INDUSTRY REPORT C1111
Meat Processing in Australia
Tenderised: Revenue is set to fall as lamb prices take a sharp downturn
Tim Calabria | April 2023
IBISWorld.com
03 9655 3881
info@IBISWorld.com
Meat Processing in Australia
April 2023
Contents
Recent Developments......................................................... 3
COMPETITIVE LANDSCAPE.......................... 22
ABOUT THIS INDUSTRY.................................. 5
Industry Definition................................................................5
Major Players...................................................................... 5
Main Activities..................................................................... 5
Supply Chain....................................................................... 6
Market Share Concentration............................................. 22
Key Success Factors........................................................23
Cost Structure Benchmarks............................................. 23
Basis of Competition......................................................... 26
Barriers to Entry............................................................... 26
Industry Globalization........................................................ 28
INDUSTRY AT A GLANCE................................ 7
MAJOR COMPANIES...................................... 29
Executive Summary............................................................ 9
Major Players.................................................................... 29
Other Companies.............................................................. 32
INDUSTRY PERFORMANCE..........................10
Key External Drivers.........................................................10
Current Performance........................................................ 11
INDUSTRY OUTLOOK.................................... 13
Outlook.............................................................................. 13
Industry Life Cycle............................................................. 15
PRODUCTS & MARKETS............................... 16
Supply Chain..................................................................... 16
Products & Services.......................................................... 16
Demand Determinants...................................................... 17
Major Markets....................................................................17
International Trade............................................................ 18
Business Locations........................................................... 20
OPERATING CONDITIONS............................ 33
Capital Intensity................................................................. 33
Technology & Systems......................................................34
Revenue Volatility..............................................................35
Regulation & Policy........................................................... 36
Industry Assistance........................................................... 36
KEY STATISTICS............................................ 38
Industry Data..................................................................... 38
Annual Change..................................................................38
Key Ratios......................................................................... 38
ADDITIONAL RESOURCES............................39
Additional Resources........................................................ 39
Industry Jargon..................................................................39
Glossary............................................................................ 39
CALL PREPARATION QUESTIONS............... 41
Role Specific Questions.................................................... 41
External Impacts Questions.............................................. 42
Internal Issues Questions.................................................. 42
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Meat Processing in Australia
Recent
Developments
April 2023
Russia-Ukraine conflict disrupts global agricultural supplies
Russia and Ukraine are both significant global producers of wheat and other grains such as barley, maize and oats.
As a result of the conflict, the gap in global supply has led to a sharp rise in demand for Australian- and New
Zealand-grown wheat and coarse grains. However, as Russia is one of the largest producers of fertiliser and
fertiliser inputs, rising fertiliser costs have placed pressure on farmers' profits across the agricultural sector. These
input cost increases have been passed on to consumers, heightening demand for cheaper, processed fruit and
vegetables.
Foot-and-mouth disease threatens Australia and New Zealand
Indonesia has suffered its first foot-and-mouth disease (FMD) outbreak in over 40 years, and the disease now
threatens Australia and New Zealand. Although the Australian and New Zealand governments have increased
biosecurity measures, virus fragments have made it into Australia. FMD affects all cloven-hoofed animals, meaning
sheep, pig, beef cattle and dairy cattle farmers would all be at risk should an outbreak occur. The Australian Bureau
of Agriculture and Resource Economics and Sciences estimates that a severe outbreak could directly affect the
Australian economy by $80.0 billion over 10 years.
FTAs with UK and India expected to boost Australian exports
Australia has signed free trade agreements (FTAs) with both the United Kingdom and India. The Australia-United
Kingdom Free Trade Agreement was signed in late 2021 and both parliaments are set to ratify the agreement, which
is due to come in to effect in early 2023. Australian and Indian ministers signed the Australia-India Economic
Cooperation and Trade Agreement in April 2022. Both India and the United Kingdom represent significant export
markets for Australian firms and FTAs, and both countries are anticipated to boost Australian export activity.
Component shortages and price leaps hamper Australian manufacturers
The ongoing fallout from the COVID-19 pandemic is weighing on the Australian manufacturing sector, by means of
supply chain issues and subsequent price leaps for parts and raw materials. According to the ABS, input prices for
manufacturing rose strongly by 17.7% over the year through June 2022. High freight costs and reduced
manufacturing activity abroad have slimmed global component supplies, contributing to price rises. Increasing prices
are expected to reduce average profit margins for manufacturers, while rising output costs are likely to decrease
demand from downstream customers, slowing down manufacturing activity.
This section last updated April 14, 2023
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Meat Processing in Australia
April 2023
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Meat Processing in Australia
April 2023
About This Industry
Industry Definition
Industry operators primarily process live animals into meat products. Processors slaughter, bone, freeze, preserve,
pack and can meat. Businesses that primarily manufacture meat from abattoir by-products, and render lard or tallow
are also included in the industry. The industry excludes poultry and seafood processors, and smallgoods
manufacturers (such as bacon, ham and corned meat producers).
Major Players
JBS Australia
Thomas Foods International
Teys Australia
Main Activities
The primary activities of this industry are:
Beef and veal
Lamb and mutton
Pig meat
Goat meat
Kangaroo meat
The major products and services in this industry are:
Beef and veal
Lamb and mutton
Pig meat
Other meats
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Meat Processing in Australia
April 2023
Supply Chain
SIMILAR INDUSTRIES
Poultry Processing in Australia
Cured Meat and Smallgoods
Manufacturing in Australia
Butter and Dairy Product
Manufacturing in Australia
Cooking Oil and Margarine
Manufacturing in Australia
RELATED INTERNATIONAL INDUSTRIES
Meat, Beef & Poultry Processing
in the US
Hot Dog & Sausage Production in
the US
Rendering & Meat Byproduct
Processing in the US
Meat Processing in the UK
Meat Processing in New Zealand
Meat Processing in China
Meat, Beef & Poultry Processing
in Canada
Meat Processing in Ireland
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Meat Processing in Australia
April 2023
Industry at a Glance
Key Statistics
Key External Drivers
$20.8bn
Revenue
Annual Growth
Annual Growth
Annual Growth
2018–2023
2023–2028
2018–2028
-0.6%
2.4%
$853.3m
% = 2018–23 Annual Growth
-1.6%
6.9%
Beef and veal production
Domestic price of beef
3.3%
2.1%
Domestic price of lamb
Demand from food retailing
0.5%
-0.6%
Demand from cafes, restaurants
and takeaway food services
Trade-weighted index
Industry Structure
Profit
Annual Growth
Annual Growth
MIXED IMPACT
2018–2023
2018–2023
Life Cycle
Mature
Revenue Volatility
Medium
Capital Intensity
Medium
Concentration
Medium
Technology Change
Medium
Barriers to Entry
Medium / Steady
0.4%
4.1%
Profit Margin
Annual Growth
Annual Growth
Competition
Medium / Steady
2018–2023
2018–2023
NEGATIVE IMPACT
0.2pp
Industry Assistance
Low / Increasing
Regulation & Policy
Heavy / Increasing
Industry Globalization
High / Increasing
599
Businesses
Annual Growth
Annual Growth
Annual Growth
2018–2023
2023–2028
2018–2028
2.0%
2.2%
 Rising global demand for Australian meat has supported
industry revenue growth
 Supply chain disruptions induced by the COVID-19
pandemic have constrained meat products exports
34,477
 Meat production has been volatile as weather conditions
have been mixed across the country
Employment
Annual Growth
Annual Growth
Annual Growth
2018–2023
2023–2028
2018–2028
-0.2%
1.8%
 Adding value to existing meat products provides a significant
opportunity to boost revenue
 Investment in plant upgrades and new technologies will
improve meat processing efficiency
 The Regional Comprehensive Economic Partnership will
support meat processors
$2.1bn
Wages
Annual Growth
Annual Growth
Annual Growth
2018–2023
2023–2028
2018–2028
-1.2%
1.8%
7
Key Trends
 Australia's meat processors export over 65% of production,
with beef accounting for most exports
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Meat Processing in Australia
April 2023
Products & Services Segmentation
Major Players
SWOT
STRENGTHS
Low & Increasing Level of Assistance
Medium Imports
Low Customer Class Concentration
High Revenue per Employee
WEAKNESSES
Low Profit vs. Sector Average
High Product/Service Concentration
High Capital Requirements
OPPORTUNITIES
High Revenue Growth (2023-2028)
Demand from cafes, restaurants and takeaway food
services
THREATS
Low Revenue Growth (2018-2023)
Low Performance Drivers
Beef and veal production
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April 2023
Executive Summary Tenderised: Revenue is set to fall as lamb prices take a sharp downturn
The Meat Processing industry has been enduring a period of decline. Volatile production volumes and labour
shortages caused by the COVID-19 pandemic have constrained meat processing operations at times. Demand from
export markets has remained strong, despite exports heavily weakening in 2020-21, caused by a dip in demand
from China. Australian meat exporters found new homes for their products, mainly in South Korea. But, just as
export revenue resurged in 2021-22, import competition intensified, causing a revenue shortfall in that year.
