Market Update

1
Market Update

• Phil Seng
• President/CEO, USMEF
• Joint International Markets Committee
• Feb. 8, 2002

2
Japan BSE Timeline
3
USMEF Actions
4
Action Examples
5
BSE Sales Impact
Foodservice
Trade
Retail
USMEF research
6
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.

7
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.

8
Japan Market Growth
Total Consumption
Imports
Domestic Production
Source FAO, Japan statistics for "Bovine Meat"
9
Japanese View
If total market shrinks, domestic production
gains share
If Total MarketShrinks 35
48MarketShare
32MarketShare
MAFF Statistics
10
Aisareru Beef Campaign
11
Funding
12
Consumer Research

• Before BSE, found
• 94 wanted safety information.
• Ranked Australia as most safe, while U.S. was
  sixth.
• Safety was No. 1 issue for imported beef.
• 74 would be comfortable buying imported beef if
  they knew safety standards.
• TV, newspapers, magazines are most influential
  media.

13
Consumer Research

• After BSE discovered
• Aussie brand more recognizable.
• U.S. beef cheap, hard and tasteless.
• U.S. more industrialized, so profit comes ahead
  of safety.
• Dont trust Japanese government do trust
  retailers, scientists, media.
• Want full disclosure of process.
• Know little about beef nutrition.

14
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.
15
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.

16
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

17
Media Plan
Key Influencers
Media, NGO, Scientists, Farmers
PR
Dietitians, Chefs, Established Food Retail
Experts
Opinion Formers
AD
Target Audience
Primary Housewives Secondary Husbands children
18
Media Plan
Geography Japan nation-wide 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
19
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
20
Information Sources
5
4
3
6
2
Rank
1
Source HABIT 2001 890 married women in their 30s
50s N890
21
Role Of Media
Informative with credibility
22
Coordinated Media
Pure Message Communication
Sure Endorsement Communication
Key Influencers
TV NP Web
PR
Opinion Formers
Radio
Mag
Prime Target Housewives
23
Effect-Current Funding
Awareness Simulation
20.2(Jun)
Peak 30.1
Ad Awareness
Cumulative Target GRP
Source HAAP Simulation
24
Effect-Target Funding
Awareness Simulation
Ad Awareness
Peak 51.5
33.8(Jun)
Cumulative Target GRP
Source HAAP Simulation
25
Other Key Beef Markets
St. Petersburg
London
Denver
Moscow
Tokyo
Seoul
Osaka
Beirut
Monterrey
Mexico City
Shanghai
Taipei
Guangzhou
Caracas
Hong Kong
Singapore
Sao Paulo
26
Korea

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

27
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

28
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.

29
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.

30
China
MT - 2000

• U.S. short plate is now affordable to Chinese
  importers. Sales of U.S. muscle meat to HK/China
  have increased dramatically the past two months.

31
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

32
Putting U.S. Meat On The Worlds Tables