Monthly Archives: November 2012

Andrew Ferrier new NZTE chair

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Former Fonterra chief executive, Andrew Ferrier has been appointed as chair of the New Zealand Trade and Enterprise Board (NZTE).

His chairmanship will be for a three-year term commencing November 2012, announced economic development minister Steven Joyce and trade minister Tim Groser today.

Ferrier has held a number of director and executive positions for large multi-nationals and has “a wealth of experience in international business, and brings strong governance and strategic capability to the NZTE Board. He is well placed to take up the role of chair for the Board,” says Joyce.

Businesswoman Julie Christie, consultant Charles Finny and Canterbury Employers’ Chamber of Commerce Chief Executive Peter Townsend were reappointed for a second, three-year term.

The Ministers thanked outgoing chair Jon Mayson for his valuable contribution to the operation of NZTE and for steering it through a period of significant change.

Andrew Ferrier has almost 30 years’ experience in international business, with a background in building global, performance-driven businesses.

In September 2011, he stepped down as chief executive of Fonterra after eight years. Prior to joining Fonterra, he was president and chief executive officer of GSW Inc. and spent 16 years in the sugar industry working in Canada, the United States, the United Kingdom and Mexico. He served as the president and chief executive of Tate & Lyle North America Sugars Inc.

Andrew Ferrier is a director of Orion Health Ltd and CANZ Capital Ltd. He was appointed to the University of Auckland Council in March 2012. Born in Canada, he has been a New Zealand citizen since 2008.

A little bit of export meat, in Wellington

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Customers of an award-winning New Zealand family line of butchers in Wellington are being treated to export quality product this year.

The run into Christmas for Wellington’s Preston’s Master Butchers is starting this week with the launch of free-range spring lamb. The new season’s lamb is sourced through sister company, meat processor and exporter Taylor Preston, which in turn sources from selected farmers in the lower North Island and top of the South Island.

“It’s not a matter of the best stuff going for export,” says the butcher’s general manager Andrew Preston, “we make sure that it comes straight here.”

Spring lamb has a unique flavour profile which is more delicate than older lambs – predominantly due to being milk-fed and young – and it’s also very tender. “People enjoy the taste,” says Preston, ” and we reckon everybody should have a chance to sample it – so we’re doing a special introduction across our stores, at really affordable prices.”

Preston’s is also launching two new beef ranges – under the Ted’s Choice premium label; Natural Farm Hereford and Natural Farm Angus – with a Preston family influence right through the chain. The cattle are sourced predominantly from lower North Island farms with Andrew Preston’s cousin, Campbell Preston, individually selecting the carcases at the Taylor Preston processing plant for meat colour, muscle size and conformation, marbling content and pH tests are also used as an indicator for tenderness.

“We expect the range will go well in our retail stores and hospitality,” says Andrew Preston. “People are looking for a little bit extra and the Natural Farm product certainly gives that, with very strict quality standards and full traceability. What’s more the butcher in-store can portion it any way you want.”

In addition, Preston’s Master Butchers learned last week that had been awarded a gold medal in the Devro New Zealand Sausage Competition for its Turingia Bratwurst (pictured right).

“Our customers have been telling us for a while that this is a fantastic sausage,” says Preston. “A win in a national competition is reinforcement that we’ve got it right. Our Anytime Turingia Bratwurst is a traditional pre-cooked German bratwurst, flavoured with marjoram and parsley and a touch of pepper and garlic. “It’s great for a variety of uses, from the family BBQ, eating as a snack, through to portioning into a risotto.”

Preston is looking forward to the shops being “a bit crazy for a while, as Preston’s has previously won gold, silver and bronze medals for bacon and other sausages. We will have a bunch of new customers coming to our stores just to try it and, I can tell you now, they won’t be disappointed.”

 

BurgerFuel wins franchise export award

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Congratulations to New Zealand gourmet burger franchise BurgerFuel, which has won the Franchise Export of the Year award in the Westpac NZ Franchise Awards 2012.

The judges praised BurgerFuel for not just selling high quality, gourmet products, but also for developing the company into a specialist exporter which sources raw materials from New Zealand wherever possible, The products BurgerFuel sends overseas are extensive, exporting anything from 100% pure New Zealand grass-fed beef to a complete store fit-out, ensuring that the products and service they provide their customers, remains of a consistently high quality standard, in all export countries.

BurgerFuel now has stores in Iraq, Abu Dhabi and Saudi Arabia, with plans to open in Egypt and other Middle Eastern territories in the next year, making them firmly established in the international market and exporting industry, the company says.