Strong export demand and herd rebuilding activity have caused meat shortages, driving up domestic beef and
sheep meat prices. Escalating prices have supported profitability for meat processors, as has greater automation
and lower wage costs. Meat processing revenue is expected to fall at an annualised 0.6% over the five years
through 2022-23, to $20.8 billion. This trend includes an anticipated 2.2% decline in 2022-23, as beef prices stabilise
and lamb prices take a sharp downturn.
Australia's meat processors export the vast majority of production by value, with beef accounting for most exports.
Some of the largest export markets for meat processors have expanded in recent years, including Japan and South
Korea. This factor has created an opportunity, as beef exports to these nations have soared. Yet, the COVID-19
pandemic has caused volatility in demand. Climbing disposable incomes in some emerging economies have
coincided with negative consumer sentiment in key export markets.
Meat processing revenue is set to make a recovery in the coming years. China, the main recipient of Australian meat
exports, has become a more restricted market. Notably, diplomatic tensions have led to tariffs and bans on select
Australian agricultural goods, and meat processors are vulnerable to future trade restrictions. At the same time, the
Regional Comprehensive Economic Partnership, an expansive trade agreement covering 15 countries including
Japan, South Korea, New Zealand and the members of the ASEAN block, will represent a significant opportunity for
future expansion. Overall, revenue is set to rise at an annualised 2.4% over the five years through 2027-28, to $23.4
billion.
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Meat Processing in Australia
April 2023
Industry Performance
Key External
Drivers
Domestic price of beef
Beef and veal account for the largest share of processed meats sold annually. Fluctuations in beef prices affect
revenue for meat processors. Beef prices move in line with cattle supplies, and demand for beef among domestic
and overseas consumers. Higher beef prices increase revenue for most meat processors. The domestic price of
beef is set to weaken by 1.1% in 2022-23.
Trade-weighted index
Meat processors derive the vast majority of revenue from export markets. Fluctuations in the exchange rate weigh
heavily on demand for meat. A strong Australian dollar makes Australian meat products more expensive in overseas
markets, which can weaken exports. A strong dollar also makes imports more affordable and can contribute to
stronger import competition. The Australian dollar is anticipated to appreciate by 1.9% in 2022-23.
Domestic price of lamb
As lamb is a major product for meat processors, lamb prices influence final earnings. As with beef, higher lamb
prices tend to increase revenue, with lamb processors achieving higher returns. Yet, some consumers may switch to
cheaper substitutes if prices become too high, reducing demand for lamb. Even so, the net effect of higher lamb
prices is positive for processors. The domestic price of lamb is expected to plummet by 13.2% in 2022-23.
Beef and veal production
The volume of beef and veal meat produced nationally reflects output and earnings for meat processors, as beef
and veal account for over 65% of revenue. Unless meat prices weaken significantly, higher beef and veal production
boosts revenue for processors. Conversely, dwindling beef and veal production typically threatens earnings for
processors. Beef and veal production is set to spike by 9.5% in 2022-23, as farmers' herd-rebuilding activities take a
back seat.
Demand from cafes, restaurants and takeaway food services
Food-service establishments are a major downstream market for meat processors. Major cafe, restaurant and
takeaway chains typically purchase meat directly from large processors. Small, independent food-service
establishments tend to purchase meat through wholesalers. Rising sales to these businesses boosts revenue for
processors. Demand from cafes, restaurants and takeaway services is expected to expand by 2.1% in 2022-23,
presenting an opportunity for meat processors to expand.
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Meat Processing in Australia
April 2023
Demand from food retailing
Food retailers are major domestic purchasers of fresh meat. Supermarkets account for most sales to this market,
although meat processors also sell to fresh meat retailers like butchers. More orders at the retail level boost
processing output, but higher import competition can displace demand for locally processed meat. Demand from
food retailing is expected to climb by 1.2% in 2022-23.
Current
Performance
Meat processing revenue is expected to creep downwards at an
annualised 0.6% over the past five years, including a 2.2% fall in 2022-23,
to total $20.8 billion, with profit margins going up to 4.1%.
Meat exports to China have ebbed and flowed
 Prior to 2020-21, Australia gained greater access to chilled meat exports to China.
 In March 2017, the number of processors permitted to export chilled meat from Australia to China rose from
10 to 36, which contributed to a strong expansion in meat exports over the three years through 2019-20.
 Diplomatic disputes with China have resulted in the country suspending meat imports from several large
Australian abattoirs. These suspensions, combined with trade disruptions throughout the COVID-19
pandemic, heavily constrained export earnings in 2020-21.
Exports go from strength to strength, despite adversity
 Beef has remained a strong export commodity for Australia. While competition from other prominent
markets has crept up, demand for high-quality Australian beef has remained strong, particularly from Japan
and other Asian nations.
 Australia's standing as a provider of reputable and high-quality meat partly insulated meat processors from
the adverse effects of the COVID-19 pandemic. Reputational advantages on the international stage have
also enabled Australian exporters to find alternative export markets after China became closed off to some.
 Export revenue bounced back strongly in 2021-22, as exporters found new markets in South Korea and
other Asian nations.
Meat processors have been contending with mounting import penetration
 The value of imported meat has been climbing higher and higher in recent years.
 Similar to exports, import volumes plummeted in 2020-21, as the COVID-19 pandemic disrupted global
supply chains.
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 Import penetration spiked in 2019-20 and 2021-22. Beef imports in particular have been on the rise, with
high local prices encouraging some customers to purchase cheaper imported meats, particularly food
product manufacturers.
 Imports have climbed overall in recent years, while meat processor revenue has fallen, causing imports to
now account for almost one-quarter of domestic demand. But the Australian dollar has depreciated and
made overseas imports relatively more expensive, which has partially offset this trend.
Meat production has been volatile, which has disrupted revenue for meat processors
 Weather conditions, like drought or floods, influence the number of animals slaughtered. But high global
prices have had a stronger effect and supported slaughter rates in recent years.
 Beef, which is the largest product segment for processors in both volume and value, is highly sensitive to
weather conditions. For example, cattle and sheep slaughter rates increased significantly during 2018-19.
Periods of drought on the Australian east coast have reduced pasture quality and increased the cost of
keeping livestock, which has encouraged many farmers to increase turn-off rates.
 Higher turn-off rates have contributed to growth for meat processors. Yet, high rainfall over the past two
years is set to precipitate lower turn-off rates, as farmers focus on herd rebuilding activities.
More processors are starting up, despite labour shortages
 Mounting competition has caused some processors to either exit or be acquired by larger rivals.
 New processors have continued entering to target niche meat product segments.
 Labour shortages, due to low migration during the pandemic, have caused employment numbers and wage
costs to diminish.
 Meat processors have been investing more in automation, reducing reliance on labour.
Profit is on the way up despite a spike in purchase costs
 Profit margins are highly sensitive to livestock saleyard prices and export prices, and profit can vary widely
among different product segments.
 Overall profitability has strengthened despite dwindling revenue. Strong sales of Australian meat products in
export markets have boosted beef, lamb, mutton and pork prices, supporting margins.
 Purchase costs have soared as a share of revenue, as livestock saleyard prices have trended upwards,
limiting profit.
Historical Performance Data
Year
Revenue
($m)
IVA
($m)
Establishments
(Units)
Enterprises
(Units)
Employment
(Units)
Exports
($m)
Imports
($m)
Wages
($m)
Domestic
Demand
($m)
2013-14
18,659
3,041
850
681
35,279
12,464
704
2,084
6,899
2014-15
23,044
3,503
867
656
36,862
16,344
875
2,259
7,574
2015-16
23,353
3,596
783
656
36,241
15,542
859
2,372
8,670
2016-17
20,573
3,127
715
593
33,956
13,576
846
2,087
7,843
2017-18
21,457
3,326
761
542
34,835
15,203
862
2,206
7,115
2018-19
21,725
3,563
801
583
35,708
17,033
887
2,291
5,578
2019-20
22,698
3,654
820
614
34,623
19,055
1,026
2,267
4,670
2020-21
21,312
3,367
801
600
34,342
14,757
837
2,179
7,392
2021-22
21,282
3,320
826
607
34,870
17,789
975
2,117
4,468
2022-23
20,811
3,247
813
599
34,477
17,601
991
2,075
4,201
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Meat Processing in Australia
April 2023
Industry Outlook
Outlook
Meat processing revenue is forecast to expand over the five years through
2027-28, at an annualised 2.4% to total $23.5 billion, while profit margins
will climb to 4.4% of revenue.
