LMC Report: Third Country Market Potential- China

NORTHERN IRELAND, UK - Anyone attending the Anuga food fair is reminded in no uncertain terms that in the context of global red meat production / consumption, the UK and Irish markets are small fish in a big pond.
calendar icon 20 October 2011
clock icon 3 minute read

Anuga is a huge event and is almost like a microcosm of the entire global market for food, which demonstrates the sheer scale and complexity of the international market.

Among the issues explored by LMC representatives at Anuga was the importance of achieving export certificates to lucrative third country markets such as China and Russia where there are reportedly significant opportunities for fifth quarter sales.

LMC currently supports the work of the UK Export Certification Partnership in gaining access to new markets and market analysis shows that this work is very worthwhile.

The UK market may remain the bread and butter of the NI beef sector, but recent analysis shows that there are significant opportunities to be explored elsewhere, such as in the Middle East, Asia and Russia. At the very least, the strong performance of these markets has the potential to take more beef off the global market and put upward pressure on local price regardless of access.

However, access to these markets would also provide a ready outlet for fifth quarter cuts which are more difficult (or downright impossible) to shift in some markets open to the NI beef sector. The growth of the middle classes and foodservice sectors in these regions also gives rise to greater potential demand for prime cuts.

China is perhaps the best example of a developing economy where strong beef demand growth may provide significant opportunities for exporters. Traditionally beef offal (typically stomach, liver and kidney) was the important market in China. Although the market is expected to remain strong there for at least the next five years, it is possible that in the longer run beef may become more prevalent with growing demand from younger more affluent consumers with a more westernised outlook.

In recent years, the Chinese beef trade has been characterised by growth in demand for niche / luxury meats and upgrade in meat retailing. The growth of foodservice in China has been phenomenal and in 2010 the sector was expected to grow by 15-20 per cent. Beef has traditionally been eaten outside the home in China so this foodservice growth is particularly pertinent.

Western fast food chains have fostered beef demand by introducing consumers to beef burgers and their continued expansion ought to have a positive impact on overall beef consumption. Restaurant chains are expanding rapidly and are chasing beef supplies.

Yum! is the market leader in fast food and in January it was reported that they were opening a new restaurant in China every 18 hours. McDonalds are reportedly aiming to open a new restaurant every day in the next three to four years.

Meanwhile, the US Department of Agriculture estimate that beef output in China is in contraction with beef prices at record levels. There is a growing list of eligible meat suppliers to China and the local industry will be keen to see the UK beef added to that list.

With incomes rising generally and urbanisation an ongoing theme in China, it is likely that beef consumption will continue to rise and the likelihood is that Chinese beef supplies will be increasingly serviced by imports.

These developments provide an excellent reason for strive for market access in these third countries and further diversification of markets can certainly work in the favour of the NI industry.

Further Reading

- You can view the full report by clicking here.

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