The rise of a premium branded beef sector in Australia that focuses on grass-finished cattle as opposed to traditional grain-finished beef, with high Intramuscular Fat (IMF) marbling is increasingly significant.
This emerging sector is primarily driven by consumer demand for lower carbon footprint products, as well as a growing interest in organic, regenerative, and sustainably labelled beef.
The Australian beef industry is presented with a unique opportunity to maintain its existing dominance in premium branded grain-fed beef in traditional export markets while simultaneously tapping into the rising demand for premium grass-fed beef in an emerging consumer segment.
The ability to balance these two distinct market segments is a testament to Australia’s diversified agricultural capabilities and its adaptability to shifting global consumer preferences.
Historically, Australia has been a significant player in the production and export of grain-fed beef, particularly to key markets in Asia, including Japan, South Korea, and China. These countries have long favoured grain-fed beef for its rich marbling, tenderness, and consistent quality, attributes that are highly valued in their culinary traditions.
Australian grain-fed beef, produced in feedlots with controlled diets, caters to these preferences and competes successfully against US beef in these key Asian markets. The ongoing demand for this type of beef ensures that Australia continues to enjoy a stable and lucrative market share within these traditional export markets.
The chart above, illustrating the rise of the grain-fed sector in Australia over the past two and a half decades, underscores this point. The chart shows a clear increase in the ratio of grain-finished cattle to grass-finished cattle, rising from about 25% in 2000 toward 40-45% in recent years.
This steady growth highlights the success of Australia’s grain-fed beef industry in meeting the specific demands of its key export markets. The dotted trend line in the chart indicates a sustained upward trajectory, suggesting that the preference for grain-fed beef in these markets remains strong.
However, while the grain-fed sector has grown, it is important to note that it still represents a smaller proportion of the total cattle turnoff compared to countries like the United States, where about 90% of US cattle are grain-finished in feedlots. As at end of June 2024 there were 1.49 million head of cattle sent to meat works that were grain finished versus 2.44 million head that were grass finished, representing a ratio of grain finished cattle slaughter of 38% in Australia this year.
In contrast to the traditional grain-fed markets, there is a growing segment of consumers in the USA, EU, and UK who are increasingly seeking premium grass-fed beef. These consumers are driven by health consciousness, environmental sustainability, and ethical considerations.
Grass-fed beef is perceived by this consumer segment as being a healthier alternative to grain-fed beef due to its higher levels of omega-3 fatty acids and antioxidants. Additionally, it is marketed as having a lower carbon footprint, which appeals to environmentally aware consumers.
The rise of this market presents Australia with a significant opportunity to diversify its beef exports and capitalise on the growing demand for sustainable and environmentally friendly produced food.
Australia’s ability to produce high-quality grass-fed beef offers a competitive advantage in these emerging markets. Unlike grain-fed beef, which can be associated by some consumers with intensive farming practices and higher environmental impacts, grass-fed beef is seen as being more natural and aligned with regenerative agricultural practices.
This mirrors the values of a growing number of consumers who prioritise food choices that are both healthy and sustainable. By emphasising the natural, hormone-free, and pasture-raised attributes of its grass-fed beef, Australia can differentiate itself from competitors and position its products as premium offerings in these markets.
The development of specific premium brands within both the grain-fed and grass-fed sectors further enhances Australia’s competitive position. Programs like the Greenham NEVER EVER, Coles' Graze range, Woolworths' Macro Grass-fed beef range, and Hewitt Agribusiness Organic Meat Company's range cater to diverse consumer preferences.
The Greenham program, for example, emphasises the natural and antibiotic-free qualities of its beef, appealing to health-conscious consumers. Similarly, Coles’ Graze range and Woolworths’ Macro Grass-fed range target the mainstream market with products that are traceable and sustainably produced, while Hewitt Agribusiness focuses on organic and regenerative practices, catering to a niche, but growing, segment of environmentally conscious consumers.
Maintaining a balance between these two market segments, grain-fed beef for traditional markets and grass-fed beef for emerging markets, will be crucial for the Australian beef sector’s future growth and sustainability.
The dual focus allows Australia to diversify its export portfolio, reducing the risk of over-reliance on a single market or product type. It also provides resilience against market fluctuations, ensuring that the industry can adapt to changing consumer preferences and economic conditions.
However, this strategy is not without its challenges. The production of grain-fed beef generally involves higher costs due to feedlot expenses, while grass-fed beef requires longer feeding periods and more extensive pasture management.
Additionally, educating consumers in emerging markets about the benefits of grass-fed beef will be essential to driving demand. Effective marketing that communicates the health, environmental, and ethical advantages of grass-fed beef will be key to capturing market share in the USA, EU, and UK.
The Australian beef sector’s ability to cater to both traditional grain-fed markets in Asia and the emerging grass-fed markets in the USA, EU, and UK positions it for long-term success.
By leveraging its strengths in both areas, Australia can maintain its place as a leading global beef producer while adapting to and capitalising on evolving consumer trends.
The strategic balance between these market segments not only enhances Australia’s competitiveness but also ensures its resilience in a dynamic global marketplace.
Matt Dalgleish is a director of Episode3.net and co-host of the Agwatchers podcast.