Exports are set to enjoy a modest expansion
 Due to Australia's mature meat market, meat processors will continue relying on export markets to boost
sales and expand revenue in the coming years.
 Exports are poised to climb at an annualised 1.0% over the five years through 2027-28. This improvement
can be largely attributed to reduced herd building efforts among upstream farmers, which will augment beef
production and result in higher export volumes.
 The expanding middle-class in South-East Asian markets indicates stronger purchasing power among end
consumers, further supporting sales of high-value meats.
International competition will continue to intensify
 Australian beef exporters are set to face stronger competition in international markets. For example, United
States beef exporters targeting Japan and South Korea will reclaim much of their lost market share in the
coming years, as beef supply in the Unites States continues climbing.
 Brazil and Argentina will provide greater competition for low-cost beef, particularly towards the latter half of
the next five years.
 The Regional Comprehensive Economic Partnership (RCEP) will strengthen Australia's position as an
exporter of meat products within the ASEAN trading bloc, giving local meat processors a fighting chance in
key markets.
The all-important Chinese market is poised on a knife-edge
 The outlook for Australian beef export growth hinges on diplomatic relations improving with China.
 Current diplomatic relations are tense. While China is a part of the newly signed RCEP, this fact alone will
not prevent China from retaining the current barriers to trade, including prohibitive tariffs.
 The continuation of trade restrictions would significantly limit exports for meat processors, particularly as
China stands as a large market by value, representing almost one-quarter of all exported goods.
 If China removes its trade restrictions on Australian meat exports, revenue would soar beyond current
forecast levels.
A taste for gourmet meats is set to support profit margins
 Profit margins for meat processors are set to strengthen slightly in future.
 Rising production volumes across most meat products, and consumers' increasing taste for premium food,
will provide support for average margins.
 Meat processors that sell to lucrative export markets will face stronger competition as global supply ramps
up, which will weigh on profitability.
Large meat processors are set to consolidate, improving economies of scale
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 Investment in plant upgrades and advancements in technology will continually improve efficiency.
 Meat production, processing and retailing will become more integrated, as more consumers demand
tracking of their food's supply chain.
 Vertical integration among livestock producers, meat processors, wholesalers and retailers will provide
opportunities to build greater economies of scale in production and distribution. Rising consolidation will
augment economies of scale, as larger operators seek to acquire smaller processors.
Value-added meat products will go from strength to strength
 Processors that can add value to existing meat products will enjoy an opportunity to increase revenue and
profitability in the future.
 Australian processors will raise their quality standards and tailor meat cuts to the needs of different market
segments.
 Transforming traditional meat cuts into more complex products increases per-unit returns and reduces price
competition.
 Meat processors are set to add value through enhanced packaging, premium cuts and leaner selections of
meat.
Performance Outlook Data
Year
Revenue
($m)
IVA
($m)
Establishments
(Units)
Enterprises
(Units)
Employment
(Units)
Exports
($m)
2022-23
20,811
3,247
813
599
34,477
17,601
991
2,075
4,201
2023-24
21,976
3,450
863
632
36,009
17,962
1,023
2,184
5,038
2024-25
22,425
3,453
885
644
36,376
18,165
1,060
2,186
5,320
2025-26
22,828
3,516
902
654
36,965
18,137
1,094
2,220
5,785
2026-27
22,418
3,452
888
640
36,133
18,524
1,139
2,177
5,033
2027-28
23,476
3,662
932
669
37,684
18,513
1,188
2,271
6,150
2028-29
23,861
3,698
951
679
38,181
18,562
1,233
2,297
6,531
14
Imports
($m)
Wages
Domestic
($m) Demand ($m)
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Meat Processing in Australia
Industry Life Cycle
The life cycle stage of this industry is
April 2023
Mature
LIFE CYCLE REASONS
The domestic market is growing slowly
Competition from poultry meat is strengthening
Export markets represent the main opportunity for expansion
Contribution to GDP
Industry value added for meat processing has been expanding, but at a slower rate than GDP. This means that
meat processing is making up a smaller share of Australia's economy.
Market Saturation
Although the domestic market is saturated and sales are moderately stable, rising demand from overseas markets
has boosted revenue for meat processors. Both domestic and global markets have acquired a taste for high-quality
meat products.
Innovation
More products are being made from organic meat and meat from specially-fed cattle. Meat grading has also been
introduced by Meat Standards Australia, which labels beef and sheep meat with a guaranteed grade and
recommended cooking method.
Consolidation
Consolidation activity has been on the rise, which indicates that meat processing is mature. Even so, some new,
small processors are entering to fill niche markets.
Technology and Systems
Some technological advances have benefited meat processors, including automated production processes and
electronic microchips to trace livestock throughout the supply chain.
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Products & Markets
Supply Chain
Key Buying Industries
Key Selling Industries
1st Tier
1st Tier
Fast Food and Takeaway Food Services in Australia
Sheep Farming in Australia
Restaurants in Australia
Beef Cattle Farming in Australia
Cafes and Coffee Shops in Australia
Pig Farming in Australia
Meat, Poultry and Smallgoods Wholesaling in Australia
2nd Tier
Fresh Meat, Fish and Poultry Retailing in Australia
Fertiliser Manufacturing in Australia
Supermarkets and Grocery Stores in Australia
Grain Growing in Australia
2nd Tier
Hay and Other Crop Growing in Australia
Consumers in Australia
Veterinary Services in Australia
Products & Services
Diminishing herd numbers have weakened sales of beef and veal
 Demand for beef and veal has been strong in recent years, supported by robust exports to Asia.
International demand for Australian processed meat has supported a spike in the domestic price of beef.
 Beef cattle herd numbers have trended downwards, constraining production volumes.
 Australia's per capita red meat consumption has been on the wane, due to associated health risks as many
people have become more conscious about their health.
 Despite strong export demand, beef and veal have diminished marginally as a share of industry revenue.
Sheep meat sales have been inching upwards, alongside production volumes
 Lamb accounts for approximately three-quarters of the total number of sheep slaughtered.
 In recent years, a spike in exports has driven up lamb and mutton prices. Even so, Australia's per capita
sheep meat consumption has remained stable, as consumer preferences pivot towards premium meats like
mutton.
 Sheep production volumes have expanded, so this segment has enjoyed a modest increase as a share of
revenue. But lamb prices are tanking in 2022-23, offsetting some of the recent growth.
Pig meat prices are edging upwards, weakening sales
 Despite strong competition from processed pig meat imports, the volume of pig meat produced in Australia
has expanded in recent years.
 Higher animal weights have enabled processors to derive more meat from each animal.
 Despite stronger production volumes, domestic consumption has slightly weakened and helped stabilise pig
meat prices.
 Pig meat has diminished as a share of revenue overall.
Other meats remain a minor part of Australian meat processing
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 Other processed meats include niche meats like goat and kangaroo, but these account for a small minority
of meat production in Australia.
 Cuisine preferences have diversified and new export markets have emerged in recent years, which has
driven up sales of other meat types. This segment has resultingly climbed as a share of industry revenue.
Demand
Determinants
Demand for industry products is based primarily on domestic and
international consumer demand for red meat and pork meat products.
An important determinant of consumer demand is the price of these meat products compared with substitutes, such
as poultry and seafood. Price differentials between meat, poultry and seafood are largely a function of processing
costs, world prices and seasonal availability. Prolonged difficult conditions, such as drought, may increase the
number of animals sold for slaughter due to higher upkeep costs. In the short term, this boosts productivity and
reduces prices. However, this may lead to a medium-term increase in prices as cattle herds take time to rebuild and
production volumes decline after the initial higher levels of slaughter.
Changes in income affect expenditure on meat. Higher incomes often increase demand for higher quality cuts of
meat or organic meat for home preparation. Traditionally, consumer awareness of nutritional issues has negatively
affected red meat consumption. Poultry meat is often seen as a leaner and healthier alternative to many red meat
products, making the industry susceptible to competition from poultry meat. An increasing number of consumers
adopting low-fat diets and greater awareness of the negative health effects of increased consumption of red meat
has further boosted poultry consumption. Processors have responded to this by introducing a wider range of trim
and lean meats. Additionally, a large and increasing proportion of immigrants to Australia are from Asia, with dietary
patterns that include less red meat and more pork, poultry and fish. Exchange rates and global production volumes
influence demand for industry products in overseas markets. A strong Australian dollar makes exports less price
competitive overseas, reducing export demand.
The COVID-19 pandemic has disrupted industry demand. Demand from international markets has fluctuated, due to
various global lockdown measures and disruptions to supply chains. In particular, demand for premium products has
been constrained due to the global economic downturn caused by the pandemic. Australia's strong credibility in
terms of meat quality has provided some insulation from these adverse effects, as overseas markets require healthy
and safe food options.
