A study into the feasibility of branding ethically and grass-fed red meat for export market recognition

Timeframe: June 2016 to February 2018

Funding sources: Core project funding: Agricultural Sciences Research and Development Fund, administered by the Department of Primary Industries and Regional Development and supported by Royalties for Regions investment.

Support funding (for consumer surveys in China): Regional Development Australia Great Southern WA

Staff: Dr John Gountas, PhD, Associate Professor in Marketing from the School of Business and Governance at Murdoch University, for survey and market analysis.

Paul Sanford, Senior Researcher, Department of Primary Industries and Regional Development, Albany, for research and technical support.

FBG support: Leonie McMahon

Summary

The intention behind this project was to investigate ‘Paddock to Plate’ opportunities for our meat sheep producers in domestic and export markets, primarily Perth and China. To make an informed decision, the producers needed to know if there was a market demand for grass fed lamb, consumer preferences, ways of negotiating the supply chain (producers, distributors, retailers and consumers) and strategies for entering into the market.

Throughout the project consumers in Western Australia, Australia and two Chinese cities were surveyed and their responses analysed. Producers met several times with marketing expert, Dr John Gountas, to discuss the data and formulate opinions as to whether or not the Paddock to Plate concept was feasible for their businesses.

At the conclusion of the feasibility study, the group decided not to pursue the Grass Fed Lamb concept. Two of the main recommendations to come out of the study: that a small group of key FBG producers invest significant funds up-front to purchase a mobile abattoir, and to develop and finance an annual marketing campaign, were significant factors in this decision.

Project details and outcomes

The grass-fed lamb feasibility study was successfully completed in February 2018 with all of the main project objectives being achieved. The key findings from the survey and supply chain analysis were:

• There is a growing market sector of consumers who value the perceived superior quality of grass fed meat, the superior taste, quality of texture, trust and security of meat safety, superior nutritional value, and environmentally sustainable animal raising conditions.

• There is premium value associated with telling the story behind the product, and in marketing and selling directly to the consumer, both locally and in South East Asia where demand for Australian sheep meat is increasing.

• However, it was strongly recommended that FBG producers focus on developing a strong domestic brand and an effective processing and distribution system in WA before considering entry into Asian markets. The Chinese market is considered particularly risky because it is fragmented and difficult to penetrate. There are major obstacles that would need to be overcome and investment costs are high.

• Processing is the key challenge for regional producers with product availability and value chain infrastructure likely to pose serious problems. The current oligopoly of meat processors does not provide enough flexibility to kill, butcher, process and distribute for small farmers in the Great Southern. Large distances between farms and processing plants result in higher distribution costs and stress to animals and farmers.

• Promotion of grass-fed meat products in WA and Australia is currently almost non-existent. Promotional campaigns should focus on the core attributes of healthy and safe meat product with superior taste. The emphasis and focus need to differ for Australian and Chinese consumers.

• The most popular branding options identified in the surveys were: “Totally Natural 100% Grass fed Lamb” [or sheep meat]; and “Grass fed Australian Lamb” [or Sheep meat].

• Branded meat products generate better financial, environmental and social returns and are more sustainable in the long term against economic and trading upheavals. The future of WA meat producers and distributors would be more secure if they developed branded sheep meat products and built strong national and global brands with strong vertical alliances and networks to connect efficiently with the customers. FBG farmers would need to work closely together to achieve this.

Throughout the course of this project FBG producers interested in the concept met three times, initially to discuss the feasibility parameters with the marketing expert, then later to learn about interim results and then thirdly to further discuss the future of the project. These meetings, one of which was attended by Chinese exporters, provided opportunity for FBG producers to expand their understanding of consumer sentiments, market development and the supply chain. These opportunities gave rise to much discussion and strategizing, identification of issues, solutions and market opportunities.