny Group Holdings Izumi Co. Ltd. Life Arcs Lawson Family Mart

Ownership Japan; listed Japan; listed Japan; listed Japan; listed Japan; listed Japan Japan; listed Japan; listed

Website www.aeon.info www.maxvalu.co.jp www.daiei.co.jp www.ministop.co.jp

www.7andi.com www.sej.co.jp www.itoyokado.co.jp

www.unygroup-hds.com www.uny.co.jp www.circleksunkus.jp

www.izumi.co.jp

www.lifecorp.jp www.arcs-g.co.jp www.lawson.jp

www.family.co.jp

Annual sales Total/Food

US$61.2b US$16.8b

US$49.1b US$17.5b

US$9.0b US$6.7b

US$4.7b US$2.1b

US$4.7b US$3.8b

US$4b US$4b

US$17.4b US$14b

Food store formats

Hypermarket Supermarket Department stores Convenience (3.4% share) Pharmacy/HBC

Convenience 17,900 (41% share) Supermarkets 185 Department stores

Supermarket Convenience (9.6% share) HBC Foodservice

Supermarkets Hypermarkets Malls

Supermarket Convenience 12,254 (20.5% share)

Convenience 9,975 (19% share)

# of stores 1,882 18,262 226 102 239 290 12,254 9,975 (JP) 16,970 (Global)

Store fascia

FOCUS MARKET – 2 – SINGAPORE Singapore has a robust and well-developed food retailing and foodservice sector

$5.6

$3.9

$6.3

$1.9

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Turnover Purchases




Foodservice Retail

$1.9 $3.9

Online $0.1

Traditional grocery $0.3

Supermarket $2.2

Convenience $0.4

Wet markets, etc. $0.7

Foodservice $1.9

Department stores $0.3

Petrol stations $0.1

Foodservice

Retail 6,500 restaurants,

hawker stalls, hotels, vending machines,

institutions (schools, hospitals, airline caterers,

prisons, etc.)

3.0%

5.0%

Retail

Foodservice


FOCUS MARKET – 2 – SINGAPORE Four potential in-market partners are identified for Western Australian firms in Singapore

Firm NTUC Fairprice Cold Storage Sheng Siong Prime Supermarkets

Ownership National Trade Union Council (Singapore)

Dairy Farm International (Hong Kong)

Listed; Singapore Private; Singapore

Website www.fairprice.com.sg www.ntuc.org.sg

www.coldstorage.com.sg www.dairyfarmgroup.com

www.shengsiong.com.sg www.allforyou.sg

www.primesupermarket.com

Annual sales US$1.83b US$1.55b US$0.55b US$0.2b

Store formats Supermarket Hypermarket Convenience (Cheers; 139) Online

Supermarket (Cold Storage, Marketplace) Hypermarket Convenience (7-Eleven; 502) Online

Supermarkets Online

Supermarkets

# of stores 285 848 38 19

Store fascia


POTENTIAL IN-MARKET PARTNERS – SINGAPORE 2015 or as available

FOCUS MARKET – 3 – HONG KONG Hong Kong has a robust and well-developed food retailing and foodservice sector

$11.5

$8.0

$12.8

$3.9

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Turnover Purchases




Retail Foodservice

$3.9 $8.0

Foodservice $3.9

CRA $0.3 CRE

$0.2

Wellcome $1.2

AEON $0.6

Drug stores $0.6

Wet markets, etc. $3.0

ParknShop $1.5

Other retail $0.6

Foodservice

Retail 14,000+ restaurants 1,000+ bars & clubs

1,050+ hotels Vending machines

Institutions (1,088 schools, 42 hospitals, 3 main airline

caterers, prisons, etc.)

6.7%

3.5%

Retail

Foodservice


FOCUS MARKET – 3 – HONG KONG Seven potential in-market partners are identified for Western Australian firms in Hong Kong

Firm Wellcome Park’N Shop CR Vanguard Dah Chong Hong 759 Stores AEON Stores Convenience Retail Asia

Ownership Dairy Farm International/Jardine Matheson

A.S. Watson/ Hutchison Whampoa

CRE/China Resources (SOE; China)

Dah Chong Hong/ CITIC Pacific/CITIC (SOE; China)

Private; Hong Kong (Lam Wai Chun)

AEON (Japan) Fung Group

Website www.wellcome.com.hk www.parknshop.com www.crvanguard.com.hk www.crc.com.cn

www.dch.com.hk

www.759store.com www.aeonstores.com.hk www.aeon.info

www.circlek.hk/en www.cr-asia.com

Annual sales (in HK)

