According to Meat & Livestock Australia’s (MLA) new report, The Korean beef market: Insights and prospects from an Australian perspective, Australian exports to Korea hit a record 180,000 tonnes shipped weight in 2016, worth A$1.36 billion. This makes Korea Australia’s third most valuable beef export market.
However, the report does predict choppier waters in the short term, with Australian cattle herds predicted to contract this year and US production set to grow.
Long-term outlook for Australian beef exports to Korea is much more positive, underpinned by consumption growth, limited local production, and tariff and quota free access by 2029.
Tim Ryan, MLA global market analyst who co-authored the report with fellow analyst Adam Cheetham, said while a number of short-term factors would impact the Korean imported beef market in 2017, the long-term prospects for Australian beef exports to Korea were positive.
“The report closely examines long-term macro drivers, but there have been a number of factors, including new anti-graft legislation, the impeachment of President Park Guen-hye, concerns around import financing and job market uncertainty, that are impacting the Korean imported beef market in 2017,” said Ryan.
“Combined with those factors, Australian beef production is forecast to contract again in 2017, when at the same time US production and competition is on the rise, meaning Australia may not be able to grow its share of the imported beef market in Korea in the short term.”
He added that domestic supply in Korea is about to enter a growth period.
“The Korean Hanwoo beef herd has recently recovered from the bottom of a cyclical trough, registering the first year-on-year growth since 2013. Local beef production is expected to peak at almost 355,000 tonnes cwt by 2026, before receding towards 2030,” said Ryan.
“Underpinned by economic growth and tariff reductions on imported product, per capita beef consumption is forecast to grow from 15.5kg carcase weight equivalent (cwe) in 2016 to 17.2kg cwe in 2030.
“If Australia is able to defend existing market share, this will place beef exports to Korea at 180,000-200,000 tonnes shipped weight over the next decade but with prospects of 230,000 tonnes by 2030 – all of which would still exceed the record 2016 volume.”
To help maintain its market share and offset pressure from US beef in Korea, MLA has been working with exporters, distributors and Korean retailers to grow sales of Australian beef through a series of ‘True Aussie’ promotional campaigns.
MLA’s international business manager for Japan and Korea, Andrew Cox, said the campaigns included working closely with Korean retailers, Homeplus and E-Mart Traders.
“Homeplus has 142 stores and is a loyal customer of Australian beef, with sales doubling over the past year,” he said. “To formalise the cooperative relationship, MLA and Homeplus signed a new memorandum of understanding in April, with both parties making a commitment to supporting each other to grow sales.”
MLA also facilitated a ‘True Aussie’ beef spring promotion event at all 11 stores of E-Mart Traders in April and May.
“E-Mart Traders offered 13 cuts during the promotion period, including steaks such as sirloin, tenderloin and striploin as well as selections for grilling and braising,” added Cox. “Sales of the 13 promotional Australian beef cuts reached A$3.7 million, up by 500% above regular sales.
“MLA has also recently activated new ‘True Aussie’ beef promotions at other large Korean retailers including E-Mart supermarkets, LotteMart and Lotte Vic Market.”