U.S. Beef Experience in International MarketsAHDB Conference

December 8, 2016

Paul Clayton

U.S. Meat Export Federation

Value of International Markets

• Beef (2015)– $6.3 billion in

value– 1.07 million metric

tons – 12-14% of total

U.S. beef production exported

– Export value equal to ~$300 per head

0

2,000

4,000

6,000

8,000

10,000

12,000

1950 2013 2025 2050 2100

World United States

000,000

0%10%20%30%40%50%60%70%

10.9 Billion

Global Middle Class in 2030

USDA statistics compiled by USMEF for August 2014(All totals include muscle cuts and variety meat)Source: United Nations, Department of Economic & Social Affairs, Population Division (2013)Source: OECD Development Center, 2010

96% of the World Population Lives out of the USGlobal Middle Class will have 80% of the buying power

U.S. Per Capita Disappearance

0

20

40

60

80

100

120

Poultry Beef Pork

Pounds per capita of meat

2013 2014 2015 2016F 2017F

+1.7 lbs. in 2016

+0.2 lbs.

Source: USDA’s November WASDE

+1.5 lbs.

The U.S. as an Importer of Beef

Source: USDA/FAS and USMEF estimates

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

U.S. Imports of Chilled/Frozen Beef

Others

Uruguay

Mexico

Canada

New Zealand

Australia

Over 100 million ground beef servings are consumed per day in the US.

Beef Competition

Changes in Shipping

North East Passage Panama Canal Silk Road

West Coast Port SlowdownCarrier Alliances

Source: GC Smith, ILC, 2013

Observations of Global Consumers compared to Americans

• Shop every day

• Use the internet more

• Eat smaller portions

• Different eating utensils, preparation differences

• Quality and value perceptions may be different; marbling vs. leanness

VS.

Getting Food to Consumers –Purchasing

• Retail

– Wet markets

– Local Grocery

– Supermarket

– Big Box

– Specialty – Gourmet, Deli

• Food Service

– Restaurants

– Pick-up and Delivery

– QSR (Drive Through)

– Coffee Shops

Alibaba.com• Others Using This Platform

• Unilever• Costco• Neiman Marcus• Saks 5th Ave• Ann Taylor

• 2014 $15 Billion US/China • 2020 $291 Billion US/China

On-line Food Service UBER - Deliveries

Yelp Virtual Storefront for Restaurants

Retail Delivery/Pick-up

Fat is Good?? Sugar is Bad!!

• Are the US Dietary Guidelines Correct?

– Gary Taubes: “Why We Get Fat”

– Nina Teicholz: “Big Fat Surprise”

• US Legislation on High Sugar Beverages

US Production

Sacred to the US

High Quality U.S. Beef

Probability of a Positive Eating Experience

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Prime Ch°/Ch+ Choice- Select Standard

Emerson, Tatum, Belk and Woerner. 2011. Relationship of USDA Camera-Based Quality Grades to

Beef Sensory Attributes. Colorado State University.

Flavor Development

Maillard Reaction- Browning of surface- Reaction of sugars

and proteins with heat

- Creates roasted, browned, grilled flavor

Lipid Breakdown- Produce volatile odor

compounds (both positive and negative)

- Degree of saturation of fatty acid plays role in flavor

- Buttery/Beef Fat Flavor

High Quality Beef Markets

• S. Korea – Honwoo

• China – Snow Dragon Beef

• Argentina

• Russia: Miratorg,

– Angus Registrations

• Great Britain

• Japan - Wagyu

• Australia - Wagyu

• Mexico

“Perhaps more than ever before, consumers want to know about what's in their meat and poultry, how it was raised and where it came from,” “This need to know taps a breadth of concerns related to food healthfulness and sustainable practices." Meat, Poultry and Seafood: Restaurant Trends and Opportunities 2016

Consumers are looking for adjectives: natural, free-range, hormone free, antibiotic free and yes, sustainably produced.Dr. David Hughes, Imperial College, London 2016

Heavier Carcass Weights

321kg 349kg

405kg349kg

329kg 337kg370kg 379kg

Beef Alternative Merchandizing

US Beef Value in Foreign Markets

Market Access Restrictions

Limited/No Access to 4.3 Billion out of the total 4.5 Billion in the most populous countries (excluding the

U.S.)

China – 1.37 B

India – 1.28 B

EU – 503 M

Bangladesh – 161 MPakistan – 189 M

Russia – 144 M

Nigeria – 182 M Indonesia – 258 M

Brazil – 208 M

Egypt – 88 M Saudi Arabia – 32 MMalaysia – 31 M

SPS Market Access Issues

Hormones

• EU, Russia, China, Thailand, Hong Kong

• Codex vs. FDA vs. Precautionary Principle

Beta Agonists

• EU, Russia, China, Thailand, Hong Kong

• AMS Never Fed Beta Agonist PVP

• Non-Use vs No-ResiduePRT’s

• EU, Singapore, Japan

• Food Additive vs. Processing Aid

Beef Safety / Antibiotic Resistance

Monitoring Food Borne Illness

FS

IS D

irective

7102.1

~150 Japan

20

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gapore

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pean U

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1

THE FAO ACTION PLAN ON

ANTIMICROBIAL

RESISTANCE2016-2020

U.S. Domestic and Import Testing Import testing standards mirror our risk-based

regulations regarding adulterants Listeria monocytogenes

RTE meats

E. coli O157:H7, O26, O45, O103, O111, O121, O145 (STEC) Raw, non-intact beef and non-intact components, e.g. trim,

ground or mechanically tenderized

New Rule: processors will need to prove use of primals and subprimals. If use is unknown or determined to be ground beef or mechanically tenderized they are subject to testing

USDA FSIS Procedures

Guidelines : BIFSCo Resources https://www.bifsco.org/resources.aspx

International Product Testing Export markets are moving to pathogen specific testing for raw,

intact products

E. coli O157, STECs, Listeria monocytogenes, Staphylococcus aureus, Salmonella

Non risk-based pathogen testing

No differentiation between intact and non-intact (or components)

No differentiation between raw and RTE

No differentiation between species

Retail Market Testing

Animal Welfare

• 5 Freedoms

• OIE Code– ISO Technical Specification

• Most Markets Have No Specific Requirements– Private Standards

Private Standards: GFSI, Animal Welfare, Sustainability

QSRInternational

Units Domestic

Units Total Units

McDonalds 18,710 14,259 32,969

KFC 11,798 4,270 16,068

Subway 10,109 27,103 37,212

Pizza Hut 5,890 7,822 13,712

Starbucks 5,757 7,559 13,316

Burger King 4,998 7,126 12,124

Dominos 4,422 5,200 9,622

Dunkin Donut 3,005 8,431 11,436

Dairy Queen 802 4,511 5,313

Papa Johns 755 3,388 4,143

Source: Forbes 2015

Retailer Headquarters

Number of Countries of Operation Revenue

Walmart USA 27 $469.1BTesco England 12 $101.2BCostco USA 8 $99.1BCarrefour France 30+ $98.7B

Kroger USA 2+ $96.6BLidl Germany 20 $87.2B

Metro Germany 31 $85.8B

ALDI Germany 18 $73.0B

Target USA 2 $71.9BAEON Japan 10 $63.1B

Source: Listovative 2014, 2016

Thank You!