The award also takes into account critical success factors such as outstanding systems that ultimately lead to a company’s ability to scale into new markets.

BurgerFuel says that whilst it’s also growing its chain in New Zealand, having just opened its thirtieth store here, its focus is firmly on its objective of becoming a global brand. The company works with NZ Trade and Enterprise and is a recognised NZTE ‘Beachheads’ company, BurgerFuel Worldwide is a New Zealand gourmet burger concept and is listed on the New Zealand stock exchange,

NZ farmers encouraged to Twitter

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The dawn chorus will have an added ‘tweet’ from now on as New Zealand’s farmers are being encouraged to start using Twitter to connect with their customers.

A forum on social media for farmers, organised by the Primary Industry Capability Alliance (PICA) forum, was held earlier this month.

Beef + Lamb NZ Ltd (B+LNZ)’s mid-northern North Island extension manager Erica van Reenan reports that the forum turned out to have a good turnout from the rural industry. She says representatives left, after an informative six hours, clutching their smartphones, and contemplating how social media could be put to work.

A farmer would want to be on Twitter or Facebook because it enables them to tell their story, explains Reenan. For example, Hunterville sheep and beef farmer and Farmer Council member William Morrison, regularly tweets about life on the farm and has – at the time of writing about 600 followers from all over the world and all walks of life, she says.

“What better way to connect with the people that buy our wonderful products that to tell them the pasture to plate story through a personal connection in easy to understand language.

“There are times when the way we produce food is challenged – more and more, through social media. If you’re not there, how can you defend yourself?” asks Reenan. “Being present allows you to build trust with the customer, who is then more likely to advocate for you.”

As Lincoln University’s Dorje McKinnon put it “Social media is like silage. It can be challenging to get it right – and sometimes it stinks. But, just like the old tractor, it’s a tool and if used right it can add value.”

While 76 percent of New Zealanders have a Facebook account, only 19 percent have a Twitter account, a recent survey has shown.

Read more …

Major new FTA to be negotiated

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A new free trade agreement, that could mean a US$500 billion boost to the Asian region’s economy by 2025, is to be negotiated it was announced today.

The New Zealand International Business Forum (NZIBF) has welcomed the announcement that the ten members of ASEAN (the Association of South East Asian Nations) and six other economies including New Zealand, Australia, China, Japan, Korea and India, intend to negotiate the Regional Comprehensive Economic Partnership (RCEP).

“This is a further sign that New Zealand’s home is in Asia” said NZIBF Chairman Sir Graeme Harrison.

“This negotiation will build on New Zealand and Australia’s existing high quality free trade agreement with ASEAN and will bring both the giant North Asian economies and India into the same network.  The initiation of a free trade negotiation with Japan is particularly welcome: Japan is now the only Asian economy with which New Zealand neither has an FTA or a negotiation underway.  A closer trade and economic relationship with Japan is strongly supported by New Zealand business and would be benefit to both countries”.

The RCEP announcement was made at the East Asia Summit meeting in Phnom Penh which is being attended by Prime Minister Key and Trade Minister Groser. The announcement follows several years of preparatory work by officials.

“We congratulate those associated with this initiative which demonstrates new leadership by the ASEAN economies. I can see several years of hard work by negotiators ahead to bring this new agreement into effect. The effort will be worth it: because of its wide coverage RCEP could be even bigger than the Trans Pacific Partnership (TPP) in terms of its contribution to economic welfare.”

Sir Graeme emphasised that TPP and RCEP were mutually reinforcing as potential pathways to a wider Free Trade Area of the Asia Pacific (FTAAP).

“There can be many paths to a broader vision for regional economic integration. New Zealand is fortunate to be directly involved in both major initiatives. TPP is further advanced but both TPP and RCEP are significant and for New Zealand offer the possibility of eliminating barriers and reducing the cost of doing business, building the basis for economic growth and creating jobs”, concluded Sir Graeme.

ASEAN members include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar (Burma), Singapore, Thailand, The Philippines and Viet Nam, which make up collectively the world’s ninth largest economy.

Research by the East West Centre in Honolulu and the Petersen Institute for International Economics in Washington DC suggests that Asian trade liberalisation could be worth $US500 billion to the region’s economy by 2025.

 

Meat industry lacks leadership according to Cooke

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The National Meat Workers Union’s General Secretary Grahame Cooke stated last Monday the large loss published by Alliance Group would be the first of several for the 2012 year. His point is fairly accurate, confirmed by Silver Fern Farms’ loss announced on Tuesday, writes industry commentator Allan Barber.

