Comprehensive Analysis of the Australian Meat Industry

This report provides a comprehensive analysis of the Australian meat industry, exploring its structure, key drivers, and challenges. The study begins with an executive summary highlighting Australia's significant role as a meat exporter and supplier, despite its relatively small domestic market. The report then delves into the macroeconomic factors influencing the industry through a PESTLE analysis, covering political, economic, social, environmental, and technological aspects. A competitive analysis, utilizing Porter's Five Forces, assesses the bargaining power of consumers and suppliers, the threat of new entrants, substitute products, and competitive rivalry. The report also examines external factors like consumer perceptions of red meat, trade barriers, and the impact of the World Trade Organization. Data visualizations, including charts on meat consumption and export to Japan, are included to support the discussion. The analysis concludes by highlighting the industry's strengths, weaknesses, opportunities, and threats, providing a well-rounded understanding of the Australian meat market. The report references relevant literature and includes appendices with supporting data.

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AUSTRALIAN MEAT INDUSTRY
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Executive Summary:
Australia meat market is relatively small but the country as emerged as one of the world’s
largest meat exporters and suppliers. This is because the country has a lower domestic
demand compared to the other meat producing economies in the world. The assignment
delves into the analysis of the meat market in Australia and takes into account the macro
economic factors like political, economic, technological and social factors through a PESTLE
Analysis. The study also delves into the competitive analysis by studying the bargaining
powers of the consumers and sellers. The paper also studies the rivalry in the market markets
and the threats established meat producers face from new meat producing firms. The paper
also contains mentions about various aspects of the meat market relating to the external
business environment like the perception in the society that red meat causes cancer, gradually
dissipating trade barriers in Australia and the impacts of the World Trade Organisation on the
market. The paper also contains graphs showing meat consumption of various categories of
meat like chicken and beef in Australia to make the discussion more lucid and
comprehendible. The chart on meat export to Japan is an example to show the growing export
of meat by Australia.

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Table of Contents
Introduction................................................................................................................................3
Pestle Analysis...........................................................................................................................3
Political factors.......................................................................................................................3
Economic factors....................................................................................................................4
Social factors..........................................................................................................................4
Environmental factors............................................................................................................4
Technical factors....................................................................................................................5
Porter's five forces......................................................................................................................5
Bargaining power of consumers.............................................................................................5
Bargaining power of suppliers...............................................................................................6
Threat of new entrants............................................................................................................6
Threat of substitute products..................................................................................................6
Threat of ccompetitive rivalry................................................................................................7
Conclusion..................................................................................................................................7
References:.................................................................................................................................8
Appendices:..............................................................................................................................10

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Introduction
Australia produces meat on a relatively small scale compared to other major
economies. However, Australia export a significant amount of its meat annually due to its
comparatively small population and low consumption (Spencer & Kneebone, 2012). The
country’s meat industry is majorly divided into two different production systems that include
the Northern (bos indicus cattle breed) and Southern (Bos Taurus cattle breed) meat
producers. The meat production and supply chain in Australia is significantly affected by
different factors that also influences the competitive advantage of the industry locally and
internationally.
As such, this report conducts a pest analysis that includes political, economic, social,
environmental and technical analysis of the Australian meat industry. The report further
highlights the industry’s porter's five forces that include the bargaining power of consumers,
the bargaining power of suppliers, the threat of new entrants and the threat of substitute
products.
Pestle Analysis
Political factors
There is an increased international demand for protein particularly in regions
experiencing various political unrests and wars such as the Middle East and Northern parts of
Africa (Kotler et al., 2009). Similarly, multinationals and developed economies in Europe and
the U.S are acquiring and developing large tracts of agricultural lands in most developing
economies. The result of such acquisitions is a significant effect on the agricultural
production and reduced food security.

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Economic factors
The 2008 global economic crisis affected most economies and resulted into acute food
shortage among other important necessities in most countries. However, Australia is steadily
recovering from the global financial crisis that affected its interest rates, commodity prices,
international and local trade and consumption among other economic issues. For instance, the
interest rates have significantly reduced making their commodities more competitive both
globally and locally. Australia has also dismantled most of its trade barriers especially in its
food industry in accordance with WTO policies increasing its exports.
Social factors
The increase in different lifestyle diseases in Australia and in different parts of the
world means that future consumption of red meat among other related products is likely to
reduce (Spencer & Kneebone, 2012). The increased need to maintain a healthy eating pattern
explains why most households are likely to reduce their purchase and consumption of red
meat which is largely attributed to chronic diseases such as cancer.
Environmental factors
The fluctuating climatic conditions in Australia implies that cattle producers have to
use different breeds to meet market demands and specifications (Adams et al., 2008). Also,
the diversity in environmental conditions occasionally forces producers to move their
respective stocks closer to the market and to greener pastures. This has increased operational
costs among meat producers in the country due to the increase in freight costs.

