Angus Pride

EXECUTIVE SUMMARY

This report analyzes the opportunities and risks associated with exporting Angus Prime Premium Beef to Hong and China and presents recommendations on the course of action toward so doing.

Worldwide Beef Bans are now Our Opportunity

Cargill Meat Solutions in is an excellent position to take advantage of the recent developments in the international beef market. As the worldwide beef bans are being lifted there are opportunities to regain market shares lost since December 2003, and to open new countries to our products.

The Beef bans did a lot of damage to American ranchers and producers initially but that has spurred us to become more efficient in our methods and more determined to market the best beef steaks in the world at prices that are good for consumers and good for us. There isn't a country in the world that can match the quality and taste than the cattle ranchers in the United States. Our Angus Prime Premium Beef is the cream of the crop and we are proud to have it among our brands.

Although we have had to focus on our domestic customers since the loss of so many export markets, we can see the hard work of our industry beginning to open the world to us again. The U.S. Department of Agriculture and the cattle associations have worked with universities and laboratories around the world to virtually eliminate the threat of BSE. It's time to aggressively re-enter those markets that were closed and once again dominate the world beef market. There are many to choose from so let's focus on those with the greatest growth potential

What is the Largest Emerging World Market?

Hong Kong and China represent the world's largest population. In just the two years that the ban was in place they have increased their populations and their per capita beef consumption. Beef is becoming a larger part of their diet for a number of economic and cultural reasons. While Hong Kong has long been affluent and highly Westernized, China is emerging from the past to reach out and spend their newly acquired wealth on all things Western. That includes their food and shopping habits. American beef is already known for the quality of its taste and there isn't serious concern about new outbreaks of BSE.

How do we Market Angus Prime to the Hong Kong Ð'- China Market?

By focusing on the elements the give us the best chance for success we can develop Angus Prime into the prime choice of beef for affluent Chinese in Hong Kong and the Mainland. This means that we make Angus Prime available to them in the supermarkets they shop in such as the award winning A.S. Watson chain and the restaurants that present Western cuisine. It means that must take advantage of the unique branding opportunity available to us. The research detailed in this report indicates that the Chinese want American beef because of its high quality and superior taste.

Obstacles are our Opportunity

Since the beef ban was lifted in Hong Kong there has been great demand for U.S. beef but before we ship the first steak we better be sure that we meet every detail of every regulation and health requirement. We have an excellent relationship with the U.S. Department of Agriculture and the Kansas Cattleman's Association. Both will be invaluable in assuring we don't make mistakes that jeopardize our efforts.

Exporting to Hong and China will be a new challenge for us and it won't be easy. There are cultural differences and we are not familiar with the business climate. Nor do we have extensive government contacts. But we do have our parent company, Cargill, Inc. They are pioneers of the U.S. Sino trade connection having entered China shortly after Richard Nixon's visit in 1972.

As we said, the opportunity is there, the challenges will be difficult. But taking advantage of opportunities and overcoming obstacles are what set us apart. We are a prime cut above the rest with good reason.

ON EXPORTING ANGUS PRIDE BEEF

TO THE WORLD'S LARGEST MARKET

INTRODUCTION

Background and Problem Defined

In the 70 years since Cargill, (known as Excel Packing Company until last year), started in the meat producing and marketing arena, we have survived tough times because of our ability to adapt to new market conditions. The most significant recent evolution came as we became Cargill Meat Solutions. Now we operate as an umbrella group for more than a dozen brands of high quality meat products. We process, package and market these brands around the globe. A great reason for our success is the support and expertise available to us from our parent company, Cargill, Inc.

What stands out is our knack for discovering new markets for our brands among those emerging consumers in places others might miss. Our challenge today is to find that undiscovered market for Angus Pride Premium Beef brand and enter before our competition, knowing our brand is the right product at the right time. We believe that the Hong Kong-China consumer is that market opportunity.

Purpose and Scope

The purpose of this report is to analyze the Hong Kong and China markets beyond our initial investigation. Two countries are considered because one is the link to the other. This report will give deeper consideration to the consumers, marketplace, the business climate, and the major obstacles involved. The information that follows represents the first step in developing this market for the Angus Pride brand. It is beyond the scope of this report to cover each element in exhaustive detail. Such studies will need to be undertaken in the event this report's recommendations are accepted.

Sources and Methods

This report was prepared using primary and secondary research methods. Primary data was collected through interviews with persons knowledgeable in the scope of this report. All of the participants were contacted via email and responded the same way. Relevant questions were selected from a prepared list in accordance with individual expertise. Secondary data was gathered using the University of Maryland Online Library and online news articles, journals, government and corporate websites. The gathered information was evaluated for relevance, accuracy and appropriateness for use in this report.

Organization