Exports keep the meat industry growing

Meat processors are benefiting from strong export demand for Australian beef, with many experiencing revenue growth in 2015–16. As a result, numerous meat processors made large gains in IBISWorld’s Top 100 Food & Beverage list.

Both JBS and Teys have continued to consolidate their position as Australia’s largest meat processors, albeit using different strategies. While Teys has increased its prices to benefit from reduced competition, JBS has expanded through export markets and strategic acquisitions.

An established player in the meat processing industry, contributing an estimated 13.7% of industry revenue, Teys reported revenue growth of 21.7% to reach $2.92 billion for 2014–15. With significant demand for beef coming from export markets, Teys has capitalised on this by increasing prices for its exported products, which has benefited company profit margins. With weak production volumes in the United States due to high feed costs, high operating costs and a prolonged drought, Teys has benefited from reduced competition in export markets. While a prolonged drought has negatively affected production volumes in the United States, drought conditions in eastern Australia have resulted in high cattle numbers being processed, with cattle farmers forced to sell as feeding costs soared.

JBS also thrived over the 2015 financial year, reaching an estimated 26.2% of industry revenue. The company capitalised on strong global demand for meat by expanding into export markets such as South Korea, Japan and China, and these increased sales to Asia, combined with the depreciation of the Australian dollar and increasing slaughter rates, lifted JBS Australia’s projected revenue by 17.6% to reach $5.38 billion for the year ending December 2015. Acquisitions have also played a large part in the company’s success.

Over the next five years, IBISWorld expects growth among processors to slow; however, it is anticipated that the continued reliance on export markets and consumer preferences for higher quality products will help offset this slowdown, which is caused by a mature domestic market and increased demand for poultry products.