Building International Beef Demand

1
Building International Beef Demand

• Phil Seng
• President/CEO, USMEF
• Texas Southwestern Cattle Raisers
• March 18, 2002

2
USMEF Mission Statement
3
USMEF Worldwide
St. Petersburg
London
Denver
Moscow
Tokyo
Seoul
Osaka
Beirut
Monterrey
Mexico City
Shanghai
Taipei
Guangzhou
Caracas
Hong Kong
Singapore
Sao Paulo
4
2001 Beef/BVM Exports
U.S. Beef BVM Exports 000 MT

• U.S. exports reached 1,274,000 MT in 2001 an
  increase of 32 from 1996.
• Valued at 3.4 billion in 2001.
• Slight decline in 2001 due to weak world economy,
  strong U.S. dollar, and concerns over food safety
  in major markets.

U.S. Department of Commerce/Trade Census Bureau
5
Beef Exports Distribution
(Volume)
U.S. Department of Commerce/Trade Census Bureau
6
Beef Export Forecasts
1,642K MT in 2005
Growth 2002-05 368K MT (29)
USMEF
7
Where Is The Growth?
Market Growth as a Percent of Total 368K MT
Growth
USMEF
8
Distribution of Exports
Beef and BVM Projected 2005
USMEF
9
Percent Of Production
USMEF, Beef/BVM Exports As Percent of Domestic
Production
10
The Story Of 2001

• BSE Discovered In Japanese Beef Herd

11
Japan BSE Timeline
12
Japan Market Growth
Total Consumption
Imports
Domestic Production
Source FAO, Japan statistics for "Bovine Meat"
13
Japanese View
If total market shrinks, domestic production
gains share
If Total MarketShrinks 35
48MarketShare
32MarketShare
MAFF Statistics
14
USMEF Actions
15
Anshin Actions
16
Anshin Results

• Media focus has begun to shift from the dangers
  of BSE to the differences in preventative
  measures between Japan and other beef supplying
  countries.
• USMEF Anshin (anxiety-free) campaign increased
  sales at HRI and retail just as important, the
  campaign established a commitment from HRI
  operators and retailers to promote U.S. beef.

17
Anshin Results

• Anshin campaign launched October 18th
• 217 retailers covering 5,444 outlets
• 4 CVS covering 24,411 outlets
• 70 HRI covering 4,600 outlets
• 33 distributors
• Additional U.S. beef sold in November due to the
  campaign is reported at 2,000 MT.
• According to Nikkei Point of Sale research,
  Anshin participants are recording sales levels
  higher than chains/outlets not participating.

18
Aisareru Beef Campaign

• Desire Beef

19
Thanks To Texas

• Texas Beef Council commitment of 500,000 was the
  first
• Texas leadership set the bar for others
• Resulting momentum pushed funding effort over the
  top

20
Funding
21
What Housewives Told Us
They want to be fully convinced that a given beef
is safe and tasty enough to serve their families
without any concern.
To this end, what housewives truly want in beef
They want to hear beef providers firsthand
accounts of how carefully they produce quality
beef.
They want objective facts to verify the safety of
beef.
22
Campaign Objectives

• Immediate
• Generate consumer confidence in U.S. beef and
  build an intent to purchase/ consume it.
• Establish desire for U.S. beef as a vital and
  accepted ingredient of Japanese diet.
• Medium to long term
• U.S. beef is identified as safe, nutritious,
  delicious and healthy.

23
Campaign Targets

• Primary
• Housewives with children at home
• Now suspicious about U.S. beef safety
• Now not fully aware of U.S. beef characteristics
  (nutritional value, easy preparation and
  suitability for Japanese home cooking/diet)
• Secondary
• Husbands and children opinion leaders co-ops
  and their leaders

24
Media Plan
Geography gt Japan nationwide gt Heavy-up in 3
major business regions - Tokyo, Osaka and
Nagoya areas covers 57 of target population
Hokkaido 4.5
Miyagi 1.9
Kanto 31.9
Tokai 8.7
Hiroshima 2.3
Kansai 16.4
Fukuoka 4.0
Source Statistics Bureau Report 2000
25
Media Timing

• Employ continuous ad exposures thru 3Q-2002
• Employ media burst at campaign launch to
  coordinate with timing of peak consumption season
  (spring)

Campaign Launch
Campaign Measurement
Q1
Q2
Q3
Q4
Jan
Apr
Jul
Oct
Feb
May
Aug
Nov
Mar
Jun
Sep
Dec
Continuous Ad Exposure
Ad Exposure
Burst
26
Role Of Media
Informative with credibility
27
Ad Development
Ad ShootingFeb 23 Mar 2
First Ad Mar. 15
28
Expected Ad Effect
Awareness Simulation
Ad Awareness
Peak 51.5
33.8(Jun)
Cumulative Target GRP
Source HAAP Simulation
29
Putting U.S. Meat On The Worlds TablesOther
Key Markets
30
Korea

• Opportunities in 2002 include 2nd year of
  liberalized market, and WTO ruling that
  eliminates dual retail system for domestic and
  imported beef.

31
Korea

• Australia stepping up activities in Korea as
  potential outlet for excess beef.
• Korean importers purchasing additional short
  plate that would have been shipped to Japan

32
Mexico

• Beef production does not keep pace with demand,
  increases opportunities for U.S. beef exports.
• Trade impediments such as verification point
  issue and anti-dumping duties are threats.

33
China 2002

• Issue for 2002 will not be prices or demand, it
  will be import restrictions from the Chinese
  government.
• WTO so far has not been positive to business,
  despite the fact that the import duty has dropped
  from 40 to 25 this year. Access issues will
  move to center stage this year.

34
China
MT

• U.S. short plate is now affordable to Chinese
  importers. Sales of U.S. muscle meat to HK/China
  increased dramatically at year end.

35
Other Markets

• Russia U.S. variety meats exports are up 76 so
  far in 2001 due to growing demand. U.S. muscle
  cuts cannot compete with EU subsidized product.
• Taiwan Launch Beef Alliance Project with
  Australia and New Zealand in Spring 2002