Joint Industry Marketing Committee Meeting July 31, 2010

1. Joint Industry Marketing Committee MeetingJuly 31, 2010 U.S. Meat Export Federation

2. USMEF Strategic Planning Cycle Beef ARs Submitted (July) Strategy & SMP Development (September – October) UES Submission (May) Strategies/SMPs Presented to BOD (October – November) Domestic & Intnl input & Market Intelligence (24-7-365) Performance Measure Review (March – April) Evaluation + Analyze Results (December – January) Tactic & Budget Development (February – March) Regional Planning & Strategy Refinement (January – February)

3. USDA Funding Overview • Unified Export Strategy (UES) is the means for requesting funds from Foreign Ag Service programs. • 2010 USDA Market Access Program (MAP) funding for international beef programs was $6,862,948. • Announcement was made January 2010 • Request was just over $9 million • FY2011 funding proposal submitted June 18. • Requested $9.5 million for beef programs • Final decision in November or December

4. USDA Review • USMEF received “Highly Effective” Rating from FAS • Highest of 4 rankings “USMEF does an excellent job of adjusting to market conditions and making changes to marketing plans accordingly. Overall we are very pleased with USMEF’s market development operations.”

5. Priority #3: Develop & Expand International Markets 2009: A Year of Challenges Global recession Continuing access issues Negative consumer perceptions 2010: A Year of Opportunity Economy improving Greater access Targeted campaigns in key markets Jan to May: Quantity up 11% (880 Million lbs) Value up 19% ($1.449 Billion)

6. Develop & Expand International Markets Strategic Priorities: Market Access (Improve and maintain access in markets) Market Development (Increase the volume and number of cuts purchased) Tactical Focus: Develop new sectors and “subsectors” – TQM Approach Integrated Campaigns Enhance image of US products and industry Educate buyers, consumers and influencers Expand Range of cuts & products/Maximize carcass utilization Adapt programs to meet market/economic environment

7. One Key is USMEF’s International Network of Offices St. Petersburg Brussels Moscow Denver Beijing Seoul Tokyo Beirut Monterrey Shanghai Mexico City Taipei Caribbean Guangzhou Hong Kong C/S America Singapore *Consultants

8. TQM Marketing Approach • Analyze each sector & subsectors - Trade, HRI, Retail, Consumer • Identify Size, Potential, Key Targets, etc • Set Goals, Tactics, Evaluation

9. Integrated Campaigns

10. Integrated U.S. Beef Marketing Campaigns “We Care”, “To Trust”, “We Love U.S. Beef” BRAND IMAGE CUSTOMER EXPERIENCE Advertising Promotion • Cable TV (Korea) • Newspaper & Magazines • Billboards • Advertorials • Retail • Chain Stores • Dept. Stores • Butcher Shops • Foodservice • Hotel/Steak • Rib Houses • BBQ/Yakiniku Public Relations Distribution Channel Development • Blogger Marketing • Web communications) • Media Relations • Information Service • Seminars • Trade Shows Implied Messages Implied Messages • Safety & Wholesome • Producer integrity • Natural & Clean • Scientific - Commitment - Product of Families & Communities • Quality • Value • Consistency • Freshness • Safety • Availability

11. Integrated U.S. Beef Marketing Campaigns LOCALIZED: based on country specific concerns and cultural biases; SYNERGY: formulate core image and message points that cross sectors/channels and tactics; IMPACTFUL: should address consumer concerns on emotional & factual level; EQUITY: should restore/build “U.S.” brand equity. FLEXIBILITY: messages differ slightly according to target audience, and can evolve; CRITICAL MASS: need minimal resources to be cost effective.

12. Focus on Underutilized Cuts Japan “We Care” campaign chuck roll, short ribs, brisket, shoulder clod heart Korea “To Trust” campaign chuck roll, outside skirt, bone-in short ribs Mexico Sales Force Training and Ideal Meat Case shoulder clod heart, chuck roll, top blade Taiwan Hotel Chef Training chuck roll, boneless & bone-in short ribs ASEAN Culinary Training Center chuck roll, chuck flap, top blade, short ribs Russia HRI Training top blade, sirloin Caribbean Chef Competitions shoulder clod heart, back ribs, tri-tip, brisket Central America Sales Force Training top blade, chuck roll EU Seminars and Promotions chuck roll, shoulder clod heart Middle East Desk-side Seminars and promotions chuck roll, sirloin Hong Kong Seminars and Trade Shows boneless short ribs, chuck roll

13. Example: Carcass Value Maximization Ribeyes, strip loins, tenderloins to EU Rounds, chucks, clods and variety meats to Mexico Livers, tongues, hearts, kidneys to Russia Livers to Egypt Short ribs, chuck short ribs, back ribs, chuck roll, brisket, femur bones, intestines, to Korea Short plate, short ribs to Greater China Short plate, chuck eye roll, chuck short ribs, bnls short ribs, tongues, outside skirts, hanging tenders to Japan Source: USMEF

14. Export Price Premiums Prices in U.S.$/lb; based on USMEF international office estimates; snapshot of C&F prices for Choice ~April 2010. US prices are Choice USDA wholesale and USMEF est.

15. Exports add value for U.S. producers Total value per head in May 2010 $160/head Short ribs in Korea alone adding >$20/head Choice cutout value up $133/head (vs. same week in 2009) The chuck primal has contributed the most to the increase… Chuck up $39 Ribs up $37 Round up $24 Loin up $21 Plate, brisket, flank up $13

16. Larger Imports Supporting Growing Consumption Source: USDA/FAS PS&D Spring 2010, carcass wt., thousand MT

17. Develop & Expand International Markets FY 2011 Budget Recommendation Program Cost $4,970,570 Implementation Cost $2,457,000

18. Develop & Expand International Markets

19. Direction for 2011 • Korea and Taiwan continue strong efforts to address image concerns • Japan expanded access expected during 2011 • New US “negotiating stance” in Asia offered encouragement for China, but now?? • Increased opportunities in smaller markets, such as Middle East, Caribbean, and Central/South America • Europe down slightly as supplies of eligible cattle remain low

20. Thank you! For additional information or questions: Greg Hanes ghanes@usmef.org 303-623-6328