… The supermarket group hopes to sell hundreds of millions of dollars of premium cuts such as brisket to China's increasingly discerning consumers. Australian beef sales to China have hit record highs this year… Mr Keeve would not share sales targets for Coles-branded beef in China, but said the opportunity was significant… Australian beef exports to China were up 73 per cent year-on-year in the nine months to end-September…
Coles targets China's middle class with prime beef exports
Australian beef sales to China have hit record highs this year, partly due to an outbreak of swine fever which has decimated local pork supplies.
Michael Smith, The Australian Financial Review
Nov 7, 2019
Shanghai | Supermarket giant Coles will open an office in China next year as it becomes the latest Australian corporate giant to attempt to sell premium cuts of beef to the country's meat-loving middle classes.
While Coles has for decades been shipping to China parts of the cow that Australian consumers do not eat, the company has rebooted that strategy to cater for the country's changing tastes.
The supermarket group hopes to sell hundreds of millions of dollars of premium cuts such as brisket to China's increasingly discerning consumers. Australian beef sales to China have hit record highs this year, partly due to an outbreak of swine fever which has decimated local pork supplies.
"There is a huge demand with a growing middle class in China; a very fragmented industry; pork consumption is declining and beef consumption is growing; and the demand for premium quality Australian food is there,” Coles export chief Thinus Keeve said in an interview on the sidelines of Shanghai's import trade fair this week.
While Coles' China push has been an open secret in Shanghai business circles for some time, it is the first time the supermarket group has talked publicly about the strategy. Coles will open an office in Shanghai in March, after establishing a Wholly Foreign-Owned Enterprise, an investment vehicle for foreign companies operating in China.
Coles already exports $400 million in meat each year to 40 countries and is expanding into new product areas under chief executive Steven Cain's export strategy. China, which accounts for around half of that revenue, is at the centre of the plan.
Mr Keeve would not share sales targets for Coles-branded beef in China, but said the opportunity was significant.
“We will start small and grow it into a sizeable business. It is a serious commitment from the Coles business to open an office in Shanghai," he said.
Coles is not the first Australian company looking to sell high-quality beef to China though. Elders' push to sell Wagyu and Angus beef after buying a meat importing business in Shanghai in 2004 was loss-making for years. China also this week lifted a ban on Canadian beef sales.
Mr Keeve said Coles was aware of the risks, and "rapidly expanding into China is not the priority". Coles sells chilled beef into China through different channels, including e-commerce, wholesalers and local supermarket chains.
He said Coles would be dealing with some of the same customers it has used for 20 years, which reduced the risk.
Coles does not plan to open supermarkets in China, a strategy that has failed for other western retail chains. German discount supermarket chain Aldi opened two pilot stores in China this year.
But Mr Keeve said Coles could look at selling other products to China if the beef strategy was successful. The supermarket chain already sells wine to China.
"Our primary focus will be beef and lamb, but over time you will see us selling some oat products . . . . a bit of milk powder. The way to build this is to build our fresh credentials with beef and then look at whether there are other opportunities to grow," he said.
Meat & Livestock Australia said China became the world's biggest beef importer in July this year, bypassing Japan. The country now accounts for a quarter of Australian beef exports. Australian beef exports to China were up 73 per cent year-on-year in the nine months to end-September.
However, there is growing competition from...