By Chris Betros

Executive Impact Jul. 12, 2010 - 05:00AM JST ( 59 )

TOKYO —

Debates on which country produces the best beef can range from amusing to quite heated. But there’s no doubt that Aussie beef has the preeminent position in the Japanese market—thanks to the efforts of Meat & Livestock Australia, the organization tasked with promoting the industry in Japan.

In 2009, Australian beef held a 44% share of the Japanese market; exports totaled about over 350,000 tonnes. Japanese beef was also on 44%, with the U.S. next on 6% and the rest from New Zealand, Canada and other countries. In the case of lamb, Australia also dominated the market with a 64% share, followed by New Zealand on 35%.

Under Regional Manager Glen Feist, MLA concentrates its efforts in four areas: maintaining the trade’s positive perceptions toward Australian beef; ensuring retailers remain loyal to Aussie beef via expanded merchandising techniques; educating consumers in the health attributes of eating beef in all marketing activities; and continuing to improve the image and awareness of Australian beef quality through chef networking activities.

Feist, who is from Adelaide, worked in Singapore, Malaysia, Hong Kong and South Korea, before taking up his Japan posting a year ago.

Japan Today editor Chris Betros visits Feist at the MLA offices in Hamamatsucho to hear more.

Is Japan Australia’s biggest export market for beef?

Definitely. We export beef to about 120 countries and Japan takes 30% of that. It’s been fairly steady trade since the late 1990s. Beef consumption reached its height in Japan in 2001.

What is the per capita consumption of beef in Japan?

About 6 kgs. In Australia, it is 38 kgs. There was this false belief among everyone in marketing way back in the early 1990s when we were forming initial marketing strategies, that if Australians eat 38 kgs, then Japanese should be able to eat somewhere near that amount, too. That strategy didn’t change until the 2000s. A more realistic goal for us now would be to see Japanese per capita consumption be about 10 kgs.

Did the recent foot-and-mouth outbreak in Miyazaki Prefecture boost sales of Aussie beef?

No. Everyone thinks it must have been good for Australian beef, but it didn’t really make a difference as the issue was confined to one brand and one prefecture. In Japan, there is a lot of empathy with local farmers. The government started a campaign to help the farmers and consumers felt they had to assist as well. Restaurants and supermarkets were encouraging consumers to eat Japanese beef, with some of the proceeds from sales even going toward helping the farmers.

What about the BSE issue with the United States?

In that case, sales of Australian beef did get a boost, but overall, it caused a big fall in consumption. We never actually got the whole American pie. The continuing effect on overall beef consumption still lingers in Japan today and as such, it our clear goal to lift beef consumption.

What’s your share of the market now?

Of the overall beef market in Japan, we have 44%, Japan also has 44%, the U.S. has 6%, and other countries have the rest.

Who do you sell to in Japan?

The biggest part of our business is food service. We supply high-end steakhouses, chains like Outback Steakhouse, restaurants, retailers and large supermarkets. Our offer is really a “fit for purpose” product where depending on the required specification, we can supply to it.

What about McDonald’s?

Over 90% of the beef used in McDonald’s Japan comes from Australia. American beef is not considered appropriate. Even in the U.S., a lot of the beef used by McDonald’s is Australian.

Do restaurants label the country of origin?

That is still an issue in Japan as there is no country of origin labeling laws for food service like there is in retail. Apart from the high-end restaurants, there is very little country of origin labeling on menus. Part of our strategy is to convince restaurateurs to do that and it requires a lot of lobbying and networking.

Are chefs very knowledgeable and particular about what they want?

Yes, they are. America and Japan have a fairly simple way of describing the grade of beef. However, because we produce a very varied product that can fit customers’ needs from manufacturing right through to the top end, our grading systems are more complex. We sit down with our customers and ask what their specific needs are and we suggest an eating quality to suit those particular needs. It’s all about the feeding regime, such as grass fed versus grain fed, and for how long the cattle are fed. For example, we have changed our feeding regime for this particular market based on requirements of the Japanese consumer. So there can be real differences in quality between one type of beef and another. Good chefs understand these things.

Have prices of beef come down recently?

Prices are driven by global demand. What has happened in the Japanese market over the past 18 months is that margins have been squeezed in all areas of the supply chain. Japan has a very complex infrastructure in terms of logistics. But we’re in tough times, so all the people in the supply chain have cut their margins. Slowly, the exporter and the retailer are coming closer together.