Major Markets
The retailers market is expanding as supermarkets are going straight to the source
 While this market includes smaller stores and butchers, supermarkets are the biggest buying group in the
retail market. The concentration of ownership among these dominant customers has caused concern
among meat processors, as supermarkets have been increasingly using their buying power to demand
lower prices from processors.
 Over time, supermarkets' demand for lower prices has helped pushed down profit margins.
 This market has been on the rise as a share of revenue, as supermarkets have increasingly bypassed
wholesalers, dealing directly with meat processors.
Wholesale bypass trends are weakening sales to the wholesale market
 Wholesalers purchase meat from processors and then market and redistribute it to butchers and other
retailers throughout the country.
 Although wholesalers remain a significant market, the importance of meat wholesalers has diminished in
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Meat Processing in Australia
April 2023
recent years, as both meat processors and large retailers slowly absorb the wholesaling function.
Food-service industries have fallen behind due to intermittent closures during the pandemic
 Large food-service firms, like restaurants, hotels and fast-food chains, purchase significant quantities of red
meat directly from processors.
 Fast-food chains are one of the biggest groups in this market. Chains like McDonald's are bulk purchasers
of beef patties.
 Restaurant chains often wield considerable power in supply relationships with meat processors, particularly
smaller processors.
 Hospitals, nursing homes, the Australian Defence Force and other large institutions purchase significant
volumes of meat from meat processors, and are included in this market. This market has shrunk in recent
years, as hospitality venues have been forced to close intermittently during the pandemic.
Food manufacturers outpace other markets
 Food manufacturers purchase meat from meat processors to use as inputs in other food products.
 Food manufacturers may further process meat for value-added pet foods, or for deli goods such as cured
meats.
 The pet food sector has been buying more processed meat as consumers increasingly look for high-quality
pet food, leading to diversified product ranges.
 This market has inched higher as a share of industry revenue in recent years.
International Trade
Exports in this industry are
High and Increasing
Imports in this industry are
Medium and Decreasing
Exports
The rising tide of global demand for meat and climbing meat prices bring export revenue to new
heights
 Sales of premium Australian meats are trending upwards across much of Asia, especially sheep meat, with
a large proportion of Australia's mutton being exported.
 Higher disposable incomes in international markets have supported consumers' ability to purchase better
quality imported meats.
 Unprecedented price increases will render Australian meat cuts too expensive for some consumers in
export markets. Even so, a weaker Australian dollar has helped keep Australian meat prices competitive in
offshore markets.
 Exports of Australian processed meat have been climbing in recent years.
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Australian meat processors have survived China's tariff protections by finding new markets
 Up until 2020-21, China's expanding economy had caused the country to become Australia's largest meat
export market, coinciding with its rapidly growing middle-class and ongoing dealings with transboundary
animal diseases.
 In 2019-20, China accounted for more than 30% of Australian beef and veal exports. The country
represented the main source of revenue for meat processors and almost one-quarter of Australia's total
exports.
 But growing diplomatic disputes caused the Chinese Government to suspend several major Australian meat
processing establishments in May 2020. Australian meat exports to China plummeted by more than 35% in
2020-21 alone.
 Australian meat processors have adjusted by finding new markets in countries like South Korea.
The United States is an increasingly important market, as are Japan and South Korea
 While three of the top four processed meat export markets are in Asia, the United States has overtaken
China as the most significant market for exports in recent years.
 Robust demand for Australian beef in the United States has driven up the importance of this export market.
 Other significant export destinations include Japan and South Korea. The Regional Comprehensive
Economic Partnership, which includes China, South Korea, Japan, New Zealand and 10 other ASEAN
economies, has simplified trade for Australian meat processors and supported exports.
Imports
Import revenue has been volatile, but import penetration has gone up overall
 A weakening Australian dollar, along with heightened freight costs, has discouraged some retailers from
sourcing meat products offshore.
 Disruptions to international trade in 2020-21, during the height of the pandemic, drove down imports during
that year.
 Inflated beef and lamb prices, caused by higher grain costs and reduced local meat supply, caused import
revenue to spike by 16.6% in 2021-22.
 Overall, imports have climbed to account for almost one-quarter of domestic demand for processed meat.
Some surprising export destinations, including Denmark and Ireland, are coming to the fore
 While the United States is an unsurprising trade partner, the Netherlands and Denmark are the two most
significant sources of imports, ahead of America.
 Imports from Ireland have surged in recent years, expanding by more than 35% in 2020-21 and 2021-22.
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Business
Locations
The populous east coast dominates meat processing facilities
 Meat processing operations are concentrated along the eastern seaboard, with Victoria, New South Wales and
Queensland collectively accounting for almost 75% of meat processors.
 Queensland accounts for the greatest volume of red meat produced in Australia, due to the state's large proportion of the
beef cattle herd.
 In the higher rainfall regions of the southern states, beef cattle production is widespread due to easier access to grazing
farmland and fodder.
 States like Victoria and Tasmania are characterised by numerous small beef cattle farms that operate as sole proprietors
or partnerships.
Abattoirs mostly operate near livestock producers
 Being located close to livestock producers provides numerous benefits. Most importantly, it lowers transport costs for
processors as it is cheaper to transport carcasses than live animals. It also reduces the time livestock are held in transit,
which reduces bruising and distress during transportation.
 The lower cost of land in rural areas can encourage meat processors to build in these locations.
 More meat processors own feedlots, which enables animals to spend time on feed close to the abattoir and usually close
to the farm, which reduces transport costs and animal stress.
Climate determines the location of sheep herds
 Commercial sheep production is most heavily concentrated in Victoria, New South Wales and Western Australia.
 Due to Queensland's unsuitable climatic conditions for farming sheep, fewer sheep farms operate in the state and the
Northern Territory has no sheep farms.
 The location of water supplies, good pastures and livestock markets influence the distribution of sheep farms.
 The location of sheep flocks helps explain the red meat production shares of South Australia and Victoria, as these states'
sheep flock numbers are proportionate to the amount of red meat they produce.
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Meat Processing in Australia
21
April 2023
IBISWorld.com
Meat Processing in Australia
April 2023
Competitive Landscape
Market Share
Concentration
Concentration in this industry is
Medium
The Meat Processing industry exhibits moderate market share concentration. In 2022-23, the four largest meat
processors account for over 50% of industry revenue. These larger firms have the power to charge higher unit prices
due to their strong product branding, high throughput of feedlot cattle, application of industry standards and ability to
establish lucrative exports contracts.
Meat processing establishments numbers are set to expand at a faster rate than enterprise numbers. A spike in
consolidation is consistent with the mature economic life cycle phase of meat processing, as existing players
attempt to expand their share of the market to capitalise on benefits from strong revenue growth. Due to the
vertically integrated nature of many of the major players, higher market concentration reduces costs and drives up
international competitiveness. The growing prevalence of organic meat and other niche processors will mitigate
growth in concentration to some extent, as smaller specialty processors start up.
Distribution of enterprises by employment size: 2021-22
Employees
(People)
Share of enterprises
(Percentage)
Non-employing
49.8
1 to 19
33.4
20 to 199
10.4
200+
6.4
Total
100
Source: ABS and IBISWorld
Distribution of enterprises by revenue size: 2021-22
Revenue
($ '000)
Share of enterprises
(Percentage)
$0 to $50
24.7
$50 to $200
17.1
$200 to $2,000
27.8
$2,000 or more
30.4
Total
100
Source: ABS and IBISWorld
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Meat Processing in Australia
Key Success
Factors
April 2023
IBISWorld identifies over 200 Key Success Factors for a business. The most important for this industry are:
Automate processes to reduce costs:
Meat processors that can automate their meat processing operations can reduce labour costs and boost
productivity.
Secure economies of scale:
Large-scale production and distribution generates cost savings for meat processors. Specifically, economies of
scale reduce per-unit manufacturing costs due to mass production.
Develop contacts within key markets:
Export markets and domestic purchasers are both key revenue channels for meat processors. Processors that have
strong relationships in one or both markets can more easily facilitate favourable deals.
Comply with required product standards:
Food standards often dictate how meat is processed in Australia. Processors must therefore abide by these
regulations to continue operations.
Produce goods that the market currently favours:
Meat processors must identify consumer requirements and offer meat products that match consumer demand.
Cost Structure
Benchmarks
Profit
Profitability has inched upwards amid positive and negative
factors
 The growing average size of meat processors has lowered perunit costs. Other factors, such as new technology, have helped
reduced cost pressures as production efficiencies have
improved for some processors.
 Export sales have soared in recent years after plummeting in
2020-21.
 An unprecedented spike in beef and lamb prices, stemming
from solid herd rebuilding momentum among farmers, has
augmented the prices that meat processors receive.
 Volatile sales and purchase cost fluctuations since the onset of
the COVID-19 pandemic have inhibited profitability, which has
crept up overall to total 4.1% of revenue.
