The Changing Korean Beef Market

Korea is currently Australia’s third largest beef export market (by volume) but that trade started from humble beginnings.
calendar icon 23 September 2012
clock icon 3 minute read

In the mid-1970s Australia’s beef trade to Korea consisted of limited shipments of frozen beef quarters. Now, Australian beef makes up about 80 per cent of all chilled beef imports in Korea.

In the 1990s Australian beef was perceived by consumers as low in quality and price. Now, Korean consumers associate Australian beef with ‘clean and safe’ and ‘quality’.

Two decades ago Australian beef was channelled into low-value market segments including catering, manufacturing and the military. Today Australian red meat is sold through a variety of channels including hypermarkets, department stores, online, fast food, barbecue and buffet franchises, as well as fine dining.

What’s triggered this transformation?

Two key events have transformed Australia’s beef trade to Korea: the liberalisation of the market and the incidence of BSE in the US. In 2001 the Korean market was liberalised, moving the market from an import quota system to a 40 per cent tariff.

With the volumes of Australian beef no longer limited by a quota, the Australian industry raised the awareness of Australian beef and set about reversing the unfounded perceptions of its low quality.

In 2003 Korea banned US beef after BSE was detected in the US. Just a year earlier, the Australian country- of-origin logo – Hoju Chungjung Woo – meaning ‘Australian beef, clean and safe’ was launched.

This tagline proved perfect given increased consumer attention towards food safety. It provided Australian exporters and importers with an opportunity to reinforce product integrity and develop loyal relationships across the supply chain and educate the market about Australian beef’s credentials.

While US beef was absent from the market, Australian beef maintained a majority market share of the imported market and has since maintained this, even after US beef started flowing back into the market in mid-2009.

What’s the market like now?

The over arching ‘clean and safe’ message from Australia continues to be a highly relevant message for Korean consumers, and is a solid platform for Australian companies to introduce their individual beef brands.

An important growth area for Australia over the years has been Korea’s chilled beef market – mainly driven by the rapid expansion of fresh produce offerings in retail stores.

From 2002 to 2011, Korea opened 223 hypermarkets, all offering chilled Australian beef products. The global economic slowdown is currently affecting consumer confidence, subduing retail demand but igniting demand for ‘ready-made’ and take-out food in the foodservice sector.

MLA's 2012 mid-year cattle industry projections predict exports to Korea are down and forecast to continue to decrease next year due to subdued demand, local production and aggressive US moves in the market.

The giant US beef industry has some distinct advantages over Australia including an ability to ship large volumes of a prized Korean cut – frozen short ribs – and a hefty marketing budget. US beef is also aided by a preferential tariff - under the Korea-United States Free Trade Agreement, the 40 per cent tariff on beef will reduce to zero over 15 years.

Where do the opportunities lie for Australian beef?

Besides Australia’s strong beef presence and individual branding in retail, Korea’s vibrant foodservice scene also continues to offer opportunities for Australian companies. Growth in this sector is forecast to expand by 79 per cent between 2009 and 2016, valued at $113 billion by 2016.

Korean sources have forecast that growth will come from expansion in fine dining and casual dining chains that require beef products and need points of differentiation in this highly competitive market.

September 2012

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