Of the other companies ANZCO and Blue Sky Meats will file their results with the Companies Office at the end of March. AFFCO is now a wholly owned subsidiary of Talley’s and doesn’t disclose its results, although the Meat Workers Union says (optimistically) these will be horrendous because of the lock out earlier this year. AFFCO’s results may not be as bad as all that because of the lack of a peak kill.

Cooke’s next point was the losses would inevitably lead to more industry rationalisation; this in turn would cause job losses for the meat workers who have already been affected by several plant closures in recent years. Job and earnings security suffered from fewer stock numbers and shorter season with workers being paid piece rates for shorter shifts; also higher average weights mean better productivity which is true for lambs, but not cattle.

His final point was about the lack of industry leadership in spite of the fact there are a number of good individual companies, all competing vigorously with each other. Cooke said the meat industry has not changed in the last fifty years with poor marketing and plant closures quickly followed by the addition of more capacity. He described the industry graphically as behaving like a cow with its head chopped off.

A look at the Union’s website provides more information on this topic: plant capacity has increased over the past decade with new plants, rebuilds and upgrades at nine plants across the country as well as capacity increases at several more. The Union believes the Government must initiate a ‘meat summit’ to address this.

So the questions are whether Cooke is correct or the industry is behaving in a perfectly rational manner.

My first reaction is the Government will never initiate a summit, almost certainly just another talkfest, because it realises the industry has a functioning commercial model. It competes in a global market and government should never interfere with privately owned businesses, provided they comply with the law. The meat industry has its own industry body, the MIA, which deals with all sorts of industry issues, but not those which impinge on competition between its members.

In addition, land use changes dictated by relative sector profitability will continue to occur regardless. The government would not be wise to get involved in picking winners or hobbling one sector’s ability to adjust its processing facilities.

My next reaction is meat processors and exporters are not the whole industry. There is a value chain which starts behind the farm gate and finishes in restaurants or consumers’ homes. The Red Meat Sector Strategy, FarmIQ and other company based initiatives attempt to define what can be done to join links in the value chain so they contribute to higher, more consistent returns. But it’s up to the farmers to produce to these specifications.

Meat exporters have done a great job over recent years to convert yesterday’s freezing industry into a sophisticated red meat member of the food industry, while also expanding into high value medical and other non-food product areas. More can always be done, but the industry has moved light years from the age of subsidies.

However, this process of modernisation has of necessity been achieved at a cost to overall jobs and terms of employment. The older plants were inefficient and built to service a different industry structure from a previous age. The period following deregulation and more particularly the removal of subsidies saw many farmers in serious financial straits, so their only option was to change farming practice or land use or sell. An unavoidable, even desirable, outcome was a big decline in sheep and prime beef numbers, offset to some extent by the growth in the dairy industry and the US manufacturing beef market.

Owen Poole made the point to me the losses are a sheepmeat problem and Alliance has responded by making the appropriate plant decisions, such as closure of Mataura sheepmeat processing, doubling Mataura’s beef capacity, increased venison processing at Smithfield and rendering at Lorneville. Keith Cooper also confirmed his satisfaction with SFF’s footprint in relation to livestock volumes, having already taken some tough capacity decisions.

This emphasises the regular requirement for new plant configurations to meet the demands of the market place and consequently the workforce must adapt as well. My experience tells me the meat industry does a pretty good job of responding to changes in market conditions, while generally trying to keep its workforce employed. But there is no future in keeping inefficient plants running to protect workers’ jobs, because these will disappear sooner rather than later.

Equally there are no prizes for leaving customer orders unsupplied when competitors are still prepared to process livestock. I certainly wouldn’t fancy the chances of the industry leader who sets an example by refusing to pay the money and has to tell Tesco or Marks and Spencer his company can’t supply because the stock costs too much this week.

Leadership is not as simple as it appears.

The item has appeared in NZ Farmers Weekly and at Allan Barber’s blog Barber’s Meaty Issues.

Beef and lamb on show in Seoul

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New Zealand beef and lamb were on show in Seoul recently, when New Zealand Trade and Enterprise (NZTE) held the third New Zealand Food Connection at the Seoul Plaza Hotel on 6 November.

The event showcased the best New Zealand food and beverage products to over 170 Korean food and beverage professionals.

Twelve New Zealand food and beverage companies participated in the event. Alongside the beef and lamb were kiwifruit, guacamole, fruit and vegetable puree and powder, honey, beef jerky, juice, energy drink, beer, syrup and Greenshell mussels.

