30 Bradman Tues 1600 1730 KATE BRABIN
Brands delivering returns to farm gate. I've just got a few notes here, because this is a new
version of presentation. We are very unique company. As Richard said, we were formally known
as Certified Australian Angus Beef Proprietary Limited. We changed our name last September to
Certified Angus Group Proprietary Limited. We did that for one reason, and one reason alone.
We also have a brand called Certified Australian Angus Beef, and it causes confusion. And it's
also a mouthful when you answer the telephone.
So we have three core business streams within what we now call Certified Angus Group. They
include our two brands, Certified Australian Angus Beef and Angus Pure, and then thirdly our
Angus Breed Verification Services. I'll get a little bit more into each of these areas in a moment.
Our brands and services tap into exactly what Jason was talking about, and that is maximising
our markets, looking for traceability, locality, and raising [? clones, ?] including breeds such as
Angus, HGP-, antibiotic-free, and whether it be pasture-raised or grain-fed. So that is primarily
what our business does.
It's interesting in that our uniqueness comes down to we do not own a single animal and we do
not sell a single animal. We are a brand company. We own the specifications. We own the IP,
that is, the trademarks to the brands. And we put those into industry and quality support systems
in order to create a brand for a processor or for an individual company in support of breed.
Importantly, it is important to note that Certified Angus Group is owned by Angus Australia, the
breed society for Angus in Australia, and the members are the brand owners. So that is why we
do what we do, and it's to create value at the other end.
Certified Australian Angus Beef currently puts in about 100,000 head per annum. It's a grain-fed
product, fed for a minimum of 120 days. We do have another programme within that. It's a 200
day programme. But so as not to confuse the domestic marketplace, that programme is only
exported. We don't like to have two specs sitting on the domestic market, because our brand is all
about being consistent. If this brand is consistent and it consistently delivers, then people will
consistently buy it. It is produced to eating quality specifications. Whilst it is underpinned by
Meat Standards Australia grading systems, on top of that, further quality specifications are
placed on the product to ensure that the product provides consistency through further ageing of
product than MSA actually requires.
It is, again, verified for Angus breed by another company that we'll talk about shortly, which we
own-- Angus Breed Verification, which provides breed verification services to the industry.
So the financial crisis and the Australian dollar. As Trish was saying, we took a pretty hard hit
when the Aussie dollar went through the roof and the bottom fell out of the US market-- to put it
very nicely. And we found ourselves in the interesting position that US, for 12 months, didn't
buy a kilo off us. Keeping in mind that we are a high-end brand, we operate in the high-end
market, so our product is more expensive. But the US took bucket loads of trim. And what we do
with our trim is we make sure in order to utilise carcass, we put it in the high-end category. So if
we sell trim to a pizza maker, it's the top pizza in that category. If we sell trim to a burger maker,
it's the top burger in their range. So that's how we position our product. And that product
disappeared from the US, because there just wasn't the money there to buy the product. So it saw
us take a big hit.
Equally, at the same time, it was a bit of a perfect storm. Japan decided it didn't want to buy a
beef anymore either because it was too expensive, and now we're two years down the track and
it's looking up. So Japan's biting again. The US is taking quite a lot of beef. Not so much grainfed, but a lot of pasture-fed beef, which we also have a brand for-- I'll talk about in a moment.
And it's looking up and up. Our biggest problem in our projections for the next five years is
where the hell are we going to find all the cattle-- and black ones at that.
So our value to suppliers for this brand in 2014-- and this is obviously to Angus suppliers-- was
270.7 million. That is return to farm gate. So I'm not talking about how much we put on a boat,
or how much was paid for it from the processor, because that's not the topic for discussion. It's
how do we return value to a producer, and that was our value returned for this brand in 2014.
So if we then go to Angus Pure. Angus Pure is our pasture-fed brand. It's only a baby. Certified
Australian Angus Beef is 20 years old. Angus Pure is only five years old, and is already
producing 80,000 head per annum. It's pasture-fed Whole of Life. It's an antibiotic-free product.
It's HGP-free. And again, produced to eating quality specifications underpinned by Meat
Standards Australia.
