Four emerging poultry meat markets take wing

Four emerging poultry meat markets take wing – South Africa, South Korea, Indonesia and Malaysia

Gina Castelnovo

Although a few big markets dominate U.S. poultry meat export statistics, some of the best growth opportunities can be found lower on the pecking order in smaller but rapidly emerging markets.

Emerging markets are typically characterized by fast-rising incomes, a developing middle class, some privatization of the economy and development of a private banking and financial sector. As a rule, these markets also tend to carry a higher risk of major economic, social, political or policy changes that may affect trade.

Given the number of small to midsize poultry markets that are climbing the trade charts, any short list of “hot prospects” is certain to be incomplete and somewhat arbitrary. However, exporters interested in exploring the opportunities in emerging growth markets would not want to overlook the four countries profiled below.

The USA Poultry and Egg Export Council (USAPEEC) is active in each of these countries, conducting a range of promotional activities targeted to the specific market and segments within that market.

South Africa

Population, 1995 est.: 45 mil.

Per capita GDP, 1994 est.: $4,420

U.S. poultry meat exports:

– 1991 $0.6 mil.

– 1995 $29.1 mil.

– Avg. annual growth 165%

Market Access: Since October 1995, South Africa has imposed no duties on turkey and turkey products, including whole turkeys, turkey parts, mechanically deboned meat and value-added products. Also in 1995, the tariff on chicken and chicken products was reduced to 27 percent of f.o.b. value.

The government currently refuses to issue import licenses for breakbulk shipments of all types of meat, including poultry, and allows only containerized shipments to enter its ports.

Infrastructure: South Africa has good telecommunications, a sophisticated financial sector and modern port, rail and other transportation facilities. More than 12,000 miles of electrified railways and 112,000 miles of highways link South Africa’s ports with other expanding markets in the region, including Namibia, Botswana, Lesotho, Swaziland, Zimbabwe and Zambia. These neighboring countries have a combined population of roughly 27 million.

Three of the country’s eight ports are equipped with container terminals, including Durban, Port Elizabeth and Cape Town. South Africa recently upgraded its container terminals and general cargo facilities to handle the expanding demand for containerized cargo and agricultural products, and agricultural importers there used their own funds to build new cold storage facilities in and near Cape Town.

Market Trends: Demand for poultry meat is expected to increase at virtually every income level. Poultry is the main source of protein for those with low incomes (about 70 percent of the population), as red meat prices remain beyond their reach.

An emerging black middle class views U.S.-made products favorably and is looking for more ways to prepare and serve poultry products quickly and conveniently. “Take away” foods, both ethnic and traditional, are growing in popularity with this group as well. A rapidly expanding tourism industry is expected to generate additional demand for selected high-value products, including microwaveable products and food packs for campers and hikers.

The retail food distribution network is currently dominated by four large supermarket chains and can support increasing urban demand for inexpensive poultry cuts. Potential also exists for further processed poultry products, such as turkey hams and frankfurters, as the 40-percent surcharge on imports of these dell items expired on October 1, 1995.

Products like frozen chicken nuggets, chicken Kiev and marinated chicken parts are only now being developed by the domestic poultry industry. Poultry parts and mechanically deboned poultry meat (used as a filler in sausages, hamburger patties and meat pies) are in high demand by catering companies, which feed more than a million mine workers daily. These types of operations number around 29,000.

South Korea

Population, 1995 est.: 46 mil.

Per capita GDP, 1994 est.: $11,270

U.S. poultry meat exports:

– 1991 $8.1 mil.

– 1995: $30.8 mil.

– Avg. annual growth 41%

Market Access: The Korean government began allowing frozen chicken imports in 1995 under a quota system negotiated during the Uruguay Round of multilateral trade negotiations. The quota for poultry meat was set at 7,700 metric tons for 1995, 10,400 tons for 1996, and 6,500 tons for the first half of 1997. On July 1, 1997, all quotas on frozen chicken imports are to be removed.

The government is also expected to loosen its controls on import-license auctioning, as well as its restrictions on time periods for shipment and sale of imported chicken.