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Wages
Wage costs diminish slightly as automation takes hold
 Wages constitute a larger share of revenue for small
processors, which are less automated than larger processors.
 Meat processors have been contending with labour shortages
over the past three years. The nature of meat processing
facilities has made them highly susceptible to the spread of
COVID-19, resulting in some abattoirs temporarily shutting
down or becoming short-staffed while exposed employees
isolate.
 Meat processing employment numbers fell in 2019-20 and
2020-21.
 Wage costs have declined marginally as a share of revenue,
influenced by labour shortages and automation, to total 10.0%.
Purchases
Higher cattle saleyard prices cause a spike in purchase
costs
 Material inputs, such as livestock, represent the most
significant purchase costs for meat processors.
 The saleyard price of livestock directly influences expenditure
on sheep, cattle and pigs. The supply of animals for slaughter
reflects changing market prospects for livestock.
 Other significant purchases include inspection costs, packaging
materials and ingredients, such as salt, preservatives and
spices for some products.
 Purchase costs have climbed higher as a share of revenue to
total 69.7%, as cattle saleyard prices have shot up.
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Depreciation
Depreciation accounts for an estimated 1.5% of revenue.
Rent
Rent accounts for an estimated 0.6% of revenue.
Utilities
Utility costs have shrunk as other costs have expanded
 Abattoirs consume large amounts of energy and water due to
strict food safety requirements.
 In addition to lighting and ventilation, meat processors use
electricity for refrigeration and operating equipment.
 Energy for refrigeration and equipment sterilisation is
particularly important to ensure quality and sanitation.
 Meat processors mainly use water to wash incoming livestock
and clean livestock carcasses, equipment and work areas.
 Utilities have diminished as a share of revenue in recent years
to total 3.9%, as other costs have been on the way up.
Other Costs
Other costs account for an estimated 10.2% of revenue.
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Basis of
Competition
Competition in this industry is
April 2023
Medium and the trend is Steady
Industry competition is moderate and steady.
Meat processors compete against one another in all facets of production and distribution. Internal competition
focuses on price, quality, product innovation, brand, promotion, and industry accreditation. Industry firms also face
external competitive pressures, which are determined by consumer consumption patterns and imports.
INTERNAL COMPETITION
Price plays a critical role in the competitiveness of meat processors.
Historically, meat has been portrayed as homogeneous, making price the key tool of comparison among processors.
The price of processed meat often reflects conditions in upstream livestock markets. However, it is also a function of
production and marketing costs.
Although price remains a key competitive factor, the importance of non-price differentiation is rising. In partnership
with livestock producers, meat processors are exploring ways to increase quality. The decision to adopt grain-fed or
grass-fed cattle farming is one of the most common ways to alter the quality of meat. Efforts to differentiate meat
based on quality are being helped by the MSA grading scheme. The growth of organic meats is also becoming a
major area of internal competition and differentiation.
Similarly, product innovation allows players to tailor processed meats to customer needs and provides a competitive
edge for industry players. Like many other food producers, meat processors are benefiting from consumer demand
for convenience, fuelling higher and more varied processing. Consumers now have access to a range of marinated,
seasoned and stuffed meat products at supermarkets.
EXTERNAL COMPETITION
Australian processors compete against producers of alternative meats.
Industry firms often face competition from poultry processors and smallgoods manufacturers. To a lesser extent,
meat processors also compete against seafood processors and horticultural producers. In addition, a pivot to
vegetarian and vegan diets presents another source of external competition. Increased availability of plant-based
meat alternatives has discouraged many consumers from consuming meat, which can be detrimental to industry
demand.
The industry also competes against the meat processors of other nations in export markets. The key factors
affecting world demand for meat products are the same as the variables that drive domestic demand, in addition to
production capacity and proximity to lucrative markets. The global market is also affected strongly by foreign
exchange rates and variances in per capita consumption of meat in other parts of the world. The value of the
Australian dollar also affects meat exports' competitiveness. A stronger Australian dollar results in Australian meat
becoming more expensive and less competitive in the global market.
Barriers to
Entry
26
Barriers to Entry in this industry are
Medium and the trend is Steady
IBISWorld.com
Meat Processing in Australia
Legal
April 2023
Barriers to Entry Checklist
The Meat Processing industry is highly regulated, with
regulatory policing aimed at maximising food safety.
Serious breaches or failure to comply with regulations,
laws and other rules governing meat production can
subject meat processors to civil remedies and
administrative penalties.
Competition
Medium
Concentration
Medium
Start-up Costs
Technology Change
Medium
Meat processors face high initial establishment costs,
which include the cost of obtaining export licences and
the expenses of building strong economies of scale.
Processors wishing to enter the market need to establish
large-scale production operations to compete effectively
against existing low-cost producers.
Regulation & Policy
Heavy
Industry Assistance
Low
Life Cycle Stage
Mature
Differentiation
Meat processors often compete on price, although smaller
processors usually carve out a specific niche. Meat
processing comprises many small-scale firms, with more
than 70% generating annual revenue of less than $2.0
million, reflecting opportunities for entry.
Capital Intensity
Many basic processed meat products have low per-unit
values, making economies of scale necessary to minimise
per-unit costs. Processors require both capital and labour,
which can be prohibitive for new entrants.
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Industry
Globalization
Globalization in this industry is
April 2023
High and the trend is Increasing
The industry is highly globalised. Globalisation has grown, as have export revenue, import competition and foreign
ownership over the past five years. Historically, industry globalisation was limited due to Australia's geographical isolation
from the international meat market. However, globalisation has increased as Asian demand for Australian meats has
grown. This globalisation is likely to boost exports and foreign investor interest.
Most smaller players are locally owned, while most larger firms are foreign owned. For example, Industry Park is owned
by JBS S.A., a Brazilian meat processing firm, and NH Foods Australia is majority owned by its Japanese namesake.
Teys Australia is jointly owned by the local Teys family and US-owned Cargill Australia. These three players account for
over one-third of the industry and contribute to the industry's high globalisation.
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Major Companies
Major Players
Industry Park Pty Ltd
Market Share: 25.9%
Industry Park Pty Ltd, trading as JBS Australia, is a foreign-owned Australian proprietary firm. Its parent company,
the Brazilian-based JBS S.A., entered the Australian market in 2007 when it acquired Swift Australia Pty Ltd. JBS
Australia produces a range of meats, and owns feedlots and meat processing facilities across Australia. The
company sells its products in local retail and export markets, including the United States, Japan and China. Over
2016 and 2017, JBS S.A. restructured across much of its global operations, including its Australian operations. JBS
Australia Pty Ltd and Primo Group now operate as subsidiaries of Industry Park Pty Ltd.
JBS Australia adapts and rides out the storm
 Reduced slaughter rates in 2019-20 and 2020-21 has inhibited the company's growth in recent years.
 A COVID-19 outbreak resulted in the company temporarily closing its Brooklyn processing facility in Victoria
in July 2020, which limited production and the company's total output.
 Tense trade relations between Australia and China have adversely affected the company's beef exports.
Yet, with solid international demand for beef, JBS Australia has continued to expand by seeking out
alternative export markets, including Japan and South Korea.
 A strong focus on product diversification and increasing value-added offerings has enabled JBS Australia to
thrive amid adversity.
The JBS Australia juggernaut keeps on rolling as it consumes smaller players
 In 2011, JBS Australia purchased Tatiara Meat Company, based in Bordertown, SA. The purchase secured
JBS Australia's position in a major lamb-producing region and made the firm the largest lamb processor in
Australia.
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 In mid-2014, the firm also acquired a major shareholding in Andrews Meat, which is based in New South
Wales.
 Following the ACCC's clearance in early 2015, JBS Australia purchased Primo Group, a leading producer of
smallgoods in Australia.
 In June 2021, the company reached an agreement to acquire pork processor Rivalea. This acquisition was
completed in January 2022, and is set to extend JBS Australia's presence in meat processing.
Industry Park Pty Ltd - industry segment performance*
Year**
Revenue
($b)
Growth
(% change)
2013
3.33
N/C
2014
4.20
26.1
2015
4.21
0.2
2016
3.88
-7.8
2017
3.93
1.3
2018
4.28
8.9
2019
4.97
16.1
2020
4.55
-8.5
2021
4.90
7.7
2022
5.16
5.3
2023
5.40
4.7
Source: IBISWorld
Note: *Estimate **Year end December
Thomas Foods International Consolidated Pty
Limited
Market Share: 13.0%
Founded in 1988, Thomas Foods International Consolidated Pty Limited is an Australian family-owned meat
processing firm. The company is headquartered in Adelaide, with processing facilities in Lobethal and Murray
Bridge, SA, and Tamworth, NSW. The company produces lamb, mutton, beef and goat meat. In July 2016, Thomas
Foods closed its processing plant in Wallangarra, QLD, citing difficult global trading conditions as the primary
cause.
