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What is the biggest challenge for Australian beef to expand in the Korean market? It’s not American beef, but the local pork industry.
This assessment from the Australia beef lobby in Korea is only possible since it dominates the import beef market. American beef, once the champion, was tainted in the aftermath of the mad cow disease outbreak. Even McDonald's Korea, the U.S. multinational's subsidiary, mainly uses Australian beef.
Koreans eat only eight kilograms of beef every year, compared to their annual pork consumption of 18 kilograms.
``Our competition is not really American beef but pork. We need to grow our share of the beef market ... To a certain extent, American beef is our competition but pork is the bigger competition,’’ Jim Lim, regional manager for Meat & Livestock Australia (MLA) Korea, told The Korea Times at his office in downtown Seoul, Tuesday.
Beef consumption in Korea is still relatively low compared to other countries. Australians consume 34 kilos of beef every year, while Americans eat 42 kilos and Argentineans devour a whopping 69 kilos.
This low beef consumption is due to the relatively expensive cost of beef in Korea, compared to pork. Traditionally, Korea’s premium beef ``hanwoo’’ has commanded higher prices, which made it less affordable to many.
Lim, who laughingly admits to eating around 100 kilos of beef a year, hopes to see an increase in beef consumption, as prices of beef imports are now more competitive.
``Imported beef is cheaper and it fills the middle gap with the premium market... The most expensive pork cut is now more expensive than the cheapest beef. So people now have a real choice between beef and pork,’’ he added.
Lim has been at the helm of MLA, a company that provides marketing and R&D services to the Australian red meat industry, for 13 months. MLA, which opened in Korea in 1989, promotes Australian beef through menu promotions with restaurants and hotels; its Black Box culinary challenge for chefs and students; and through sampling stations in big retailers like E-Mart and Lotte Mart.
MLA’s efforts have been successful, especially in instilling a ``clean and safe’’ image of Australian beef among Koreans. Australian beef benefitted from the ban on U.S. beef over mad cow disease fears in 2003.
Unlike the United States, Australia has a National Livestock Identification System that allows it to monitor cattle from birth to packing, and in the case of any outbreak, it can be easily traced and quarantined immediately. ``Consumers understand that there is a traceability system and that enhances their confidence in the safety of Australian beef,’’ he said.
Even as American beef re-entered the market in 2008 and has launched an aggressive marketing campaign, Australia continues to dominate, even though its share has slipped.
`` (U.S. beef) had an aggressive marketing campaign, but we also benefitted from it a lot because they are reminding consumers that the alternative to pork is beef,’’ Lim said.
According to figures from the Korea International Trade Association, Australian beef has a 52 percent share in Korea as of the first half of the year. This represents a decline from 59 percent market share during the same period last year.
On the other hand, U.S. beef has increased its share to 30 percent in the first half of 2010, a seven percent increase from last the same time last year.
Yet, more importantly, Lim said, overall beef imports have increased significantly. From January to June this year, Korea imported 124,669 tons of beef, a 21 percent increase from the same period last year.
``Volumes are growing year-on-year and it makes everyone (in the industry) happy. We don’t care what our market share is as long as volumes grow,’’ Lim said.
If beef imports continue to grow by at least 20 percent every year over the next 3 to 5 years, Lim sees imports returning to levels recorded in the early 2000s, when annual imports totaled 320,000 tons.
``Korean consumers no longer focus on price and quality, but on cleanliness and safety. Because of our reputation, we have managed to hold on to a large market share... It’s not hard to maintain that image because we are clean and safe,’’ Lim said.
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