Tariffs are still an issue in the Japanese market and to this end, our government is currently negotiating a free trade agreement with the Japanese government. This market and Korea have some of the highest tariffs in the world. Korea is 40% and here is 38.5%. That means an extra 38% of every dollar added to the price of beef.

How are lamb exports?

We currently have a 75% market share. New Zealand has much of the retail segment, but we have most of the food service sector. Our lamb has genetically improved over the last 15 years for our larger markets of Middle East and the U.S. where there is a demand for bigger eye muscles. In Japan, however, retailers seem want smaller cutlets so they tend to favor the smaller New Zealand lamb.

Isn’t there a perception among Japanese that lamb is smelly?

There is reluctance by all Asians north of Australia, concerning lamb. Yes, 99% will say they don’t like lamb because it smells but most haven’t even eaten it recently. This goes way back to the 1950s when we were selling mutton around the world as an affordable protein. As mutton is from older sheep, the odor can be much stronger when cooked Asian style. But over the years, the refinement of producing lamb as a meat has made a big difference. It doesn’t smell. But the old idea has been passed on from parents to children.

We are making progress. In Hokkaido, Genghis Kahn Mongolian style BBQ is popular and we supply a lot of lamb there. Elsewhere, in Japan fine dining restaurants like our rack of lamb.

By the way, why can’t I find good sausages in Japan?

Everyone everywhere in the world wants the sausages that their mother used to cook when they were growing up. We can never replicate that. I could make you 1,000 sausages and you’d say they were not the ones you want. Sausages are a very individual thing. The one thing that has happened in more recent years is the production of gourmet sausages and in Australia especially, the range is enormous.

How do you market Aussie beef and lamb in Japan?

We develop and refine a strategy document every year on the status of the market, what we think we need to do to fulfill that strategy and how much it should cost. This is presented and discussed at a task force in Sydney made up of producers, exporters and stakeholders in the industry. They agree the strategy and we get to work. Fortunately, in Japan, marketing dollars are also added by importers and exporters in promoting their particular Australian beef and lamb brands.

What events do you have for chefs?

One example is that this year on June 2, we invited 300 top Japanese chefs to dinner at The Westin Hotel to try beef and lamb dishes and hear about our industry and our promotional strategies. The following week, we held a similar event for foreign chefs at a Michelin starred French restaurant. If you want to get on menus, networking with chefs and industry is a winning way. We also host a chef mission each year to Australia to showcase our industry.

What about at the retail level?

Sampling our product at retail level is one of the best ways to obtain consumer acceptance and purchase. To this end, we carried out over 8,000 sampling events in supermarkets last year, and 17 consumer events where consumers come along to see a famous chef. We even host cooking events for men. We are about to start a major summer merchandising competition whereby 900 retailers will compete in a 2-month display competition of Aussie beef. The winner gets a trip to Australia to see first hand just what Australia can offer the Japanese markets in terms of beef and lamb products.

How many staff do you have?

Nine beside myself. They work in retail, trade, food service, consumer marketing and PR media.

What do you focus on?

I make sure we spend our industries’ money in as wise a way as possible while fulfilling our marketing strategies. To this end, I make sure all that we do is linked together to spread our marketing dollars further. In terms of my management style, I want my staff to be totally free to think outside the box and then I help them with that, rather than saying, “This is what I want you to do.”

How many times a week do you eat steak?

About five times a week. I know, it’s probably two times too many but I have to eat out a lot with government representatives, retailers, hoteliers and restaurant owners. I like my steak medium. A nice grass-fed rib-eye or a grain-fed striploin suits me perfectly.

What do you think of the quality of steakhouses in Japan?

They are the best in all of Asia. One area we are working on here is educating their waiting staff to be able to describe the steak on the menu just like they do with wine so that they can explain the differing attributes. When I order a steak, I always ask the waiter to tell me about the beef. Nine times out of 10, they just say it is Australian. That happened when I first went to my favorite Western restaurant, the Oak Door. Afterwards, I said to the GM that it would be better if the staff could describe what they are selling. So we have done a lot education in that area.

Speaking of the Oak Door, I hear that you went there for dinner on your first night in Japan last year.

Yes. I went with my wife for some Aussie steak. That was when I first realized that not only the quality of beef in Japan was so high but so were the prices.

For more info, visit www.aussiebeef.jp [Japanese] or http://www.mla.com.au [English]