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Retail Meat New Zealand 23 March2012

Retail Meat New Zealand 23 March2012. Presentation by DAVID BAINES General Manager Alliance Meats. INDUSTRY WORLD SCENE PRICING TRENDS ALLIANCE GROUP POSITIONING/MARKET UPDATE INDUSTRY OPPORTUNITIES. WHERE ARE WE TODAY - Industry.

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Retail Meat New Zealand 23 March2012

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  1. Retail Meat New Zealand 23 March2012 Presentation by DAVID BAINES General Manager Alliance Meats
  2. INDUSTRY WORLD SCENE PRICING TRENDS ALLIANCE GROUP POSITIONING/MARKET UPDATE INDUSTRY OPPORTUNITIES
  3. WHERE ARE WE TODAY - Industry Red meat sector worth circa $8 billion of export earnings Represents 15% of NZ’s total export revenue Compares to dairy sector of $10 billion Diversified - 22% sheepmeat to UK vs. 94% in 1958 Almost completely NZ owned industry with 55% owned by farmers Farming sector comprises over 12,000 individual farmers Over 90% of sheepmeats and 80% of beef exported Sheep numbers around 32 million compared to over 70 million in mid 1970s 19 exporters to the EU - critical mass essential to supply large retailers Industry would benefit from fewer companies - less processing plants
  4. FOOD STILL A GOOD BUSINESS TO BE IN Population worldwide growing Consumption increasing Need for more protein Major domestic producers - EU, South America, Australia - in decline Food and supply security important - NZ’s ability to maximise Extreme volatility in foreign exchange rate relativities Next Phase: - Sustainability - Carbon Footprint - Food Inflation
  5. Cattle WORLD SHEEP and CATTLE PROJECTIONS Source: GIRA
  6. WORLD SCENE
  7. WORLD SCENE … WEST to EAST - Volume 2006 to 2011 Total New Zealand tonnage 2006 = 311,641 2011 = 221,351 -30% Source: B+LNZ, AGL
  8. WORLD SCENE
  9. NEW ZEALAND PRODUCTION LAMB EXPORTMUTTON 2008 330,000 (26.5 m) 95,100 (6.5 m) 2009 305,000 2010 295,000 2011 274,000 2012 288,000 (20.1 m) 55,000 (3.3 m) Export tonnage loss (5 years) = 42,000 Mt - 13% Significant reduction Markets fully aware Supply security Rationalise customer base EU/UK - less dominant EU Quota -2011 down 45,300 Mt -2010 down 31,000 Mt (227,854 MT)
  10. NEW ZEALAND 1990 – 1991 Dairy accounted for 10% of pastoral land area
  11. NZ LAMB MARKETS - TOP 10 Total 270,000 tonne exported - 28% Chilled (44% main primal cuts now shipped chilled)
  12. THE ALLIANCE GROUP STORY Est. 1948 by Southland farmers unhappy with lamb prices/British control First plant at Lorneville in 1960 Today has 9 processing plants from Invercargill to Dannevirke Annual turnover of around $1.5 billion; 5,500 employees Diversified product range - retail, food service and manufacturing segments 100% farmer owned co-operative - 5,500 farmers AGL represents 16% of world sheepmeat trade Largest sheepmeat player in NZ Global distribution network across 65 countriesand ownership in UK, ME and North American marketing companies
  13. ALLIANCE INVESTMENT MOVING UP AND DOWN THE VALUE CHAIN BasePrimalsSub Primals
  14. THE LOW HANGING FRUIT Bones - China Soup Stock Fat - China Lamb Roll Filler Knk Tips - China Stock / Hot-pot DMM - UK, EU, Pacific Manufacturing Heads - China Wool -> Garments Tng / Brain – Eating Balance – Pet Food Tripe - China Hot-Pot Testes - China BBQ Tails - China, Africa, PNG BBQ / Hot-Pot
  15. LAMB UPDATE Supply/demand fundamentals OK – but economies impacting Cross currencies will change trade flows - EU vs. diversified NZ and market stocks increasing - consumer resistance at current high levels FTA’s providing more opportunities - China, Malaysia, Korea, Russia, India Emergence of China - low valued protein EU Quota will not be filled Impact of Australian product flows to market Product Forms Legs - continual conversion frozen to chilled Middles - supply/demand back in balance Shoulders – some correction on pricing Flaps - high prices China
  16. OPPORTUNITIES Meat Sector Strategy process Automation and industry collaboration projects Shrinking supply - MLA estimates 300,000 tonne short in next 5 years Growing demand - protein supply needs to double by 2050 Emerging markets - becoming more sophisticated with ability to pay NZ producers and processors more productive - more to come Exports more precise in targeting right market, right customer, right products, right price points Prospects forward for sheepmeat never looked better New Zealand is well positioned to enjoy its bountiful advantages
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