If consumer trends in the European Union and Japan were summed up in one phrase, it might be “low-cost, value-added and branded.”
If the potential for U.S. pork exports to the EU were similarly summed up, it would be “limited.” That’s because of the expense and challenges that U.S. plants face in obtaining EU approval. For perspective, U.S. pork exports to Japan in a single month in 2002 exceeded the total year’s U.S. pork sales to the EU.
Earlier this summer, pork industry representatives met at the World Pork Congress in Birmingham, England, to discuss market trends, opportunities and challenges. There, Colin Smith, commercial director for Britain’s giant supermarket Tesco, said global meat retailing’s future relies on listening and responding to the customer. Our customer, he added, is always the consumer.
What do EU consumers want? They want pork that is cheap and easy to prepare. Thus the British
supermarket chain’s strategy is a price-led one that sees its greatest growth potential in ready-made meals.
Smith said the pork industry must produce a quality product for even lower prices than it is today. While lower consumer prices often mean unprofitable prices for producers, Smith said that driving producers out of business isn’t good for anyone. He pointed to the supply and demand system as a place to tighten costs.
Can producers improve quality with Tesco’s price-led strategy? One way might be through long-term partnerships. Tesco doesn’t offer short-term contracts, but Smith said 15-year unofficial partnerships with producers are commonplace.
Even though EU consumer trends have little direct relevance to the U.S. pork industry, actions there tend to surface in the United States.
Japan, on the other hand, is the No. 1 export market for U.S. pork. It has suffered for more than a decade from a minor, but smoldering recession that has increased price competition in all sectors, but especially in food. Pork consumption has held static at about 1.5 million metric tons in recent years, and shows little sign of increasing.
According to Minoru Nose, with Itoham, Japanese consumers check a product’s freshness first, then the sell-by date, price and its origin.
With freshness uppermost in Japanese consumers’ minds, it is vital for pork products to have: 1) appropriate meat color; 2) firm texture; 3) consistency in size and cut; 4) attractive packaging.
Consumers are willing to pay a premium for domestic branded pork, although U.S. pork is by no means inferior. Japan’s domestic pork supply continues to decline, securing the prospect of future export opportunities.
Japanese consumers will pay more for a label than for the meat, said Nose, but will expect quality and consistency every time they purchase that brand. At all levels – the producer, wholesale and retail – brand marketing strives to differentiate the product from the rest in terms of appearance, consistency and taste.
While it is certain that imported pork will increase in market share, the most successful exporters will be those who establish their brands in the consumers’ consciousness and accommodate the needs of all of Japan’s market sectors – the consumer, the ham and sausage manufacturers, and the restaurant industry.
The lesson, then, for the U.S. pork industry and exporters, is that it’s hard work to give consumers what they want in each market. However, it’s well worth it if the country you want to export to plays by the rules and lets your product compete.
What’s the Export Hang up?
For many reasons the European Union has been a tough market for U.S. pork exports to crack.
To start, pork exports to the EU must come from hogs that are slaughtered in a federally inspected plant that’s approved for export to the EU. Each group of animals must be identified with a unique identification to maintain segregation and to facilitate traceback in the event of a violation. All plants approved for pork and offal exports to the EU are required to participate in the EU’s “Additional Residue Testing Program,” which the U.S. Food Safety and Inspection Service administers.
Samples are collected and tested for residues at the industry’s expense in independent laboratories participating in the Agricultural Marketing Service’s European Meat Export Laboratory Program. The costs to simply access what is a difficult and competitive market is such a deterrent that only one U.S. pork plant is currently approved to export to the EU.