LARGE Japanese meat importer, S Foods, has made its first investment into the Australian red meat supply chain, purchasing southern NSW beef processor Monbeef.

The new owner is a significant importer, distributor and end-user of Australian and US beef over many years, ranked within the top five meat importers in Japan by volume. Monbeef has supplied S Foods with beef for a considerable period, through its export agreements with Sanger and Agricomm.

S Foods has no previous investment history in the Australian red meat supply chain, but owns and operates two large beef processing plants in the United States, producing the company’s Aurora Angus beef brand.

The company has meat sales offices in 24 centres across Japan and overseas in countries like the US, Korea and Singapore.

The S Foods 2018 annual report says it has a “basic strategy of vertically integrating its meat businesses̶   production, processing, wholesale business, retail business and meat food service.”

“We will continue to work proactively to enhance our meat procurement network in Japan and abroad,” the listed company told shareholders in its most recent annual report.

S Foods reported 2017 net sales of 281,233 million yen (up 16pc year-on-year), and operating income of 10,555 million yen (up 25pc year-on-year).

A brief advice to Monbeef stakeholders this week said the decision to sell the business to S Foods was made due to the “advancing age of Monbeef shareholders, many of whom were not in a position to continue with the business.”

Long-term view for Monbeef

Located near Cooma in the Monaro region of southeastern NSW, Monbeef’s plant is one of the newer plants in eastern Australia, having been commissioned in 1998.

The boutique-scale hot-boning facility, with a daily shift capacity understood to be around 200 head, uses latest hot-boning design and technology. The plant sits on the same site as an earlier multi-species facility operated for many years by Frank Ripzsam and major shareholders, the Dorahy brothers.

“S Foods has invested in Monbeef with a long-term view and will develop and implement strategies to allow Monbeef to continue to succeed into the future,” Monbeef stakeholders were told this week.

Industry observers suggest S Foods purchase is strategic in nature, and is not designed simply to provide ‘food security’ for customers in Japan. The company will continue to export to a broad range of countries.

Southern processing industry sources told Beef Central that Monbeef had been looking for a buyer for the past three or four years, in an ‘off-market’ fashion.

The plant was the first purpose-built hot-boning facility constructed in New South Wales. In 2011 Monbeef became an accredited Halal processor which involved plant modifications and new equipment.

In recent years significant investment has been made in introducing new technology and equipment to improve efficiency and allow an expanded range of products and packaging options.

Monbeef’s kill is made up primarily of bulls and cows, with beef and dairy cows sourced out of the Gippsland region and local areas. The company is known to specialise in particularly heavy bulls, which cannot be accommodated on other processor chains due to their size. Bulls are drawn from across NSW and Victoria.

“Our location is adjacent to the significant dairy catchment areas of the NSW South Coast and northern Victoria and these regions provide the core supply of cattle for our operation. We also have a competitive procurement advantage in the Southern Highlands, Southern Tablelands, South West Slopes and Monaro regions,” the Monbeef website says.

The plant supplies manufacturing beef and cuts to the Australian domestic market and 26 export countries around the world.

“We have an experienced management team with a clear vision for the future. Our markets are established, our products are of the highest quality and our workforce is stable and this provides a solid foundation for future growth,” the company website says.

Monbeef employs between 85 and 120 staff throughout the year, depending on market demands and cattle supply, injecting an estimated $6 million into the local economy each year.

Direct consignment model

The company has established a strong direct consignment supply network with local beef cattle producers and dairy farmers who “now recognise the savings that can be made by selling direct,” the company’s website says.

“By working directly with farmers we can ensure a regular supply of cattle to our facility resulting in better plant efficiency, which in turn is reflected in better prices for customers.”

Monbeef has a long-standing export marketing relationship with Sanger Australia, which also exports on behalf of Bindaree, and Agricomm, which specialises in Halal certified products into markets in southern Asia and the Middle East.

• Keep a look-out for Beef Central’s upcoming Top 15 Processors feature