Competitiveness of the Meat processing Industry

1
Competitiveness of the Meat processing Industry

• Brussels 15 November 2007
• Jan Heemskerk
• President
• CLITRAVI

2
Clitravi

• Centre de liaisons des industries
  transformatrices de viande de lEU
• Liaison centre for the meat processing industry.

3
Established in 1958

• Includes
• 25 Member States (28 members) 3 Associated
  members (Norway, Switzerland, Turkey).
• Industry with
• Turnover 66.3 billion
• 15 000 companies (mainly SMEs)
• Workforce 560 000 people
• Total production 12.5 mill. tons/year

4
Characteristics of the Meatprocessing industry I

• Many family owned companies, traditional
  regional. (It. according EU definition 94 SME)
• A wide variety of products, many based on
  regional taste and traditional production
  methods.
• A limited range of international products
  (cooked ham/frankfurters), within this categories
  a wide range of different qualities (and prices)

5
Characteristics of the Meat processing industry
II

• Share of raw material costs high (till gt 70)
• gt Limited price fluctuation buffer.
• Many (small) operators in the same range of
  products. (severe branche internal competition)
• Keen on new challenges within their scope.
• Anticipating on consumer trends is complex for
  the size of companies and type of products. (Meat
  destines the limits).
• depending where measured in the production
  process

6
Meat processing companies EU 15

• Danish Crown (Tulip) 4.8 EU share
• Nestlé (Herta) 4.1
• Smithfield (Aoste) 3.5
• Kerry Group 3.3
• Stockmeyer 2.5
• Unilever (Bifi Unox) 2.0
• Campofrio 1.8
• Vion 1.9

7
Intra EU Competitiveness of the meat processing
industry. I

• Raw materials.
• Pigmeat, poultry beef
• Volatile markets (animal health situation)
• Concentration of the slaughter industry.
• Imports limited
• Labour productivity.
• Traditional processes.
• Small production runs

• Sales
• A few EU/world wide appreciated products.
• Most national/regional products.
• Very limited number of customers. (Retail
  concentration)
• Low return on investment.

8
Intra EU Competitiveness of the meat processing
industry. II

• A wide variety of tasty , ready to eat products.
• Globalisation to start in Europe.
• Base for more convenience
• In preparation of meals
• In portion sizes.
• Marketing prospects
• Niche marketing
• Supply to the ready meals industry.

9
International competition EU ltgt Brasil

• Raw materials
• Difference in legislation, in practice could be
  the same. (customers specification).
• Welfare
• Environment
• GMO policy
• Space-labour-climate-landprices-farmstructure.
• Import tariffs/Quotas EU, Japan.
• Veterinary and hygiene requirements.

10
International Competition Data / country 2004
(source LEI -NL)
11
(No Transcript)
12
Slaughter-deboning sector

• Concentration (Danish Crown, Tonnies, Vion,
  Smithfield).
• Move into processing. (Smithfield, Vion,
  Westfleisch, DC, Tonnies, Cooperl, etc)
• High investment or labour-intensive.
• i.e. Germany, benefit labour legislation.
• Food Multi nationals leave meat sector.(UL, Sara
  Lee)

13
Fresh meat major companies 133.8 Billion (EU
15)

• Vion (pig-beef) 4.5 EU total- 8 of EU Pig
• Socopa (beef-pig) 2.7 EU
• Doux (poultry) 2.5 EU - 8 of EU poultry
• Danish Crown 2.5 EU - 10 of EU pig
• ABC (beef) 2.0 EU
• Cremonini (Beef) 1.6 EU

14
Processing trends in the EU - I

• Slaughter companies go into processing.
• America comes but also goes. Smithfield in, Sara
  Lee out.
• Automatisation in commodity production.
  (specialisation/plant).
• Imports processed products (poultry/beef).
• Retail requirements. (They claim to be the
  consumer guardian).

15
Processing Trends II

• Internationalisation of consumption
  (Mediterranean style products, exotic products).
• Nutritional Health focus. (We want to live
  forever).
• Niche markets, (Wealthy, critical, concerned,
  busy consumers) - Fresh, tasty, healthy, welfare,
  artisanal, regional, convenience.

16
Customer trends.

• Retail as consumers guardian.
• Concentration of retail.
• Price oriented (for commodity products)
• Saturated markets, Retail war on prices.
• 3rd country supply is within their scope.
• Copying successful novelties.
• Other outlets gt Out of home

17
Concentration of retail Share Top 5/country

• Germany 65 share (Metro, Rewe,
  Edeka, Aldi, Lidl)
• France 81 (Carrefour, Intermarche,
  Leclerc, Auchan, Casino)
• Italy 55 (Coop, Carrefour, Auchan,
  Esselunga, Metro)
• UK 50 (Tesco, Sainsbury, Asda, Morrisons,
  Sommerfield)
• Spain 51 (Carrefour, Mercadona, Eroski.
  Auchan. Lidl)

18
Phenomenon Combined purchasing

• Centrales dachat (Combining the purchases of
  different independent retail chains).
• Italy (Centrale italiana and others).
• NL (Superunie)
• Combining volume and buying power.
• Developing from National gt International gt Global
• Cartel legislation ???

19
Discrimination ? Hygiene regulation 853/2004

• Packing and/or slicing done within retail
  premises derogated from the requirements.
• Same processes done in meat-processing have to
  fulfil the rules as laid down.
• Equal processes, equal rules !

20
Private labels.

• The real manufacturer is unknown.
• Gives a weak position. (Price argument only ?)
• How to create a stronger position.
• Create visibility of the manufacturer to the
  consumer.
• Possibility of co-branding ?

21
(No Transcript)
22
Thank you for your attention.