Over 170 trade people attended, including chefs, menu developers and buyers from major hotels, restaurant chains and catering companies, retailers/distributors, food manufacturing companies, journalists and power bloggers in Seoul, its vicinity areas and as far away as Gwangju and Cheongju.

Following Ambassador Patrick Rata’s welcome speech, participants saw a presentation on how to use social media and enjoyed a food tasting session. Many new recipes were discussed and developed jointly by participants and chefs for this event, showing the New Zealand participants how their products can be used in Korea.

Vion leaving British meat industry

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The Dutch-owned meat industry processor Vion NV has announced it is to leave the British meat industry, according to an item in the British Farmers Weekly magazine. The firm is the top EU producing company by meat volume according to Richard Brown of GIRA’s presentation to the Red Meat Sector Conference earlier this year. Producing 2.5 million tonnes (carcase weight equivalent) in 2010/2011, Vion deals principally in pork, but also beef, poultry and a small amount of sheepmeat. It entered the UK market in the late 1990s. According to the article, the UK operations for sale are pork, red meat and poultry units. Read more …

Success depends on innovation

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Success depends on innovation, says the head of one of the world’s leading retailers – and a major customer for New Zealand lamb.

Speaking at the FT Innovate 2012 conference in London in early November, Tesco Plc’s group chief executive Philip Clarke said: “Be it nations or companies, if you don’t innovate; if you cling to the old way of doing things in the forlorn hope that the pace of change will slow; if you dare not take risks for fear of failure – if you do these things, then decline is inevitable.”

Change and innovation are part of every successful businesses’ DNA, he said and related the story of Tesco’s founder Jack Cohen “an innovator to his fingertips.”

It was Cohen who helped bring the concept of a self-service supermarket to Britain after World War II “an innovation that changed the entire retail industry.”

His innovative streak was borne out of an attitude of mind. “He’d travel, he’d constantly ask questions, spark ideas, try things. Lesson one from Jack then: to innovate we must create the right mindset.”

Since then Tesco has been leading innovation in retail “everything from new formats like Express to centralised distribution, which have revolutionised the supply chain here in the UK,” said Clarke.

The digital revolution is heralding a new era of retailing. While the customer always was king, thanks to digital technology, today’s customers are more powerful than ever. “Not just with more information and choice of goods and services to buy, but a choice of ways to shop at whatever time they like,” he said, adding that social media creates fashions in seconds, making or destroying brands within a day.

In the wake of the change has come data. “The vast, almost infinite quantities of data now available means no retailer has any excuse not to abide by the first law of business: know your customer.”

The insights gleaned by Tesco by its Clubcard, launched in the 1990s, turbo-charged Tesco’s growth. Data is now helping Tesco to drive innovation: “Which is why we own Dunnhumby, our marketing services business.”

While data is important, experimentation is vital. “Try, try and try again. And in the face of failure look for what is good about the experiment. Encourage your people to try again, to build on the success, not blame them for the failure.”

People said, when Tesco.com was launched in 2000, it would not work. “Today it is the world’s largest and most profitable online grocery retailer and we are rolling out the service across all our markets. Already more than five years old in Korea and Ireland; we have launched it in Slovakia, Czech, Poland. Thailand follows very soon.”

That roll out has been made possible thanks to an innovative IT platform that has been developed by Tesco’s Hindustan Service Centre, the company’s global services arm based in Bangalore, said Clarke.

“Employing over 3,000 technologists, this is where we develop new web services and systems so they are on a common operating platform, allowing is to set them up easily in markets around the world.”

Clarke described Tesco as a ‘blueprint led organisation’. “Once innovations are proved successful, a blueprint is developed and managers trained to speed adoption around the world.”

In each of their markets, Tesco.com’s offer has to be tailored to meet the local culture and tastes. New innovations to aid speeding delivery to the customer include Mapster, an application which tracks Tesco vans in real time and is being piloted in some stores around London. Tesco has also created a virtual store in Seoul, Korea, where commuters can use their smartphones on the platforms of the city’s underground to scan the barcodes of the products they want – and then their shopping gets delivered to the address of their choice later on the same day.

“Our Korean colleagues lead on digital innovation for the Group – not because we asked them but because we fostered a culture of innovation; we encouraged innovation and recognised colleagues for trying.”

