Europe, Russia and The Middle East

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Europe, Russia and The Middle East

• Richard Ali
• November 8, 2001

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Total US Beef Exports To ERME Regions

• In 1999 Region Accounted For 15 of total U.S.
  beef exports
• Exports to area forecast to grow by 50 between
  1999 and 2008

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Europe

• European Union, Western Europe, Central Eastern
  European Countries

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Market Snapshot - Economy

• Population
• Former Soviet Union 291 million
• Russia 147 million
• Baltics 7 million
• Ukraine 50 million
• Other 87 million

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Market Snapshot - Economy

• Population
• EU 373 million
• CEECs 121 million
• Poland 39 million
• Romania 22 million
• Hungary 10 million
• Bulgaria 8 million
• Switzerland 7 million
• EU and Western Europe growth forecast around 1.6
  in 2002
• CEECs growth forecast 3 in 2002

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Market Snapshot Consumption / Import

• Consumption
• EU 19.1 kg / year (imports 1)
• (offals, petfood pharma, HRI)
• CEECs 8.6 kg / year (imports 2)
• Poland 9.2 kg (US tripe, beef HRI)
• Romania 7.4 kg (US tripe)
• Hungary 3.6 kg (US tripe, beef HRI)
• Bulgaria 8.5 kg (US tripe, beef HRI)
• Switzerland 22.1 kg (beef HRI)
• Malta 30.3 kg / year (imports 10)
• (HRI, retail)

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Tariff Rate Quotas
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The Euro Effect
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Europe BeefObjectives

• Establish distribution links for U.S. beef and
  build product loyalty among targeted importers
  distributors, HRI and retail buyers.
• Position U.S. beef as the preferred highest
  quality product among targeted consumers.

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Europe Beef Strategies

• Foster relationships between U.S. suppliers and
  European buyers and facilitate contact with U.S.
  suppliers to establish distribution links.
• Promote the American Beef Club concept and
  increase its membership in trend-setting
  restaurants and hotels.
• Educate retailers serving high-income clientele
  of the range of cuts available and of the
  profitability of continuously purchasing U.S.
  beef.

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High Quality Beef to Bulgaria

• Chef Seminar Held May 2001
• Now 5 American Beef Club Members Enrolled
• Next Stops..Hungary Malta

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Key Strategic Questions

• Why Activities In Europe? Isnt it a small
  market?
• Europe, both the EU and CEECs, is a vast market
  with huge potential. A barrier to entry in the
  CEECs is establishing distribution channels.
• The EU has a massive impact on the rest of the
  world. USMEF plays a key intelligence (eg BSE,
  FMD, GMOs) and representational role on behalf of
  the U.S. beef industry.

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Key Strategic Questions

• European traders are important in moving product
  to the FSU and beyond.
• Europe is a major competitor as well as a market.
  USMEF provides competitive information.

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Key Strategic Questions

• What about the Hormone Ban?
• USMEF is working creatively with FAS and the
  industry to seek solutions to increase access
  into the EU for US beef.
• In the meantime, USMEF, in cooperation with the
  beef industry, is assisting those companies and
  producers who wish to export under existing
  arrangements and take advantage of the 11,500 mt
  quota.

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Russia

• Russian Federation, Commonwealth of Independent
  States, Baltic States

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Market Snapshot - Economy

• Population
• Former Soviet Union 291 million
• Russia 147 million
• Baltics 7 million
• Ukraine 50 million
• Other 87 million
• Economic Growth Forecast
• 2001 4.9
• 2002 4.0

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Market Snapshot Consumption / Import

• Consumption
• Russia 16.5 kg (imports 25 )
• US Livers retail, processing
• HQB mainly HRI
• Normally fat trims, short plate
• U.S. market share of beef vm market forecast at
  65 in 2001
• U.S. market share of beef imports 1 down from 6
  due to EU dumping

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Russia BeefObjectives

• Expand the number of importers and processors
  purchasing U.S. beef and beef variety meats.
• Position U.S. beef as the preferred, highest
  quality product among targeted HRI customers.
• Develop the image of U.S. beef as a quality
  product among Russian consumers.

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Russia BeefStrategies

• Demonstrate the profit potential of U.S. beef to
  large processing operations and importers/
  distributors in the Russian market.
• Increase membership in the American Beef Club as
  a vehicle for promoting usage of U.S. beef as a
  high quality product.
• Penetrate the large Russian retail channels by
  test marketing underutilized cuts.

