1. What supermarkets overseas are really saying about Australian Lamb
Marcus O’Sullivan
JBS Global (UK) Ltd

2. UK and EU retail trade
Dominated by large multiples in a very competitive, very mature environment
Top 3 global retailers present – Wal*Mart / Carrefour / Tesco
Own brand is what they’ve invested in – providing their customers with confidence in their name
UK retailers and public very focused on animal welfare and provenance – the most extreme of any market in the world
Heavily promotional driven – big seasonal events, ie: Easter, Christmas, BBQ

3. UK No. 1 spot – Tesco >30%

4. UK No. 2 spot – Asda Wal*Mart >16.5%

5. Other UK retailers

6. French No. 2 spot – Carrefour >12%

7. Other French/EU retailers

8. What do all UK/EU retailers look for in a lamb supplier?
Consistency
Quality
Delivery / Service
Fit for Purpose
Price
Volume at key promotion periods
A supplier who can meet their standards
A marketing story if/when appropriate
RETAILERS ARE A KEY CUSTOMER FOR AUSTRALIAN LAMB

9. Who is our competition? Domestically produced lamb
UK primary European producer - 13m lamb kill
Ireland / France / Spain all significant sheep kill
Can only be exported within EU
New Zealand lamb
Very well established in the market place
Often consumers first answer on where lamb comes from
Complimentary seasonality

10. Australian lamb – how does it fare?
Tesco and ASDA will retail Australian lamb 52 wks
Carrefour will retail Australian lamb for promotional periods only
UK retailers have wanted to decrease their reliance on NZ lamb
No negative consumer reaction to its presence on shelf but no high awareness of Australia as a lamb producing country either
We sit in second place to NZ as imported lamb suppliers

11. Challenges Size of our lambs Fat Levels EU Quota
For UK – farm assurance and welfare standards
Competitiveness – high AUD
Time to market – shipping options

12. Size of Lambs
Target UK retail spec carcase = E/U/R 2 & 3L = weight 15.0 – 21.5 kgs

13. UK system - Grid Payment
Fat Class 1 2 3L 3H 4L 4H 5 E
BID 15
-15
-30
-50 U 8 R -5 O
-20 PH PL
-£1
Conf ormation
Example; deadweight bid price £3.50 /kg
Paid to max kgs

14. UK carcase grading and fat %O P
2008
1.5%
15%
59%
23% 2%
2009
2.5%
17%
58%
22%
0.5%
2010 5%
54%
19% 0%
2011
18% 1 2 3L 3H 4L 4H 5
2008
1.5 24 54 15 4
0.5
2009 22 51 20
2010
2011 21
Source: HCC

15. How Australian lamb used by retailers?
EU quota allowance means restrictions on shipping Bone in vs Boneless meat
This narrows the type of cuts Australia can supply to market
Primarily leg cuts
Generally weight restrictions on Whole Legs due to sensitive price pointing
More material supplied to UK as Part Boned Leg to be further processed / cut to smaller portion size

16. Australian lamb further processing

21. Retail Promotional Strategy
Deep cut promotion, foot fall driving strategy
Many promotions loss leaders at key sales periods, ie: Easter and Christmas
Promotional ends / Feature ends in-store are prominent and where major activity occurs
Very competitive (amongst proteins) to secure space on the feature end
Multi-buy / fixed weight / round price points
More lamb sold on ‘promotion’ than standard retail

23. Any 3 packs for £10

24. Easter Whole Leg

25. ASDA Easter advertising

26. Summary Global retailers – ‘friend or foe?’
To achieve greater market penetration, the industry must be able to meet the wants and needs of a demanding market
Comment from a UK Retail Lamb Buyer – ‘Australian lamb can have an established place on our shelves and complement the British and NZ offer well. Our primary requirements are consistency, availability, quality and best commercial value. We do set the bar high on assurance standards and welfare, but these are a core value of the retail chain and intrinsic requirement of the British consumer.’