Clarke liked to think that Jack Cohen would be proud of what Tesco did with Facebook, asking customers what ice-cream flavours they wanted – the 21st century equivalent of his 1930s store tours in Hackney. “Asking customers what they want isn’t new, but doing it the digital way is.”

Looking to the future, Clarke said for retailers it’s no longer going to be sufficient to innovate simply to meet an existing customer trend. “We need to innovate to anticipate what customers want. Successful retailers will not be those who meekly follow the customer like some obedient puppy. They will be one step ahead, offering people new ways to make their lives that bit better.”

Those innovations have to fit a powerful trend created by the power of digital technology,. “People want and increasingly expect personal service, a personalised choice, a sense that a brand – be it a retailer or media organisation – has tailored what they offer to fit their own unique needs and wishes.”

The drive to personalisation will be propelled even further by the internet of things. “Everything from the light bulb in your house to the car you drive will be connected to the internet… Mass personalisation, plus the internet, will determine everything, from pricing and promotions to the internet.”

Innovations depend on much more than just clever people who are experts at technology; and they rely on much more than just using customer insight in an intelligent way, Clarke said.

“From the perspective of any CEO, a company that truly excels at innovation is a company whose culture rewards innovation. It is a culture where people understand that, to change, to create something new, means taking risks. A culture where people know that innovations can certainly fail, that mistakes happen, but you learn from them; where aiming high, having a big, bold idea is not frowned upon, but encouraged. A culture in which the leaders think the biggest mistake is not trying, not experimenting, not taking a risk.”

 

Omnishambles for lamb

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‘Omnishambles’, is the word of the year, according to the Oxford Dictionary. Coined originally in a British TV political sitcom, and meaning ‘a situation that is shambolic from every angle’, at first sight it seems a good way to describe this week’s public showing for the sheepmeat industry. It also seems fitting as ‘shambles’ was the old Middle English word for the place where meat is butchered and sold.

High prices for lamb last year, caused in part by high schedule prices to farmers compounded by the ridiculously high NZ dollar and customer resistance to the resulting final prices, resulting in high stock levels have combined to produce announcements of combined losses of over $81.9 million by Alliance Group and Silver Fern Farms this week to add to the $605,000 loss announced in July by the ‘canary-in-the-mine’ Blue Sky Meats.

The situation was signalled earlier in the year, with price resistance being evident, but it wasn’t apparent, until the end of year accounts wash-up, just how bad the situation was. The fall-out continues. According to media reports, Alliance Group has also confirmed this week that it will make redundancy payments for up to 223 staff as a result of the closure of the Mataura sheepmeat processing plant, which it announced earlier this year. In addition, lamb schedule prices to farmers are said to be tumbling as processors react to the reluctance of European customers to pay the higher prices. Both Alliance and Silver Fern Farms have acknowledged they paid too much for livestock for too long.

The vultures gathered as the Meat Workers Union received plenty of coverage this week with its claims of ‘industry over-capacity’ and lack of leadership in the meat industry – sounding, perhaps, a little last century, but calling for government intervention. Hindsight is a wonderful thing.

Strong, but silent. Like a good southern bloke, the industry is taking its medicine. No industry comment has been made to date by any of the industry organisations or by Government. A response is probably brewing.

We know the meat export industry is resilient. It’s been around for 130 years after all. It’s also characterised by businesses: small-to-medium farming businesses supplying to mainly medium and large meat processing businesses producing product for, in some cases and from New Zealand’s perspective, gigantic global commercial concerns. All of which are subject to the current, and extraordinary, global economic pressures.

Contrary to MWU assertions, plenty is happening behind the scenes as a result of the 2010 Red Meat Sector Strategy, this year’s Riddet Institute’s ‘Call to Arms’, the Stanford University boot camp and no doubt also yesterday’s Pure Advantage Green Growth report will have sparked ideas. All of these work alongside and complement the Government’s  Business Growth Agenda. All highlight the importance of the primary sector to New Zealand’s future fortunes.

Stockpiles have already been worked through, new plants are being built, like Silver Fern Farms’ Te Aroha replacement plant for the one that burned down, and old ones adjusted to cater for the shifts in geographic livestock procurement, to adjust for capacity and cater for new customer requirements.

That was all last season. This is a new season. Lessons have been learned. As Allan Barber reported at the end of October, the 2012-2013 season was looking optimistic from the European perspective following the massive SIAL food fair in Paris. Add to that global meat demand is continuing its upward trend and the the fact that New Zealand meat has an exceptionally good reputation offshore and is the envy of many other producing countries, things ain’t looking so bad.

Omnishambles? I don’t think so.