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Technical factors
Various technological applications introduced into the Australian meat industry have
significantly increased production. For example, the introduction of vitro development of
embryo and cryopreservation of embryo technologies. Moreover, the introduction of HMC
and vitrification technologies have plummeted the reproduction of beef cattle in Australia
(Spencer & Kneebone, 2012).
Porter's five forces
Bargaining power of consumers
The bargaining power of consumers in the Australian meat industry high. This can be
attributed to the increased range of available meat products offered by many competitors in
the market. Most consumers in Australia are very keen on the best quality meat and
reasonable pricing. The Southern Australia meet producers are known to produce the best
quality beef but are relatively expensive to Northern meet products.
The result is an increase in the bargaining power of the consumers due to the low
switching costs and expanded options. The high bargaining power of consumers is forcing the
Northern and Southern meet producers in Australia to revaluate their pricing and quality
production strategies to remain competitive in the industry.
Bargaining power of suppliers
The bargaining power of suppliers in the Australian meat industry relatively low. This
low bargaining power can be accredited to the many producers from Northern and Southern
parts of Australia. Also, the perceived differences in taste between forequarters and

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hindquarters have further affected retail of meat products in Australia. The Northern and
Southern meat consumers, therefore, have the enhanced advantage of directly negotiating
with these many meat suppliers to reduce prices and i9ncrease quality.
Threat of new entrants
The threat of new entrants into the Australian meat industry is high. The high threat of
possible entrants can be ascribed to the high growing rate of Australian economy and other
sectors of the economy. Many investors are gaining interest in the Australia meat industry.
This is also attributed to the minimal regulations by the Australian government on companies
seeking to gain entry into this lucrative industry. This high threat of potential market players
has led to prices wars with both Northern and Southern producers aiming at sustaining their
respective market dominance.
Threat of substitute products
The threat of substitute products in the Australian meat industry is also high. The high
threat of substitutes can be ascribed to increased entrance of new market players into the
industry. Also, alternative sources of protein such as fish and chicken threatens the long-term
survival of the industry. Other crucial sources of protein include walnuts and soya beans
among others. Indeed, most consumers are increasingly becoming more conscious about their
health and spending behaviours.
Most of these substitute products are considered to be healthier and relatively cheap.
Thus, the competitiveness and profitability of various producers in the Australian meat
industry have significantly reduced as a result of the increased presence of substitute
products.

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Threat of ccompetitive rivalry
The threat of competitive rivalry in the Australian meat industry high. Some of the
companies with large operations in the industry include the Consolidated Pastoral Company
(CPC) in Northern Australia, the North Australian Pastoral Company (NAPCo), Paraway
Pastoral Company, and S. Kidman Company among others. The industry also faces
competition from commercial meat processing from the UK, Mexico and U.S (Spencer &
Kneebone, 2012). As a result of the high competitive rivalry, sales of meat products and the
market share of respective companies operating in the industry have reduced significantly.
Conclusion
Based on the comprehensive analysis of the Pestle, the report ascertain that a
relatively stable political environment, stable economy, climatic diversity, technological
applications and lifestyle changes affects the operations in the industry. Conversely, based
on the analysis of Porter’s 5 forces, the report point at increased competition and high market
entrants as some of the feasible market threats.

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References:
Adams, R. M., Hurd, B. H., Lenhart, S., & Leary, N. (2008). Effects of global climate change
on agriculture: an interpretative review. Climate Research, 11(1), 19-30.
Asseng, S., Ewert, F., Martre, P., Rötter, R. P., Lobell, D. B., Cammarano, D., ... & Reynolds,
M. P. (2015). Rising temperatures reduce global meat production. Nature Climate Change,
5(2), 143-147.
Cline, W. R. (2007). Global warming and agriculture: Impact estimates by country. Peterson
Institute.
Ho, J.K.K. (2014) ‘Formulation of a Systemic PEST Analysis for Strategic Analysis,’
European academic research, 2(5), pp.6478-492.
Kotler, P, Keller, K, Burton, S (2009) Marketing management, 1st adapted edition, Frenchs
Forest, Pearson Education Australia pp. 74-89.
Kotler, P., Keller, K., & Burton, S (2009), from Chapter 3: Gathering information and
scanning the environment, Marketing Management, 1st adapted edition, pp. 74-89, French’s
Forest, Pearson Education Australia.
Kunc, M. (2010) ‘Revisiting Porter’s generic strategies for competitive environments using
system dynamics,’ Computational Analysis of Firms’ Organization and Strategic Behaviour,
1(2), pp.152.
Spencer, S & Kneebone, M (2012) 'FOODmap: An analysis of the Australian food supply
chain', Department of Agriculture, Fisheries and Forestry (DAFF), Commonwealth of
Australia, Canberra.

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Statistics.mla.com.au. 2017. MIDAS - Run Report. [online] Available at:
http://statistics.mla.com.au/Report/RunReport/e4469a3e-e951-4f85-8243-4d3b0f432624
[Accessed 24 Aug. 2017].
The Conversation. 2017. Three charts on: Australia's declining taste for beef and growing
appetite for chicken. [online] Available at: http://theconversation.com/three-charts-on-
australias-declining-taste-for-beef-and-growing-appetite-for-chicken-78100 [Accessed 24
Aug. 2017].

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Appendices:
Appendix 1:
Unit
of
Meas
ure:
Australian dollars
Sour
ce:
ABS/GTA
Carcase Bone-In Boneless Total
Year Chil
led
Fro
zen
Tot
al
Bee
f
Chill
ed
Froz
en
Total
Beef
Chilled Frozen Total
Beef
Chilled Frozen Total
Beef
2016 80,7
79
0 80,
779
1,334
,027
3,016
,654
4,350
,681
1,098,6
86,750
709,81
6,448
1,808,5
03,198
1,100,1
01,556
712,83
3,102
1,812,9
34,658
2017 0 813 813 383,3
01
2,245
,027
2,628
,328
525,982
,098
396,78
4,660
922,766
,758
526,365
,399
399,03
0,500
925,395
,899
Figure 1.Table showing meat export to Japan by Australia
(Source: Statistics.mla.com.au. 2017)

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Appendix 2:
Figure 2. Graph showing categories of meat consumption in Australia
(Source: The Conversation. 2017)