International Markets Committee Discusses 2010 Export Outlook, Urges Action on U.S.-Korea FTA
The beef industry’s Joint International Markets Committee discussed a host of trade topics Friday at the Cattle Industry Annual Convention in San Antonio. The keynote speaker for the meeting was Jonghyun Choi, minister for economic affairs for the Korean Embassy in Washington, D.C.
Choi strongly urged the committee to support a resolution submitted by the Nebraska Cattlemen that called on the U.S. Congress to immediately ratify the U.S.-Korean Free Trade Agreement. He warned committee members that if the U.S.-Korea agreement continues to languish while Korea engages in FTA negotiations with Australia, U.S. beef could be placed at a price disadvantage due to reduced tariffs on Australian products.
The committee unanimously supported the resolution, which was approved the following day by the full NCBA Board of Directors.
USMEF President and CEO Philip Seng provided the committee with a discussion of USMEF promotional activities and a number of emerging issues that impact consumer attitudes toward U.S. beef in overseas markets. Seng noted that one of the biggest changes he’s seen with regard to foreign marketing is the shift in packer outlook and behavior.
Philip Seng addresses the Joint International Markets Committee in San Antonio
“Years ago, packers looked at the foreign markets as ‘residual’ – somewhere to ship products not consumed in the United States,” he said. “But today, they see the international market as being much more primary. Foreign buyers are now setting standards that affect the entire beef production and supply system, and the international market is more consumer-driven than ever before.”
USMEF Chairman Jim Peterson provided the committee with a report on the Meat Industry Trade Coalition, which is a strategic planning task force designed to improve foreign market access for U.S. products. Peterson co-chairs the task force with NCBA representative Dana Hauck.
“This whole effort is using the existing industry organizations to address the issue of market access,” Peterson said. “The primary role that USMEF can play is in the area of market intelligence. USMEF has staff in those overseas markets every day of the year, so they understand the needs and wants of those countries. And through this task force, this information can be filtered into the policy organizations so that industry policy can take into account what each market’s needs are.”
Peterson added that it is his hope that the work of the industry task force will lead to a more incremental, market-specific approach to market access negotiations for U.S. beef.
“The industry has come to realize that an incremental approach is more effective, and the Meat Industry Trade Coalition is helping us consistently deliver that message to the U.S. government,” he said.
Committee Chairman Bob McCann led a discussion of the goals established in the Beef Industry Long Range Plan with regard to international marketing. He noted that the industry reached its goal of becoming a net beef exporter (in terms of value) by 2010, achieving that status in both 2008 and 2009. However, the United States has not yet reached its annual beef export volume goal of 3 billion pounds.
NCBA trade counsel Gary Horlick gave the day’s final presentation, discussing the status of the WTO trade action filed against the United States by Canada and Mexico with regard to mandatory country-of-origin labeling. Horlick expects an initial decision to be issued in the case by early 2011. When the initial decision is appealed, he expects the WTO’s appellate body to issue a ruling in mid-2011.
Korean Retail Giant Targets U.S. Beef to Bolster Sales
South Korean retailing giant E-Mart is looking to U.S. beef as one of the key tools to help it rebound from stagnant sales in 2009, and the early returns look extremely positive.
Sales in the big-box retail sector lagged behind general economic growth in South Korea last year, and management at E-Mart has seized on the concept of Everyday Low Prices (EDLP) to help it attract new customers, differentiate it from other big-box competitors and drive sales. U.S. beef is one of the key products E-Mart has identified to adhere to the EDLP program throughout the year.
Partnering with USMEF-Korea, E-Mart promoted three U.S. beef items – chilled bone-in short rib, chilled chuck eye roll and frozen bone-less chuck short rib – at 123 of its stores between Jan. 15 and Jan. 20.
USMEF-Korea assisted the promotion with the support of the Beef Checkoff and USDA Market Access Program (MAP) funds by conducting sampling of U.S. beef at 30 targeted E-Mart stores and by making purchasers eligible for a drawing to win a trip to the United States to visit a U.S. ranch. In addition, the stores showed commercials from USMEF’s “Trust” television advertising campaign on screens in the meat department.
U.S. beef was a popular purchase during the promotion, with sales in the six-day period reaching 1.86 billion Korean won (approximately $1.6 million), a 300 percent increase from the previous week.
In addition, the promotion helped U.S. beef rebound versus rival Australian beef. In the fourth quarter of 2009, Aussie beef outsold its U.S. counterpart by a ratio of 79 percent to 21 percent of imported beef sales. During the Jan. 15-20 promotion, U.S. beef outsold Australian beef by a ratio of 57 percent to 43 percent.