Thomas Foods rises from the ashes after a fire at its Murray Bridge facility
 In January 2018, the company's Murray Bridge facility was damaged by fire. Thomas Foods responded by
redistributing much of its workforce from the Murray Bridge plant and increasing production at its other
facilities.
 In late 2020, the company started construction on a new facility in the Murray Bridge area. Stage one of the
facility was completed in late 2022.
 Construction of the new facility will augment the plant's total processing capacity to 1,200 head of beef, and
15,000 head of sheep and lamb per day.
The company has overcome difficulties to thrive in export markets
 The COVID-19 pandemic has presented a challenge for the company. COVID-safe regulations placed
downward pressure on productivity and profitability, as social distancing measures limited staffing numbers
and higher personal protective equipment requirements drove up purchase costs.
 Despite difficulties maximising productive capacity, robust export sales have driven Thomas Foods' strong
performance, with the company benefiting from high beef prices.
 The company's profit margins have edged up in recent years, boosted by soaring prices for beef and lamb.
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April 2023
Thomas Foods International Consolidated Pty Limited - financial performance
Year
Revenue
($b)
Growth
(% change)
2012-13
1.08
N/C
2013-14
1.10
1.9
2014-15
1.23
11.8
2015-16
1.39
13.0
2016-17
1.34
-3.6
2017-18
1.63
21.6
2018-19
1.69
3.7
2019-20
2.05
21.3
2020-21
2.27
10.7
2021-22
2.48
9.3
2022-23*
2.70
8.9
Source: Annual Report and IBISWorld
Note: *Estimate
Teys Australia Pty Ltd
Market Share: 11.8%
Teys Australia Pty Ltd is an Australian proprietary company that generates most of its revenue from meat
processing operations. The company was founded in 1946 as a family-run meat retailer and wholesaler. Teys
operates six beef processing plants in Queensland, New South Wales and South Australia. The company currently
operates as a joint venture between the Teys family and Cargill Australia, a subsidiary of US-based food processor
Cargill Inc. In Australia, Cargill's key activities include oilseed crushing, commodity merchandising, salt harvesting
and wool and cotton trading. The venture received approval in May 2011 and includes beef processing and tannery
and feedlot operations. In 2019, the company announced that it is developing a $42.0 million low emissions energy
hub at its facility in Wagga Wagga, NSW.
Adaptation is the key to Teys' success in export markets
 The company's meat processing revenue has expanded modestly in recent years.
 Teys endured a tough year of reduced revenue in 2021, as exports to China plummeted.
 In the wake of this challenge, Teys has bounced back, despite a fall in the national cattle size.
 The company is benefiting from increased cattle capacity at its feedlots and rising beef prices.
Teys is at the cutting edge of deboning automated technology
 In November 2021, the company established an $18.0 million contract with Scott Technology, which
provides meat processing automation products, and Meat & Livestock Australia (MLA).
 The contract with Scott Technology will deliver the company a computerised boning machine to combat
labour shortages, and improve operating efficiencies and output volumes. The machine will be the first of its
kind in Australia, and is poised to be ready for use in 2023.
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April 2023
Teys Australia Pty Ltd - industry segment performance*
Year**
Revenue
($b)
Growth
(% change)
2012-13***
1.81
N/C
2013-14***
2.18
20.4
2014-15***
2.63
20.6
2015-16****
2.12
-19.4
2016-17
2.02
-4.7
2017-18
2.25
11.4
2018-19
2.33
3.6
2019-20
2.64
13.3
2020-21
2.11
-20.1
2021-22
2.39
13.3
2022-23
2.45
2.5
Source: IBISWorld
Note: *Estimate **Year end May ***Year end June ****11-month period
Other Companies
Large firms in the Meat Processing industry typically market their products both nationally and internationally.
Vertical integration in the industry is mostly limited to larger companies due to the cost and complexities of
livestock farming. Integrating processing with feedlots, livestock farming and wholesaling operations enable
industry players to spread overheads across a greater range of activities. The industry also comprises many smallscale firms, with more than 80% of players employing less than 20 employees, including almost 50% nonemploying.
Fletcher International Exports Pty Ltd
Market Share: 3.0%
Fletcher International Exports Pty Ltd (FIE) is an Australian family-owned company that is headquartered in Dubbo,
NSW, with processing plants in Dubbo and Albany, Western Australia. The Dubbo site is one of the world's largest
sheep meat processing plants, which operates seven days per week, and has a weekly lamb and sheep slaughter
capacity of over 90,000 head. The company is heavily engaged in exporting and has farming operations in Western
Australia, New South Wales and Queensland.
Surging lamb prices, both domestically and overseas, augment Fletcher's revenue
 The company mainly processes lamb, but also processes significant quantities of mutton.
 Lamb prices have soared in both domestic and export markets, supporting Fletcher's revenue.
Sheep by-products supplement Fletcher's revenue
 To maximise the value of processed sheep, Fletcher makes use of by-products, like lanolin and sheepskin.
 Sales of by-products have supplemented an upward trend in revenue in recent years.
Midfield Meat International Pty Ltd
Market Share: 3.0%
Midfield Meat International Pty Ltd is a mid-size meat processor based in Warrnambool, VIC. Formerly part of
Midfield Pastoral Pty Ltd, Midfield Meat International became a separate entity in 1975, after Midfield Pastoral
became a solely pastoral business. Midfield is a vertically integrated firm that also operates in meat wholesaling.
As a licensed meat exporter, the company distributes its meat products both domestically and internationally.
Midfield reaps the benefits of strong beef and lamb prices
 The company mainly processes beef and lamb, although Midfield also deals in significant quantities of veal
and mutton.
 Beef and lamb prices have spiked in both domestic and key export markets, supporting Midfield's revenue.
Chinese tariffs have not proven an insurmountable obstacle for Midfield
 Midfield's meat processing revenue has grown modestly in recent years.
 The company rode out a year of inhibited revenue growth in 2021, as exports to China suffered from new
tariffs. Yet, the company has bounced back by finding alternative trading partners like South Korea.
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Operating Conditions
Capital
Intensity
The level of capital intensity is
Medium
The industry is moderately capital-intensive. For every
dollar invested in capital across, an estimated $6.67 is paid
as wages. Capital intensity has risen considerably in recent
years, as firms have introduced new processing technology
to reduce labour costs. High-speed production lines have
dramatically improved throughput, enabling meat
processors to increase overall production without
corresponding employment rises. Although technology is
reducing labour requirements, some components of
abattoir production, like boning, butchering and
slaughtering, still rely heavily on human input.
Industry capital intensity has risen as many processes
have become more automated due to occupational health
and safety standards, along with rises in efficiency. For
instance, beef splitting is a physically taxing task that uses
industrial bandsaws requiring a skilled operator. The joint
venture between Meat & Livestock Australia and Scott
Automation & Robotics has created an automated beefsplitting process that reduces occupational hazards and
labour costs, boosting productivity and yield. The
COVID-19 pandemic has accelerated rises in capital
intensity over the past three years. Shortages of skilled
labour, owing to international border closures and a
reduction of inbound workers, has inspired operators to
increasingly automate, establishing artificially intelligent
robots to replace traditionally labour-intensive tasks.
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Technology &
Systems
April 2023
Potential Disruptive Innovation: Factors Driving Threat of Change
Level
Factor
Disruptive
Effect
Description
Very Low
Rate of
Innovation
Very
Unlikely
A ranked measure for the number of patents
assigned to an industry. A faster rate of new
patent additions to the industry increases the
likelihood of a disruptive innovation occurring.
Medium
Innovation
Concentration
Potential
A measure for the mix of patent classes
assigned to the industry. A greater
concentration of patents in one area increases
the likelihood of technological disruption of
incumbent operators.
Medium
Ease of Entry
Potential
A qualitative measure of barriers to entry.
Fewer barriers to entry increases the
likelihood that new entrants can disrupt
incumbents by putting new technologies to
use.
Medium
Rate of Entry
Potential
Annualized growth in the number of
enterprises in the industry, ranked against all
other industries. A greater intensity of
companies entering an industry increases the
pool of potential disruptors.
High
Market
Concentration
Likely
A ranked measure of the largest core market
for the industry. Concentrated core markets
present a low-end market or new market entry
point for disruptive technologies to capture
market share.
Low levels of innovation limit the threat to incumbent operators from new technologies disrupting their operations. However,
a low rate of growth in technology can also create exposure for incumbents as the trajectory of innovation in other markets
could lead to unforeseen competitive disadvantages.
Both the ease of entry and the rate of entry in the industry are moderate. While these factors do not significantly add to the
threat of disruptive potential, they do not detract from it either.
