1. 1 The effectiveness of USMEF's programs Nick Young Promar International Nov 4 - 2004

2. 2 BACKGROUND Promar – Ag & food marketing consultants –Specialize on developing strategies & marketing plans - focus on strategic issues –As part of this service we evaluate strategies and marketing plans. –See our role to provide LEARNING & FEEDBACK to our clients to help them assess progress.

3. 3 EVALUATING USMEF MARKET DEVELOPMENT PROGRAMS USMEF task challenging –Often difficult to see direct impact of market development activity on sales. Other factors influencing. Generic market development is a painstaking & deliberate process –Develop awareness, knowledge, understanding, liking & preference – leads to being receptive to US meat & eventually a purchase. Evaluations: –Examine purchasing behavior of key meat purchasers –And how USMEF staff have changed buyers awareness, attitude & purchasing behavior.

4. 4 USMEF EVALUATIONS USMEF program built around servicing key accounts - important players in the market. Our task – assess if: –key players identified as targets, –specific marketing messages communicated &, most important –whether they have changed behavior. Note: –We are a third party. We have no ax to grind. –Our role to be an objective check on program strategy & implementation. –This is a difficult & challenging job. We are not always welcomed, & among some clients our conclusions are also not always greeted with enthusiasm. USMEF staff very supportive of our evaluation work –Never felt any pressure to take any particular view on their programs. –Moreover, they are open to our findings & recommendations.

5. 5 THE EVALUATIONS Beef - post BSE –Europe & Russia Beef - Pre BSE –Caribbean, Taiwan & Mexico

6. 6 TRADE POLICY Critical market access issues to be fought in all markets. Of primary importance but need to ensure trade policy fight is congruent with marketing position.

7. 7 EUROPE - EU - State of the market Overall EU market will continue to grow slowly Beef –Market has been decimated by the hormone ban. –Continues to be a problem & hence US will not be able to make significant headway. –NHT beef will continue to be a niche –But growing need for imports Pork –Hormone ban also a major problem. –Also, an oversupplied market where price is critical. Hence, a relatively low key USMEF involvement

8. 8 EU 16 (primarily UK & Benelux) Beef: only access is through NHTB Scheme. But availability has been a problem- though less critical now. –Most of the activity has fallen on supporting the two major importers. –These are critical. They do a great job for US. Very committed, although frustrated by prices & availability –The ABC concept is very limited without substantial supplies. Pork: Again only access is through a NHT Scheme –Some have found niche market - but this market is very small –Little that USMEF can contribute in this market except ensuring that buyers know of US availability & the quality of product/service package.

9. 9 EU 25 (new members Poland) Beef: –A very small premium beef market.  As now part of EU it has to take NHTB Scheme beef.  Now so expensive the market has disappeared. –Beef tripe trade has been very important  Total disappearance of this market saved by FAS & USMEF negotiations with Polish government.  But need to raise awareness that US can continue to service this trade Pork: –A very difficult market – price critical & now NHT Scheme –US pork did not have a good name among the trade! –USMEF worked hard to overcome problems

10. 10 SHOULD MEF CONTINUE IN EU MARKET? Low level investment in trade servicing is justified –Some risk attached to it, but on balance, needs to be continued. We give a confident 'yes' to this. –Inconceivable that such an important market should be left without any service. Import needs are projected to grow –Beef in particular.

11. 11 WHAT ABOUT DIFFERENT SPECIES & PRODUCTS? Beef: –Moderate priority  Continuing participation in ANUGA & SIAL - wide geographical interest in these shows.  Bricks & mortar ABC approach less effective than focusing on chefs. Chefs likely to have bigger multiplier effect on beef purchasing behavior (Chef's US meat accreditation)  NHTC program - maintain focus on opportunities for this product in EU. Maintain enthusiasm of 2 key beef importers. Continue pressure to make NHTCS less costly.  Recommend continuation as program is relatively inexpensive - importers bear a lot of the cost, & they create positive image.  Essential to maintain a toehold, although no major volume until there is a breakthrough on market access issues.

12. 12 WHAT ABOUT DIFFERENT SPECIES & PRODUCTS? Pork: –Low priority  Work in the US to promote niche opportunities  Very light trade servicing required Variety meats –Low priority - except Poland  Poland - need to improve awareness US beef tripe is still available.  Encourage exporters to look for EU approval to supply beef tripe.  Continue with light trade servicing

13. 13 EUROPE - FUTURE EU (2007 - BULGARIA & ROMANIA) Gearing up for EU entry (in 2 year's time) - so will be caught in the EU cobweb. Currently EU trade preferences. Very gloomy outlook These are traditional pork markets. –Very tough price competition from Brazil (& EU) for pork. –Light trade servicing required around meat trade shows - no specific activities. Very small premium beef trade as incomes are so low. –Both are relatively small markets (particularly BG) –Light trade servicing required - no specific activities. Variety meats very small & a low priority. –Light trade servicing required around meat trade shows - no specific activities.

14. 14 RUSSIA A very important market overall. Beef: –Not the same problem with growth promoter use. –Many high income consumers - ostentatious entertainment habits - price not a problem. Beef livers - excellent position in the market –MEF done a good job in sustaining interest –Success of product linked to low incomes Pork: –Good trade servicing job done to familiarize with US product.

15. 15 RUSSIA: PRIORITIES Leverage high –High quality beef  Augment ABC with chef accreditation scheme  Add chef missions  Develop interest in secondary cuts  Trade missions to focus on developing sales of premium cuts Leverage modest –Beef liver at retail  Continue with evaluation of sales data to ensure effective. Low leverage –Pork & beef in processing  Light trade servicing –Pork retail promotions  Need careful testing to identify value of this

16. 16 PRE-BSE EVALUATIONS Caribbean - pre BSE –Beef: A really good beef program  Real evidence of changed attitudes & changed purchasing behavior among a closely targeted group of buyers.  Well thought out strategy - well delivered. –Pork:  Constraints not so large  Several large companies have relatively easy access to the market without needing MEF help

17. 17 PRE-BSE EVALUATIONS Mexico - pre BSE –Generally a positive picture - however, we recommended less focus on the consumer & continuing emphasis on retail & food service. Retailers & food service are important drivers of consumer demand & seek US service –Better-off consumers trust the major retailers (& the US regulatory systems) Taiwan - pre BSE –The program has worked well - beef is the major opportunity & it is essential to keep working there - even more important to be there in post BSE phase –Pork – very price sensitive – light trade servicing to maintain awareness & image.

18. 18 CONCLUSIONS A generally tight ship in the markets we have looked at. Key strengths –Carefully defining constraints – target & message –Focus on the things that can be changed with modest funding –Key account program delivery –Open mind about the challenges  In general, continuous questioning of program effectiveness –Willingness to adjust program to meet  Changed market circumstances  Ineffective activities –Quality of the staff delivering the program –Integration of market access work

19. 19 Emphasis on increasing awareness, understanding & preference & capability of using or preparing it. Mature Immature Develop confidence, Catalysts to link buyers & sellers, Develop image that creates preference on basis of non price factors Product Market Upstream influences more important (importers, distributors, processors) Downstream influences more important (consumers, retail, HRI) – working through importers Differentiated Commodity Russia: pork (much done) EU pork (much done) EU: beef Russia: premium beef & beef liver BG/RO: pork & variety meats (but v. small market) BG/RO: beef (but v. small market) EU: Poland: beef tripe Market development approach – products/markets