“E-Mart prepared this full-scale U.S. beef promotion to expand overall beef consumption that has slowed due to the depressed economy,” said E-Mart Livestock Team Manager Young-sun Min. “With the success of this promotion, we see strong potential with U.S. beef and are willing to strengthen promotional programs in cooperation with USMEF.”
During the promotion, E-Mart sold frozen bone-less chuck short rib valued at 1.25 billion Korean won (just over $1 million), chilled chuck eye roll valued at 350 million won (more than $300,000) and chilled bone-in short ribs valued at 330 million won (more than $280,000).
“The willingness of E-Mart to partner with USMEF and feature U.S. beef is a significant development,” said Jihae Yang, USMEF-Korea director. “E-Mart is a very influential retailer, and its long-term plan to feature U.S. beef is a clear sign that the market is more receptive to the message of the quality and safety of U.S. beef.”
Further Clarification on Korea’s New Labeling Requirements
USMEF has received additional clarification regarding the new labeling rules established by South Korea:
1.) A one-year extension has been granted on any rule related to bilingual labeling.
After one year, the Korean government will not allow a label that includes ONLY a third-country language, but a combination of English or Korean and a third-country language will be acceptable.
Acceptable examples:
- English only
- Korean only
- English and third country
- Korean and third country
- English, Korean and a third country
Unacceptable examples
2.) A 30-day extension has been granted on the enforcement of labels that indicate a destination other then Korea. After 30 days, the following criteria will apply:
- Label indicating destination is Korea - acceptable
- Label indicating no destination - acceptable
- Label indicating destination is a third country - unacceptable
If you have any questions or concerns please contact Kevin Smith at ksmith@usmef.org or 303-887-3334.
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USMEF Unveils Integrated Beef Imaging Campaign in South Korea
USMEF this week unveiled a multimedia advertising campaign with a “women-to-women” theme designed to raise the visibility of U.S. beef among South Korean consumers and counteract persistent negative images that have lingered since U.S. product reentered the market in mid-2008.
Developed after extensive consumer surveys and testing of the messages with focus groups, the campaign consists of television commercials, print ads and bus ads on the theme of “Trust.” The “Trust” theme will be integrated into other USMEF activities, including retail and foodservice promotions.
“The ads are designed to respond to what Korean consumers have been telling us,” said Jihae Yang, USMEF-Korea director. “In our research, consumers have told us they want to see images of safety and wholesomeness, and they are most receptive to hearing such messages from people like themselves: women who feed U.S. beef to their families. Trust in U.S. beef needs to be rebuilt.”
The ads are built around three women: a rancher, a scientist and a food safety inspector. The women are depicted in their work setting as well as with their children – sending the clear message that these women are both professionals as well as mothers who work to guarantee the safety of the beef they feed to their own families.
The ads are being targeted to women with school-age children who, research shows, are the primary food purchasing decision-makers in the Korean family.
The television ads, which began to air today, Dec. 9, are running on cable channels with a high proportion of target audience viewership. Similarly, the magazine ads will be placed in women’s publications while the bus ads will be focused on routes that run by the primary shopping districts in the Seoul metropolitan area, a city of 25 million people. The ads also will be aired on two strategically located jumbotron screens in high traffic areas of the city.
“The time is right to disseminate positive images of U.S. beef to Korean consumers, which in turn will support the impact of retail and restaurant promotions, and other activities in support of the trade,” said Yang.
U.S. beef consumption in Korea is on the rise, according to the local trade. Although the velocity of beef consumption remains below that of the pre-BSE period, there are clear signs of gains in U.S. beef distribution and usage by the foodservice sector, which accounted for an estimated 65 percent of U.S. beef consumption in 2003.
Particularly encouraging is growing usage by small- to medium-size independent barbecue and rib soup establishments, whose collective potential demand for U.S. beef is considered the largest among all sectors. There is also new buying interest by some catering and institutional operators.
“There is growing willingness by small restaurants to use U.S. beef,” said Elly Sung, USMEF/Korea’s assistant marketing manager. “Several months ago, restaurants were reticent to use U.S. beef because of requirements which obligate them to display the country of origin. These concerns are abating.”
Large U.S. beef stocks, purchased late last year when the value of the Korean currency plummeted during the global economic downturn, have clouded domestic wholesale marketplace psychology through the first three quarters of the year. However, USMEF estimates these stocks may have shrunk by about 25 percent in the past two months. According to local traders, as U.S. beef usage increases, the ratio of stocks to annual consumption, seen by local traders as a key health barometer of the market, has declined to more normal levels.
Weekly statistics for U.S. beef exported to South Korea show a steady rebound of sales, with the pace in late November reaching the second-highest level for all of 2009 and the highest level since February.
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