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High Quality Beef Growing In Russia
27 ABC Restaurants
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U.S. Beef Livers In Baku

• USMEF introduced livers to local importer in
  Azerbaijan
• Trial order placed
• USMEF assisted in trial promotion
• Second order now being placed

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Key Strategic Questions

• Isnt Russia a Small Market For US Beef?
• Russia is a key market for US beef variety meats
  a key component in the bottom line
• While US beef exports to Russia have been harmed
  by EU dumping, there is a growing market for high
  quality beef at HRI
• USMEF is working closely with importers and
  exporters to expand the range of US beef cuts
  available on the market

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Key Strategic Questions

• For example, in a trial, US beef brisket is
  being cooked by a Russian processor, sold in its
  shops, and sampled at HRI. (Whole chain
  marketing)
• Market representation is important During the
  crisis, USMEF maintained contact with the Russian
  industry, thereby assisting US suppliers to
  respond effectively once the economy strengthened.

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Middle East

• Gulf Cooperation Council,
• Egypt, Jordan, Lebanon

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Market Snapshot Consumption / Import

• Consumption
• Egypt 11.2 kg / year (imports 25)
• Livers retail. Beef HRI, retail
• UAE 15.3 kg / year (imports 80)
• Kuwait 9.9 kg / year (imports 80)l
• Lebanon 6.4 kg / year (imports 50)
• Jordan 4.7 kg / year (imports 90)
• Saudi Arabia 3.2 kg / year (imports 80)
• HRI, Retail

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Market Snapshot Population / Economic Growth

• Population (105 million)
• Egypt 68 million (74 million in 2005, 80 million
  2010)
• GCC 29 million (34 million in 2005, 40 million in
  2010)
• Saudi Arabia 21 million to 28 million in 2010)
• Economic Growth
• Egypt 3 2001, 3.5 2002
• GCC average 2.5 in 2001, 2.8 in 2002

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Middle EastObjectives

• Increase importers and distributors knowledge
  and awareness of the availability of U.S. beef
  and beef variety meats.
• Develop the image of U.S. beef among Middle
  Eastern consumers and the tourist industry as the
  premier beef available on the market.

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Middle EastStrategies

• Forge relationships with Middle Eastern buyers
  and facilitate contact with U.S. suppliers to
  establish distribution links for U.S. beef.
• Position U.S. beef as the preferred, highest
  quality product among targeted consumers and the
  tourist industry through the American Beef Club.
• Counter fears about BSE by distinguishing U.S.
  beef from EU beef and promoting the wholesomeness
  and quality attributes of U.S. beef.

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US Beef in The Middle East
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Consumer Education
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Key Strategic Questions

• Has the Current Political Situation had an Impact
  on USMEFs Strategy?
• USMEF has tailored its strategy to take account
  of potential problems specifically by directing
  resources into areas unaffected by instability
  (upscale HRI)
• Despite short term political events, the region
  remains a significant market for U.S. beef.
• It is also set to become one of the worlds most
  important beef markets with a growing population

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Key Strategic Questions

• All major beef supplying countries are targeting
  the Middle East as a growth market
• Representation is culturally important
• Trade Consumer Education is a key facet of
  strategy (BSE / FMD)

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Parallel Societies In The Middle East
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Emergence of New Tastes Eating Habits
social
Stage One
Stage Four

• Structured Meal Patterns
• National Tastes
• Food as Fuel

-Cosmopolitan / national -Foodservice and
distribution key -Food as Choice
U.S.
Iran
Japan
individual
family
Western Europe
Egypt
UAE / Kuwait
-Limited Experimentation -Less Structured Meal
Patterns -Basic foodservice offering
-Cosmopolitan tastes emerge -Western style
foodservice of greater importance
Bahrain Oman
Saudi
Stage Two
Stage Three
product
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Emergence of New Tastes Eating Habits
social
Stage One
Stage Four

• Structured Meal Patterns
• National Tastes
• Food as Fuel

-Cosmopolitan / national -Foodservice and
distribution key -Food as Choice
U.S.
Livers
Iran
Japan
individual
family
Western Europe
Egypt
High Quality Beef
UAE / Kuwait
-Limited Experimentation -Less Structured Meal
Patterns -Basic foodservice offering
-Cosmopolitan tastes emerge -Western style
foodservice of greater importance
Bahrain Oman
Saudi
Stage Two
Stage Three
product
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Black Sea Cold Store Update

• Bulgarian Company Acted on USMEF study
• Currently Refurbishing Site
• Freeport access to Balkans, Southern Russia,
  CIS