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AACo shifts focus to luxury beef on falling production

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Falling meat sales are spurring the Australian Agricultural Company to focus on luxury beef production, as it seeks to tap into the world's rising middle class.

AACo, which has the world's largest cattle herd, has seen meat and live cattle sales fall sharply, with prices for its non-premium beef down.

But prices for the luxury variety Wagyu are up, as increased consumer incomes spurs interest premium food.

'Growing middle class'

The company sees the growing global middle class fuelling premium beef demand.

"By 2030 there will be 3bn middle class people in the world, all with the capacity and willingness to pay for a premium product," AACo said.

"As incomes increase, consumers are more likely to expect superior taste and enjoyment from eating premium quality beef."

AACo termed itself "a global leader" in production of Wagyu beef, "one of the most exciting and rapidly growing premium food products in the world".

Wagyu prices rise

And by premium beef, AACo means Wagyu, a Japanese cattle breed which produces highly marbled, and highly valued, meat.

The company's Wagyu branded first half beef sales price increased 6% to $13.59 per kilogramme from $12.88 per kilogramme on a like-for-like basis.

Last month the AACo launched its new luxury beef offerings, Westholme and Wylarah, in Singapore, ahead of a broader roll-out.

"Company strategy is to launch the brands into other key markets over the next 18 months," the company said.

Profits fall

But outside of the Wagyu market, AACo's sales and revenues fell, with total beef takings down 12.7% at Aus$195.9m

AACo's net profit over the six months to September 30 fell to Aus$47.9m ($35.45m) from Aus$49.8m during the same time period a year earlier.

Sales revenue decreased by 18% to Aus$214.1m.

AACo said the sale of live cattle to third-party producers and processors reduced by approximately 18%.

By Tanya Ashreena

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