The major markets for this industry are highly concentrated, which implies that the market has a focus on key customer
segments. This presents an opportunity for strategic entrance into lower-end markets or unserved markets for innovations
to take on a disruptive trajectory.
Technology disruption has lightly affected the Meat Processing industry over
the past decade.
The rise of ecommerce has been the strongest internal threat to the industry, as supply chain systems have adjusted to
advancements in logistics software and methodology. Investments in renewable energy systems have also disrupted the
industry in recent years. In particular, firms that invested early have experienced greater benefits, as electricity prices have
risen significantly. In the coming years, meat processors are set to invest in more advanced smart devices and inventory
management software to increase production efficiency.
The increasing development of plant-based meats has further disrupted the industry. Plant-based meats can serve as a
healthier and more sustainable alternative to conventional meats, particularly red and processed meats. Such products
appeal to consumers following a plant-based diet or seeking to reduce their meat consumption. A rise in health
consciousness and environmental concern will continually increase demand for plant-based meats in future, driving the
development of new alternatives.
The level of technology change is
Medium
The pace of technological change in the industry is moderate.
In some respects, meat processing has not changed significantly in recent years. This relative lack of change reflects the
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significant labour input required for certain elements of processing, like boning and butchering. Elsewhere, the industry has
increasingly adopted automated processes to streamline production and, as a result, has improved meat quality and lifted
productivity. Technological research in the industry focuses on cost reduction, animal welfare, the application of genetics
and biology, improvements in productivity and environmental management.
Meat Standards Australia
The development of meat safety standards has significantly affected the
industry over the past few decades.
The Meat Standards Australia (MSA) grading system is a joint initiative of MSA and Meat & Livestock Australia (MLA).
Research by MSA found that variations in meat quality and a lack of cooking knowledge were key problems for consumers.
The MSA scheme focuses on eating quality, and uses critical control points to project quality level. The system differs from
previous grading schemes in that compliance is based on adherence to processes that are related to palatability, rather
than relying on carcass traits measured in the chiller. Increased uptake of MSA grading is anticipated to improve Australia's
export competitiveness, as Australian beef has been considered too inconsistent in some export markets.
Refrigeration is another important aspect of meat safety, freshness and the condition of meat. The method of chilling used
determines shelf life, microbiological control, and meat tenderness, all of which affect the quality of the product. A rise in
best practice programs is playing a key role in ensuring product integrity in meat processing. The introduction of quality
assurance programs like Hazard Analysis Critical Control Point has helped the industry improve food safety. High food
safety standards play a vital role in preserving the industry's reputation for clean and reliable food manufacturing.
Revenue
Volatility
The level of volatility is
Medium
Meat production has historically determined volatility
 In the medium term, the volume of meat produced affects revenue for meat processors. Meat production depends
on changes in the supply of animals available for slaughtering, which depends on climatic conditions and world
prices. These conditions can be volatile from year to year, and vary regionally.
 During periods of drought, high feed costs mean that more animals are available for slaughter while meat prices
normally weaken. Similarly, high prices overseas can encourage farmers to send more cattle for slaughter and
export.
Reliance on exports leaves much volatility in the hands of the global market
 Much of meat processors' volatility is attributable to export markets, with the vast majority of revenue derived from
exports.
 Exports can be affected by changes to trade protection in export markets, exchange rates, economic cycles and
international demand.
 Changing exchange rates and surging global demand have heavily influenced meat processors in recent years.
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The pandemic has exerted some pressure on revenue volatility for meat processors
 The COVID-19 pandemic has modestly contributed to revenue volatility.
 Shifts in consumer purchasing behaviour, such as panic buying meat at the retail level, have filtered upstream
through stronger demand for meat processors.
 Labour shortages and logistical issues have scaled back export volumes, but Australia's standing as a reputable
supplier of high-quality meat has somewhat insulated local processors from the adverse effects of the COVID-19
pandemic.
Regulation &
Policy
The level of regulation is
Heavy and the trend is Increasing
Environmental protections
State and federal regulations covering waste control, clean air, packaging standards, weights and measures, and building
regulations affect meat processors. Processors are also beholden to specific regulations aimed at protecting public health,
guaranteeing supply to consumers and safeguarding competition.
Licencing for the domestic market
Meat processors selling products to the Australian market need state government-issued licences for meat processing
facilities. Companies must meet hygiene and construction standards to qualify for the licence, and are subject to
inspections from state government representatives.
Licencing for exports
The Federal Government primarily regulates meat processors that export meat. To export meat from Australia, companies
must obtain an export licence and are subject to inspections by the Department of Agriculture, Fisheries and Forestry.
AUS-MEAT accreditation
Accreditation with AUS-MEAT Limited is compulsory for exporting companies and voluntary for companies selling meat for
domestic consumption. AUS-MEAT Limited is responsible for maintaining national industry standards for meat processing.
AUS-MEAT Limited is an industry-owned body operating as a joint venture between Meat & Livestock Australia and the
Australian Meat Processor Corporation.
Hazard Analysis Critical Control Point standards
Meat processors are introducing the Hazard Analysis Critical Control Point (HACCP) quality assurance to improve food
safety. First introduced in the United States, HACCP is designed to work as a preventative measure to reduce health risks
in food manufacturing by identifying hazards and preventing them from contaminating food. The system increases
compliance costs for meat processors due to record-keeping requirements.
Modern Slavery Act 2018
In November 2018, the Federal Government passed the Modern Slavery Act 2018. The act, which came into force on 1
January 2019, is a new reporting requirement for larger Australian businesses. Companies that generate annual
consolidated revenue of at least $100 million must report on how they act to mitigate the risks of modern slavery in their
operations and supply chains.
Industry
Assistance
The level of industry assistance is
Low and the trend is Increasing
Public
Tariffs and border controls
Historically, tariffs have declined as the Federal Government has pursued free trade policies. Tight quarantine restrictions
aimed at preventing the entry of exotic diseases have played a major role in deterring foreign competition. Moreover, meat
processors are protected from imports by natural barriers due to the abundance of cheap livestock and Australia's distance
from other major beef-producing countries.
Free trade agreements
Free trade agreements with China, Japan and South Korea that came into effect between 2014 and 2015, and the
agreement signed with Indonesia in March 2019 will help boost market access for exporters to these countries.
Government funding
Although no specific assistance programs are in place, the government matches meat processors' expenditure on R&D
through a levy paid by processors. Meat processors can also secure government funding through schemes available to the
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food manufacturing sector. In July 2021, the Australian Government invested $1.52 million to support processors' export
efforts in new emerging markets such as Thailand, Vietnam and Saudi Arabia.
Private
Industry bodies
Meat & Livestock Australia (MLA), an independent marketing and research body for the red meat and livestock sector,
provides funding opportunities for meat processors. National bodies like the Australian Meat Processor Corporation
represent the interests of processors active in the red meat market.
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Key Statistics
Industry Data
Year
Revenue
($m)
IVA
($m)
Establishments
(Units)
Enterprises
(Units)
Employment
(Units)
Exports
($m)
Imports
($m)
Wages
($m)
Domestic
Demand ($m)
2013-14
18,659
3,041
850
681
35,279
12,464
704
2,084
6,899
2014-15
23,044
3,503
867
656
36,862
16,344
875
2,259
7,574
2015-16
23,353
3,596
783
656
36,241
15,542
859
2,372
8,670
2016-17
20,573
3,127
715
593
33,956
13,576
846
2,087
7,843
2017-18
21,457
3,326
761
542
34,835
15,203
862
2,206
7,115
2018-19
21,725
3,563
801
583
35,708
17,033
887
2,291
5,578
2019-20
22,698
3,654
820
614
34,623
19,055
1,026
2,267
4,670
2020-21
21,312
3,367
801
600
34,342
14,757
837
2,179
7,392
2021-22
21,282
3,320
826
607
34,870
17,789
975
2,117
4,468
2022-23
20,811
3,247
813
599
34,477
17,601
991
2,075
4,201
2023-24
21,976
3,450
863
632
36,009
17,962
1,023
2,184
5,038
2024-25
22,425
3,453
885
644
36,376
18,165
1,060
2,186
5,320
2025-26
22,828
3,516
902
654
36,965
18,137
1,094
2,220
5,785
2026-27
22,418
3,452
888
640
36,133
18,524
1,139
2,177
5,033
2027-28
23,476
3,662
932
669
37,684
18,513
1,188
2,271
6,150
Enterprises
(%)
Employment
(%)
Exports
(%)
Imports
(%)
Wages
(%)
Domestic
Demand (%)
Annual Change
Year
Revenue
(%)
IVA
(%)
Establishments
(%)
2013-14
11.5
9.46
-4.93
28.5
2.43
25.8
1.83
5.13
-8.31
2014-15
23.5
15.2
2.00
-3.68
4.48
31.1
24.3
8.39
9.78
2015-16
1.34
2.67
-9.69
0.00
-1.69
-4.91
-1.80
4.98
14.5
2016-17
-11.9
-13.1
-8.69
-9.61
-6.31
-12.7
-1.52
-12.0
-9.54
2017-18
4.29
6.35
6.43
-8.61
2.58
12.0
1.86
5.69
-9.28
2018-19
1.24
7.12
5.25
7.56
2.50
12.0
2.90
3.84
-21.6
2019-20
4.48
2.56
2.37
5.31
-3.04
11.9
15.8
-1.03
-16.3
2020-21
-6.11
-7.86
-2.32
-2.29
-0.82
-22.6
-18.5
-3.90
58.3
2021-22
-0.14
-1.41
3.12
1.16
1.53
20.6
16.6
-2.85
-39.6
2022-23
-2.22
-2.22
-1.58
-1.32
-1.13
-1.07
1.60
-2.01
-5.98
2023-24
5.59
6.27
6.15
5.50
4.44
2.05
3.23
5.28
19.9
2024-25
2.04
0.08
2.54
1.89
1.01
1.12
3.60
0.08
5.61
2025-26
1.79
1.80
1.92
1.55
1.61
-0.15
3.22
1.53
8.74
2026-27
-1.80
-1.81
-1.56
-2.15
-2.26
2.12
4.13
-1.94
-13.0
2027-28
4.71
6.08
4.95
4.53
4.29
-0.06
4.22
4.32
22.2
Key Ratios
Year
IVA/Revenue
(%)
Imports/
Demand
(%)
Exports/
Revenue
(%)
Revenue per
Employee
($'000)
Wages/
Revenue
(%)
Employees per
estab.
