China Research Project Update

ACA meeting August 2010

“ANALYSIS OF PRODUCT DIFFERENTIATION OPPORTUNITIES FOR AUSTRALIAN WILD CAUGHT ABALONE IN CHINA”

In Market ResearchMAP Research Reports 2007/2008

Consumer Restaurant Importer

Grey Group/Moisson – “In Market research” – 2009/2010

Shanghai “In Market” Research Report – University of the Sunshine Coast: Dr Joanne Freeman, April 2010

Beijing “In Market” Research Report – USC – September 2010

China Research Project Focus

Business to Business B2B

Business to consumer B2C

B2B – Premium Restaurants – First Tier Cities Shanghai Guangzhou Beijing

B2C – Emerging affluent class in First Tier Cities Restaurants Premium Food Retail Outlets

Channel Penetration by Phase

Club/ High-end restaurant/Private Kitchen/Fusion

54%

Sea Food Hot pot

27%

Premium Sea food

9%

Club high end restaurant/Private Kitchen/Fusion

41%

Sea Food Hot pot

25%

Premium Sea food +

Chinese Abalone

Restaurant

12%

Club high end restaurant/Private Kitchen/Fusion

47%

Sea food Hot pot

21%

Premium Sea food + Chinese Abalone

Restaurant

7%

Phase 150 Restaurants

Phase 2120 Restaurants

Phase 3210 Restaurants(Accumulated)

Japanese Restaurant

9%

Japanese Restaurant

20%

Japanese Restaurant

23%

Abalone in Shanghai – situation analysis

* Premium restaurants in Shanghai generally do not use live Abalone due to variable quality

* Premium restaurateurs generally travel to Hong Kong on a monthly basis to purchase Dry Abalone

* There is little known about Australian Abalone other than it exists in the live market

* Restaurateurs were unaware of an Australian Dry Abalone product in the market

Abalone in Shanghai – situation analysis

Supply chain service levels are low – if you want abalone, go to the wet market - Tong Chuan is major market for abalone in all forms – larger restaurants and hotels utilise services of a trusted seafood supplier/distributor

Prices are volatile for all abalone product forms

Market education is required – poor understanding of Australian Wild abalone product portfolio

The Australian Abalone industry has not engaged the premium restaurant segment and expected product quality is continually undermined by the dumping of alternate product within the Shanghai market

Abalone in Shanghai – situation analysis

High end hotels report a preference for direct channel products with HACCP certificates required on all products – hotels are heavily regulated in purchasing behaviour both from a government regulatory perspective (Food safety and hygiene) and self imposed constraints to maintain high standards and image.

COO (Country of origin) and HACCP (health) certificates are enforced by regular government inspections

Smaller restaurants have greater flexibility with product sourcing as they are not subject to regular government inspections that require COO and HACCP certificates

Research Opportunities• For directly imported product, the key market segment

is within 5 star hotels and prestige restaurants – specifically establishments with stringent quality, health and hygiene standards

• Customisation and value adding to save cooking preparation time - opportunity for ready to cook packaged product placement in premium retail food sector

• Stability in quality, pricing and supply is welcome

• There is a desire for authentic, safe, quality product that meets all certification requirements for both restaurant and premium retail food outlets

• Opportunity to impart product knowledge to chefs and F&B managers

Where to from hereDevelopment of a working relationship with Chinese

import authorities is the key to expediting friendly import environment for direct channel imports

Establishment of a “direct import abalone product portfolio” with COO and HACCP certification

Establishment of a restaurant and consumer focused promotional strategy for the Australian Wild Abalone product portfolio

Seek out suitable Chinese entity to engage in restaurant recruitment, sales and product supply functions

Development of product variants customised to suit top end restaurant and food service sector

Progress to date Engagement of Chinese partners for Research management,

Promotional, PR and Data management functions (Grey Group, Moisson and MAP)

Ongoing development of “direct import” Australian Wild Abalone product portfolio

Recruitment of 6 “flagship” restaurants in Shanghai

Foundation discussions with a further 40 restaurants in Shanghai and Guangzhou re likely recruitment

Shanghai Trade Launch event planned and ready for execution on 25th of August 2010

Guangzhou Trade Launch event planned and ready for execution on 15th of September 2010

Contact established with key Chinese Import Regulatory Authorities

EXTENDING THE FOOTPRINT

EXTENDING THE FOOTPRINT

APPLICATION OF TRADEMARK

Industry Endorsement – Q A (Heart Foundation √)

Geographic Indicator – Appellation (Product adopts Geography)

Place Of Origin Brand – Supply Chain Management and Marketing Model

PROJECT LAUNCH

25th August 2010

The Lan Club Shanghai