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Retail Meat New Zealand 23 March2012 Presentation by DAVID BAINES General Manager Alliance Meats.

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Presentation on theme: "Retail Meat New Zealand 23 March2012 Presentation by DAVID BAINES General Manager Alliance Meats."— Presentation transcript:

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 Source: GIRA WORLD SHEEP and CATTLE PROJECTIONS Cattle

6 WORLD SCENE

7 WORLD SCENE … WEST to EAST - Volume 2006 to 2011 Total New Zealand tonnage2006=311, =221, % Source: B+LNZ, AGL

8 WORLD SCENE

9 LAMB EXPORTMUTTON ,000(26.5 m)95,100(6.5 m) , , , ,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 down 45,300 Mt down 31,000 Mt (227,854 MT) NEW ZEALAND PRODUCTION

10 1990 – 1991 Dairy accounted for 10% of pastoral land area NEW ZEALAND

11 NZ LAMB MARKETS - TOP Change CountryMT$/kgMT$/kgMTValue + UK73, , , % China20, , , % France23, , , % Germany22, , , % Saudi Arabia13, , % USA20, , , % Belgium12, , , % Canada9, , % Japan5, , % Mexico11, , , % Totals215,157187,563-29,010 Total 270,000 tonne exported - 28% Chilled (44% main primal cuts now shipped chilled)

12  Est 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 countries and ownership in UK, ME and North American marketing companies THE ALLIANCE GROUP STORY

13 ALLIANCE INVESTMENT MOVING UP AND DOWN THE VALUE CHAIN BasePrimals Sub Primals

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15 THE LOW HANGING FRUIT DMM - UK, EU, Pacific Manufacturing Bones - China Soup Stock Knk Tips - China Stock / Hot-pot Fat - China Lamb Roll Filler Tails - China, Africa, PNG BBQ / Hot-Pot Tripe - China Hot-Pot Testes - China BBQ Heads - China Wool -> Garments Tng / Brain – Eating Balance – Pet Food

16 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

17 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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