(Units) Average Wage ($)
2013-14
16.3
10.2
66.8
529
11.2
41.5
59,075
2014-15
15.2
11.5
70.9
625
9.80
42.5
61,283
2015-16
15.4
9.91
66.6
644
10.2
46.3
65,440
2016-17
15.2
10.8
66.0
606
10.1
47.5
61,462
2017-18
15.5
12.1
70.9
616
10.3
45.8
63,324
2018-19
16.4
15.9
78.4
608
10.5
44.6
64,151
2019-20
16.1
22.0
83.9
656
9.99
42.2
65,485
2020-21
15.8
11.3
69.2
621
10.2
42.9
63,453
2021-22
15.6
21.8
83.6
610
9.95
42.2
60,717
2022-23
15.6
23.6
84.6
604
9.97
42.4
60,176
2023-24
15.7
20.3
81.7
610
9.94
41.7
60,660
2024-25
15.4
19.9
81.0
616
9.75
41.1
60,100
2025-26
15.4
18.9
79.5
618
9.72
41.0
60,049
2026-27
15.4
22.6
82.6
620
9.71
40.7
60,244
2027-28
15.6
19.3
78.9
623
9.67
40.4
60,264
Figures are inflation adjusted to 2022-23
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Additional Resources
Additional
Resources
Meat & Livestock Australia
http://www.mla.com.au
Australian Meat Industry Council
http://www.amic.org.au
Australian Pork
http://www.australianpork.com.au
Industry Jargon
AUS-MEAT
An organisation that developed a set of objective descriptions for primal cuts and offal products derived from beef,
veal, sheep and goat.
FEEDLOT
A confined area of land used for controlled feeding of livestock to finish them prior to slaughter or sale.
MEAT STANDARDS AUSTRALIA (MSA)
The organisation that labels beef and sheep meat with a guaranteed grade and recommended cooking method.
TURN-OFF
The number of livestock sold by farmers and available for market.
Glossary
BARRIERS TO ENTRY
High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for
new companies to enter an industry.
CAPITAL INTENSITY
Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labour.
IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than
$0.333 of capital to $1 of labour; medium is $0.125 to $0.333 of capital to $1 of labour; low is less than $0.125 of
capital for every $1 of labour.
CONSTANT PRICES
The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e.
year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving
only the 'real' growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using
the Australian Bureau of Statistics' implicit GDP price deflator.
DOMESTIC DEMAND
Spending on industry goods and services within Australia, regardless of their country of origin. It is derived by
adding imports to industry revenue, and then subtracting exports.
EMPLOYMENT
The number of permanent, part-time, temporary and casual employees, working proprietors, partners, managers
and executives within the industry.
ENTERPRISE
A division that is separately managed and keeps management accounts. Each enterprise consists of one or more
establishments that are under common ownership or control.
ESTABLISHMENT
The smallest type of accounting unit within an enterprise, an establishment is a single physical location where
business is conducted or where services or industrial operations are performed. Multiple establishments under
common control make up an enterprise.
EXPORTS
Total value of industry goods and services sold by Australian companies to customers abroad.
IMPORTS
Total value of industry goods and services brought in from foreign countries to be sold in Australia.
INDUSTRY CONCENTRATION
An indicator of the dominance of the top four players in an industry. Concentration is considered high if the top
players account for more than 70% of industry revenue. Medium is 40% to 70% of industry revenue. Low is less
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than 40%.
INDUSTRY REVENUE
The total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other
operating income from outside the firm (such as commission income, repair and service income, and rent, leasing
and hiring income); and capital work done by rental or lease. Receipts from interest royalties, dividends and the sale
of fixed tangible assets are excluded.
INDUSTRY VALUE ADDED (IVA)
The market value of goods and services produced by the industry minus the cost of goods and services used in
production. IVA is also described as the industry's contribution to GDP, or profit plus wages and depreciation.
INTERNATIONAL TRADE
The level of international trade is determined by ratios of exports to revenue and imports to domestic demand. For
exports/revenue: low is less than 5%; medium is 5% to 20%; and high is more than 20%. Imports/domestic demand:
low is less than 5%; medium is 5% to 35%; and high is more than 35%.
LIFE CYCLE
All industries go through periods of growth, maturity and decline. IBISWorld determines an industry's life cycle by
considering its growth rate (measured by IVA) compared with GDP; the growth rate of the number of establishments;
the amount of change the industry's products are undergoing; the rate of technological change; and the level of
customer acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENT
Businesses with no paid employment or payroll, also known as nonemployers. These are mostly set up by selfemployed individuals.
PROFIT
IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s profitability. It is calculated as
revenue minus expenses, excluding interest and tax.
VOLATILITY
The level of volatility is determined by averaging the absolute change in revenue in each of the past five years.
Volatility levels: very high is more than ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%;
and low volatility is less than ±3%.
WAGES
The gross total wages and salaries of all employees in the industry.
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Call Preparation Questions
Role Specific
Questions
Sales & Marketing
How has your business tried to access export markets?
Expanding sales to export markets can improve volume growth.
How has increasing health consciousness affected your sales?
Due to rising health consciousness, some consumers are reducing their red meat consumption in favour of
vegetarian diets.
Strategy & Operations
How has your business adapted to changing consumer tastes?
Consumers are increasingly demanding premium and gourmet options.
How close is your business located to key inputs?
Being located close to cattle and sheep farms reduces transport costs.
Technology
What investments has your business made in facility technology?
Technology to reduce labour reliance increases a company's competitiveness.
How quickly does your business adopt new industry technology?
Rapid uptake of technological developments can provide a competitive edge.
Compliance
How does your business ensure compliance with regulations?
Businesses that fail to adhere to strict food-safety requirements risk fines.
How does your business ensure workplace health and safety for employees and customers?
Meat processors are exposed to workplace risks associated with machinery used to dismember carcasses.
Finance
How has price competition affected your business's profitability?
Operators that can attract a premium price are often more profitable.
What challenges does your company face in financing its ongoing operations?
Meat processing revenue volatility can cause financial problems during periods of low prices.
IBISWORLD.COM
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Meat Processing in Australia
External Impacts
Questions
April 2023
Impact: Beef and veal production
How have cattle supplies affected your production?
Processors with large supply contracts benefit from decreased revenue volatility.
Impact: Trade-weighted index
How do fluctuations in the exchange rate influence your margins?
Changes in the value of the Australian dollar can significantly affect export-oriented processors.
Impact: Domestic price of beef
How do fluctuations in the retail price of beef affect your revenue and profit?
Businesses that can pass on cost increases benefit from smaller revenue fluctuations.
Internal Issues
Questions
Issue: Automation - reduces costs, particularly those associated with labour
How much does your business invest in machinery and equipment for automation?
Investing in automation increasing labour efficiency and helps processors to remain competitive
Issue: Economies of scale
What steps has your business taken to increase scale?
Increasing animal throughput can significantly improve profit margins.
Issue: Production of goods currently favoured by the market
How does your business adapt to changing consumer tastes and preferences?
Trends such as rising health consciousness affect demand for red meat.
IBISWORLD.COM
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