The brand position for this is also the top end of that market. But again, comes back to product
claim and product story. We know where it's come from. It's fully traceable. We take DNA
samples of every carcass processed for both brands in store for traceability should they be
required. We position it in the high-end, and the same with the trim from this product, in order to
ensure that value can be received.
Interestingly, for this product, domestically, it's not readily available, because Safeway in the US
takes almost entirely all our production. And it's in every store on the East Coast of Safeway in
the US. So with Safeway recently purchasing Albertsons on the West Coast, we find ourselves in
a little bit of a pickle, where we need more cattle once again. Obviously, a very different type of
animal, but more of them.
The outlook is strong for this product. With the Aussie dollar down, and the US buying in-- and
really buying in hard on this HGP-, antibiotic-free type animal-- the prospect is very solid for
this brand in the overseas markets. And equally, we've had a lot of interest from Korea.
Domestically, obviously, domestic supply is our challenge, because this is such a wonderful
product we want to get available domestically, and very little of it stays here at the moment. And
that's our challenge for the next few years-- how do we make it affordable in Australia for this
product.
Verification. So this little logo-- and I haven't put the other logo on there, which was remiss of
me, there's one that says Black Mac Angus Beef, which is used exclusively for McDonald's-goes on the end of cartons at abattoirs to say that there is a system in place in that abattoir, an
audited system, which we provide, that verifies that that beef is of Angus parentage, and is
traceable throughout the supply chain. So this third-party verification for breed-- sorry, I should
have told you too, previously, that the value to suppliers of the Angus Pure in 2014 was 67.1
million.
Third-party verification for breed provides this assurance to a customer, and further, a value to
the producer that's producing this product that they're producing a product that somebody wants
and is in demand, and hence is getting a premium price for this products in the marketplace.
We're seeing on saleyard type cattle, 15 to 40 cents increased priced on other breeds-- with other
factors in play, including how long they've been pasture-fed for, and if they've had a HGP or an
antibiotic. So if they tick all the boxes, and they have and have not had, then obviously, the price
sneaks up. But this is exclusively for Angus and is week in, week out in every saleyard.
It's used by other brands and Angus beef resellers. So yes, McDonald's use it. But again, what I
was talking about is we're pushing it to the top range. So it's trim going into McDonald's, but
their Mac Angus, and the build-your-own burger range that they're launching, et cetera, is their
premium offer. So we're still positioning Angus as the premium product in that line.
We do it for other companies, including Rangers Valley, Bindaree Beef, Jack's Creek, Manildra
Meat Company, Australian Meat Group, Thomas Farms International, Teys Australia. Everyone
is seeking for their products to be verified to give that customer assurance, and equally wipe out- because there's such a demand for the Angus product, and such a premium paid-- wipe out the
competitors that are calling it Angus and not buying Angus that are getting found out, because
they have no third-party verification backed by someone owned by the breeders of Angus in
Australia that that product is, in fact, Angus.
This verification service has been operating for about eight years, primarily, firstly, for
McDonald's. It was developed for McDonald's, and then, of course, every other company said,
we need a third-party assurance. So we started offering this service outside of McDonald's. And
in 2014, for the year, 642,490 head of cattle were verified for this programme. That amounts to,
on a trim of 30 kilos per carcass, 1.8 million kilogrammes per month, or on 60 kilos taken from
carcass being primals, 3.2 million kilos per month. So it's quite a force for the Angus, and it
continues to deliver the Angus promise to the industry. And that is that you get what you're
paying for.
So in summary-- and trying to keep it sweet and on my time limit. I talk pretty quick, so
hopefully I'm ahead. Is that it's owned by members of Angus Australia, that is, Certified Angus
Group. CAAB provides a member-owned grain-fed brand in the marketplace, and Angus Pure
provides our pasture-fed option in the marketplace. Verification services are ensuring Angus
producers receive the benefit of the breed, and customer receives the truth in labelling they
deserve. And we see that there for these brands there are real growth opportunities.
Domestically, for our pasture-fed brand, and equally growth opportunities overseas into Korea,
the UAE, and the US for our grain-fed brand especially. And I'm pretty sure that's me in a
nutshell, and that's what's Certified Australian Angus Group does. So thank you.