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    AAC   AU000000AAC9

AUSTRALIAN AGRICULTURAL COMPANY LIMITED

(AAC)
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Luxury food industry turns sour amid global coronavirus lockdowns

06/12/2020 | 03:43am EST
70-year-old sushi chef Seiichi Yano serves sushi at Isozushi restaurant at Toyosu Market in Tokyo

By Naveen Thukral, Yuka Obayashi and Sybille de La Hamaide

Global demand for premium foods like wagyu beef, bluefin tuna and caviar has plunged with thousands of restaurants shuttered and many economies sliding into recession amid the coronavirus pandemic.

As strict lockdown measures to contain the outbreak ravage global economic activity, the luxury food industry could be among the worst hit since it heavily relies on restaurants and top hotels for demand for deluxe items from caviar to champagne.

While some gourmet food producers are tapping consumers directly to stay afloat, others have been forced to cut output as some products have lost nearly half their value since the start of the year.

Jean-Marie Barillere, co-chairman of champagne producers' lobby CIVC in France, said he hoped people would celebrate the easing of lockdown with a bottle of champagne, but expected a difficult end to the year.

"This is really a period that looks like a war time," he said.

Bookings data compiled by OpenTable, an online restaurant reservation service, showed a near 80% year-on-year decline in seated diners at restaurants in the United States, United Kingdom, Germany, Canada, Australia, Ireland and Mexico this year.

People are also less likely to consume luxury foods when stuck at home in the middle of a health crisis and worried about their financial situation, or under clinical social distancing measures as eateries reopen.

"People will not want to taste a Chateau Petrus wine, a lobster or caviar under a bell jar," said Michel Berthommier, managing director of Caviar Perlita in southwestern France.

"If you force people to eat in these conditions they will prefer going to fast foods."

DEEP DISCOUNTS

Premium foods was "one of the worst hit sectors worldwide", said Ole Houe, director of advisory services at agriculture brokerage IKON Commodities in Sydney. He said he did not expect a prompt recovery given many countries were in recession.

Falling demand has already taken a toll on the prices of luxury items.

In Tokyo, the price of top quality wagyu beef cuts has fallen about 30% from a year earlier, bluefin tuna - considered the best in Japan - has dropped more than 40% over that period, while prices of the famed 'Earl's melons' from Shizuoka have slumped 30%.

Russia's top sturgeon breeding company - Russian Caviar House - meanwhile was offering a 30% discount for Beluga hybrid caviar.

"Spring and summer are always low seasons for the caviar market, but if we compare this period with previous years, the sales in Russia are down 50%," said the firm's owner Alexander Novikov.

In France, caviar prices languished near historic lows, champagne sales tumbled, while foie gras producers have had to cut output to prop up prices.

Cifog, a foie gras producers' group, said restaurants account for 40% of total foie gras sales.

"Mid-March it felt like the sky had fallen on us," said Florian Boucherie, who produces 2 tonnes of foie gras per year in France.

Oyster and razor clam fishermen from Cape Cod and other top fishing grounds have also had to curb catches as lockdowns upended global eating habits.

GOING DOWNMARKET

To plug the yawning gap left by eateries, many high-end food producers are attempting to reach consumers directly via e-commerce platforms.

Others are steering more produce onto supermarket shelves.

"We are accelerating our supply of products into some of the world's largest supermarkets, gourmet butchers and direct to consumers online," said Hugh Killen, chief executive of Australia's largest listed beef producer, Australian Agricultural Company.

But some vendors say selling to supermarkets is far less profitable than selling to high-end restaurants.

In Japan, top sushi chefs pay 400,000 yen ($3,737.97) for 10kg of the best cuts of tuna compared to the 25,000 yen paid by supermarkets for 10kg of lower value cuts, said Yukitaka Yamaguchi, owner of Yamayuki tuna brokerage at Toyosu Market in Tokyo.

He said "the best part of (the) tuna" was usually sold first to high-end sushi restaurants but when these closed the "harakami had nowhere to go." They eventually started offering high-quality tuna to fish retailers and supermarkets.

For now, Yamaguchi has had to park plans to retire as he has accumulated debt during the pandemic.

"I had planned to retire when I turn 60, but that's no longer possible," he said.

(Reporting by Naveen Thukral in Singapore, Yuka Obayashi in Tokyo and Sybille de La Hamaide in Paris; additional reporting by Colin Packham in Sydney, Polina Devitt in Moscow and Sophie Yu in Beijing; Editing by Gavin Maguire and Ana Nicolaci da Costa)


ę Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
APOLLO FUTURE MOBILITY GROUP LIMITED 0.00% 0.455 End-of-day quote.1.11%
AT HOME GROUP INC. -0.08% 36.99 End-of-day quote.0.00%
AUSTRALIAN AGRICULTURAL COMPANY LIMITED 1.97% 1.55 Delayed Quote.2.03%
BEST INC. -8.76% 0.805 Delayed Quote.-5.46%
DELUXE CORPORATION -0.52% 32.44 Delayed Quote.1.56%
HF FOODS GROUP INC. -3.06% 7.92 Delayed Quote.-3.43%
JUST GROUP PLC -0.91% 92.45 Delayed Quote.10.59%
KINGDOM HOLDINGS LIMITED 0.00% 1.26 End-of-day quote.8.62%
LIKE CO., LTD. 3.07% 1814 Delayed Quote.4.60%
OBAYASHI CORPORATION 0.33% 919 Delayed Quote.3.82%
PREMIUM GROUP CO., LTD. 0.59% 3420 Delayed Quote.-5.96%
REACH PLC 0.92% 273 Delayed Quote.-3.36%
THE GLOBAL LTD. 1.17% 173 Delayed Quote.0.00%
US DOLLAR / RUSSIAN ROUBLE (USD/RUB) -0.07% 76.11 Delayed Quote.2.67%
WILL GROUP, INC. 5.11% 1254 Delayed Quote.-12.88%
WORLD CO., LTD. 1.99% 1129 Delayed Quote.-4.88%
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Financials
Sales 2022 245 M 178 M 178 M
Net income 2022 11,6 M 8,39 M 8,39 M
Net Debt 2022 384 M 278 M 278 M
P/E ratio 2022 304x
Yield 2022 -
Capitalization 916 M 662 M 663 M
EV / Sales 2022 5,30x
EV / Sales 2023 5,09x
Nbr of Employees 423
Free-Float -
Chart AUSTRALIAN AGRICULTURAL COMPANY LIMITED
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Australian Agricultural Company Limited Technical Analysis Chart | AAC | AU000000AAC9 | MarketScreener
Technical analysis trends AUSTRALIAN AGRICULTURAL COMPANY LIMITED
Short TermMid-TermLong Term
TrendsNeutralNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus HOLD
Number of Analysts 1
Last Close Price 1,52 AUD
Average target price 1,70 AUD
Spread / Average Target 11,8%
EPS Revisions
Managers and Directors
Hugh Killen Chief Executive Officer, MD & Director
Nigel Simonsz Chief Financial Officer
Donald Gordon McGauchie Independent Director
Anna Speer Chief Operating Officer
Stuart Alexander Black Independent Non-Executive Director