Infrastructure: The Republic of Korea has fairly good infrastructure, especially around the capitol, Seoul. There are nine major seaports and more than 4,000 miles of railways. Although unevenly developed, Korea has almost 38,000 miles of highways. Telecommunications are excellent.

Market Trends: Korea’s rapidly expanding economy – growing at a rate of 7 to 8 percent a year – is expected to generate rising demand for U.S. poultry meat. Average household spending on food and dining out has increased tremendously over the past decade, accompanied by the spread of fast-food and family-style restaurants, including many major U.S. chains.

Frozen turkey parts, used to make sausages and further-processed poultry products, are currently the most heavily demanded U.S. poultry product in Korea.

Younger consumers, influenced by international and Western tastes and attitudes, have a high propensity to purchase imported products. The numbers of working women and two-income families are increasing, making Western-style convenience stores more attractive. Supermarkets and convenience stores now number in the thousands.

Indonesia

Population, 1995 est.: 204 mil.

Per capita GDP, 1994 est.: $3,090

U.S. poultry meat exports:

– 1991 $0.3 mil.

– 1995 $1.7 mil.

– Avg. annual growth 53%

Market Access: Until recently, Indonesia required all chicken entering the country to be certified as salmonella-free. This year, however, the government agreed to drop this provision. Recognizing that 87 percent of Indonesia’s population is Muslim, exporters need to concern themselves with obtaining proper halal slaughter certification for this large and growing market.

Infrastructure: Indonesia has eight ports, 450 airports, over 4,000 miles of railways and 70,000 miles of highways. Telecommunications are fair to good.

Market Trends: The country has around 250 supermarkets, with 150 in Jakarta. Almost all supermarket chains have plans for expansion over the next five years. Shoppers are being drawn to the convenience and cleanliness of supermarkets and the ability to do one-stop shopping. Most supermarkets carry both traditional and Western foods; they target middle- to high-income Indonesians (particularly the younger generation), expatriates and tourists.

Indonesia is experiencing a tremendous growth in restaurants, with 30 new and different U.S. restaurant franchises reportedly opening in the first half of 1996. These will join the 20 to 25 U.S. franchises already present, including Kentucky Fried Chicken, McDonald’s, Burger King, Wendy’s, Pizza Hut, Country Chicken, A&W, Western Sizzler, Hard Rock Cafe and Tony Roma’s.

Although Indonesia’s per capita poultry consumption is relatively low for the region, it is growing by 8 to 10 percent a year. Demand for processed poultry products, including dell meats and all kinds of turkey, exceeds supply.

Malaysia

Population, 1995 est.: 20 mil.

Per capita GDP, 1994 est.: $8,650

U.S. poultry meat exports:

– 1991 $1.1 mil.

– 1995 $2.1 mil.

– Avg. annual growth 18%

Market Access: Malaysia currently bans the import of frozen chicken, but imports of U.S. turkey and duck have proven competitive in terms of price and quality against products from Thailand, Brazil and the European Union. All imported poultry products must be accompanied by certification of halal slaughter.

In 1995, USAPEEC and the U.S. poultry industry sponsored a visit to the United States by key Malaysian officials so they could see how the U.S. poultry inspection system works and review U.S. poultry plants for export eligibility. The officials represented the Malaysian Department of Veterinary Services and Pusat Islam (the Malay halal slaughter certification organization). As a result of this effort, eleven U.S. poultry processing plants have been approved.

Infrastructure: Malaysia has 17 ports, 115 airports, more than 1,000 miles of railways and 17,000 miles of highways. Telecommunications are fair to good.

Market Trends: Despite its rapid economic growth, Malaysia is still a somewhat agrarian country, with purchasing power concentrated in urban areas. In the cities, shopping habits are changing, with more consumers now shopping in supermarkets and eating out. Several new supermarkets have been built recently with Japanese investment.

Gina Castelnovo is a poultry market development analyst and Roseanne Freese is a poultry trade analyst with the Dairy, Livestock and Poultry Division, FAS. Tel. (202) 720-2208, fax (202) 720-0617.

COPYRIGHT 1996 U.S. Department of Agriculture

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