$2.2b+ $2.8b ~$0.8b (food/FMCG) N/A N/A $0.8b $0.4b

Food store formats

Supermarkets 318 Convenience 921 Health & Beauty 369 Restaurants 676

Supermarkets 260+ Convenience

Supermarkets Convenience

Supermarkets Grocery 247+ Dept. stores (w/food) 8 Supermarkets 5

Convenience 600+ Bakery

# of stores Wellcome 280+ Marketplace 31 7-Eleven 900+ Olivers the Delicatessen ThreeSixty

ParknShop 175 PnS Superstore 50+ PnS Taste 10 PnS Fusion 14

CR Vanguard 100+ VanGo 79

DCH Food Mart 80+ DCH Food Mart Deluxe

759 Stores 247+ AEON 13 Circle K Saint Honore Cake

Store fascia


POTENTIAL IN-MARKET PARTNERS – HONG KONG 2015 or as available

DOCUMENT STRUCTURE





43

IDENTIFIED WA COMPANIES

GAGE ROADS BREWING CO.

LITTLE CREATURES BREWING

ADDRESS: 14 Absolon Street, Palmyra, WA 6157 ADDRESS: 40 Mews Rd, Fremantle, WA 6160

PHONE: 08 9314 0002 PHONE: 03 9188 8000

WEBSITE: www.gageroads.com.au www.australianqualitybeverages.com.au

WEBSITE: www.littlecreatures.com.au

44 Sources: Coriolis from a wide range of sources

MATSO’S BROOME BREWERY

NAIL BREWING

ADDRESS: 60 Hamersley Street, Broome, WA 6725 ADDRESS: 301 Collier Rd, Bassendean, WA 6054

PHONE: 08 9192 7751 PHONE: 0413 872 337

WEBSITE: www.matsos.com.au WEBSITE: www.nailbrewing.com

FERAL BREWING

ADDRESS: 152 Haddrill Rd, Baskerville, WA 6056

PHONE: 08 9296 4657

WEBSITE: www.feralbrewing.com.au

Address

252 Eagle Bay Rd, Eagle Bay, WA 6281 08 9755 3554

4259 Caves Rd, Wilyabrup WA 6280 08 9755 5555

72a McCoy St, Myaree, Perth, WA 6154 08 9317 2940

Puzey Rd, Wilyabrup WA 6285 08 9755 6300

Osmington Road, Margaret River, WA 6285 08 9758 8177

10250 W Swan Rd, Henley Brook, WA 6055 08 9296 5588

Lot 3 Hemsley Rd., Yallingup, WA 6282 08 9755 2848

AUSTRALIA Coriolis Australia Pty Ltd

PO Box 5831 St Georges Terrace

Perth, WA 6831 Australia

+61 8 9468 4691

NEW ZEALAND Coriolis (New Zealand) Limited

PO Box 90-509 Victoria Street West

Auckland, 1142 New Zealand

+64 9 623 1848

www.coriolisresearch.com

Coriolis is the leading Australasian management consulting firm specialising in the wider food value chain. We work on projects in agriculture, food and beverages, consumer packaged goods, retailing & foodservice. In other words, things you put in your mouth and places that sell them. WHERE WE WORK We focus on the Asia Pacific region, but look at problems with a global point-of-view. We have strong understanding of, and experience in, markets and systems in Australia, China, Japan, Malaysia, New Zealand, Singapore, South Korea, Thailand, the United Kingdom and the U.S. We regularly conduct international market evaluations and benchmarking. WHAT WE DO We help our clients assemble the facts needed to guide their big decisions. We develop practical, fact-based insights grounded in the real world that guide our clients decisions and actions. We make practical recommendations. We work with clients to make change happen. We assume leadership positions to implement change as necessary. HOW WE DO IT All of our team have worked across one-or-more parts of the wider food value chain, from farm-to-plate. As a result, our recommendations are grounded in the real world. Our style is practical and down-to-earth. We try to put ourselves in our clients’ shoes and focus on actions. We listen hard, but we are suspicious of the consensus. We provide an external, objective perspective. We are happy to link our fees to results. WHO WE WORK WITH We only work with a select group of clients we trust. We build long term relationships with our clients and more than 80% of our work comes from existing clients. Our clients trust our experience, advice and integrity.

Coriolis advises clients on growth strategy, mergers and acquisitions, operational improvement and organisational change. Typical assignments for clients include… FIRM STRATEGY & OPERATIONS We help clients develop their own strategy for growing sales and profits. We have a strong bias towards growth driven by new products, new channels and new markets. MARKET ENTRY We help clients identify which countries are the most attractive – from a consumer, a competition and a channel point-of-view. Following this we assist in developing a plan for market entry and growth. VALUE CREATION We help clients create value through revenue growth and cost reduction. TARGET IDENTIFICATION We help clients identify high potential acquisition targets by profiling industries, screening companies and devising a plan to approach targets. DUE DILIGENCE We help organisations make better decisions by performing consumer and market-focused due diligence and assessing performance improvement opportunities. EXPERT WITNESS We provide expert witness support to clients in legal cases and insurance claims. We assist with applications under competition/fair trade laws and regulations.

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