What supermarkets overseas are really saying about Australian Lamb Marcus O’Sullivan JBS Global (UK) Ltd

UK and EU retail trade Dominated by large multiples in a very competitive, very mature environment Top 3 global retailers present – Wal*Mart / Carrefour / Tesco Own brand is what they’ve invested in – providing their customers with confidence in their name UK retailers and public very focused on animal welfare and provenance – the most extreme of any market in the world Heavily promotional driven – big seasonal events, ie: Easter, Christmas, BBQ

UK No. 1 spot – Tesco >30%

UK No. 2 spot – Asda Wal*Mart >16.5%

Other UK retailers

French No. 2 spot – Carrefour >12%

Other French/EU retailers

What do all UK/EU retailers look for in a lamb supplier? Consistency Quality Delivery / Service Fit for Purpose Price Volume at key promotion periods A supplier who can meet their standards A marketing story if/when appropriate RETAILERS ARE A KEY CUSTOMER FOR AUSTRALIAN LAMB

Who is our competition? Domestically produced lamb UK primary European producer - 13m lamb kill Ireland / France / Spain all significant sheep kill Can only be exported within EU New Zealand lamb Very well established in the market place Often consumers first answer on where lamb comes from Complimentary seasonality

Australian lamb – how does it fare? Tesco and ASDA will retail Australian lamb 52 wks Carrefour will retail Australian lamb for promotional periods only UK retailers have wanted to decrease their reliance on NZ lamb No negative consumer reaction to its presence on shelf but no high awareness of Australia as a lamb producing country either We sit in second place to NZ as imported lamb suppliers

Challenges Size of our lambs Fat Levels EU Quota For UK – farm assurance and welfare standards Competitiveness – high AUD Time to market – shipping options

Size of Lambs Target UK retail spec carcase = E/U/R 2 & 3L = weight 15.0 – 21.5 kgs

UK system - Grid Payment Fat Class 1 2 3L 3H 4L 4H 5 E BID 15 -15 -30 -50 U 8 R -5 O -20 PH PL -£1 Conf ormation Example; deadweight bid price £3.50 /kg Paid to max. 21.5 kgs

UK carcase grading and fat % O P 2008 1.5% 15% 59% 23% 2% 2009 2.5% 17% 58% 22% 0.5% 2010 5% 54% 19% 0% 2011 18% 1 2 3L 3H 4L 4H 5 2008 1.5 24 54 15 4 0.5 2009 22 51 20 2010 2011 21 Source: HCC

How Australian lamb used by retailers? EU quota allowance means restrictions on shipping Bone in vs Boneless meat This narrows the type of cuts Australia can supply to market Primarily leg cuts Generally weight restrictions on Whole Legs due to sensitive price pointing More material supplied to UK as Part Boned Leg to be further processed / cut to smaller portion size

Australian lamb further processing

Retail Promotional Strategy Deep cut promotion, foot fall driving strategy Many promotions loss leaders at key sales periods, ie: Easter and Christmas Promotional ends / Feature ends in-store are prominent and where major activity occurs Very competitive (amongst proteins) to secure space on the feature end Multi-buy / fixed weight / round price points More lamb sold on ‘promotion’ than standard retail

Any 3 packs for £10

Easter Whole Leg

ASDA Easter advertising

Summary Global retailers – ‘friend or foe?’ To achieve greater market penetration, the industry must be able to meet the wants and needs of a demanding market Comment from a UK Retail Lamb Buyer – ‘Australian lamb can have an established place on our shelves and complement the British and NZ offer well. Our primary requirements are consistency, availability, quality and best commercial value. We do set the bar high on assurance standards and welfare, but these are a core value of the retail chain and intrinsic requirement of the British consumer.’