Monthly Archives: August 2012

Telling the story

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The meat industry needs to market itself better and tell its story, according to several presenters at the Red Meat Sector Conference.

Marketing of industry is all about building trust in the integrity of the brand, Meat and Livestock Australia’s managing director Scott Hansen told delegates.

“We’ve learned the best defence against attacks on the industry is  the farmers themselves to become advocates for their industry and their own businesses.”

“Not only do we have to sell a product, we have to sell the industry.”

Keeping consumers informed, however, has become way more complex. Consumer-driven US company Agri Beef has identified that, in the US, the 28-45 year age group – the “Digital Moms” – go online first to make decisions.

They don’t want to know how animals are slaughtered, but they do want to know the animals are treated well and that the product is safe to eat, said the company’s executive vice-president Rick Stott.

Blogs and videos are two weapons in the armoury. Three young US farmers produced a low-cost home-produced rap video about their work on the family farm that went viral after being posted on You Tube and, at the time of his speaking, Stott said had received over 4.5 million views.

The rapid rise and uptake of social media and the use of smartphones around the globe in the past couple of years is changing the way businesses communicate with consumers and was remarked on by several of the presenters.

New communication channels that retailer Progressive Enterprises is using here in New Zealand to directly interact with its consumers include Facebook, You Tube, smartphone applications and QR Codes alongside tailored emails and promotions aimed at loyal consumers, according to its general manager for merchandise Murray Johnston. This all runs alongside print and TV advertising.

Through the use of interactive technology, for a consumer, “brands are now yours. You make them,” he said.

Pinterest’s bulletin boards were also pointed to by Stott and MLA’s Scott Hansen, while B+LNZ Inc chief executive Rod Slater talked of PLUCK, which smartphone-enabled consumers can use in conjunction with television advertisements.

This article appeared in Food NZ magazine (August/September 2012).

Be smart: keeping consumers happy

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Keeping its consumers happy and listening to what they want has significantly improved McDonald’s business performance including financial returns, according to one of the company’s top China-based executives.

Introduced as a “good friend of New Zealand beef” at the Red Meat Sector Conference, Arron Hoyle, McDonald’s senior director and head of strategy for China and Hong Kong and a major customer for New Zealand’s lean manufacturing beef, said that the result deserved “a massive thank you to the New Zealand meat industry.”

McDonald’s had selected New Zealand and Australia as its sources of beef for the region because of the two countries’ reputations for food safety. While the US is still the largest market for the company, the company is significantly growing its presence in the APMEA countries.

In 1990, McDonald’s entered China, the fastest growing market in the world, when it opened its first store in Beijing. In 2010, it had 1,000 stores open and by 2013 will have 2,000.

All new stores will have a uniquely McDonald’s style, reflecting Chinese expectations for a modern, trendy image.

“We found that we need to ensure consistency in supply of style and expectations.”

There is no silver bullet, he went on to say. “You have to work extremely hard and to understand your consumer better than your husband or wife.”

He believes that New Zealand is well positioned to grow in Asia, particularly in China with its need to “import virtual water” due to ever growing water constraints as the country develops.

The Chinese market changes rapidly depending on the supply/demand dynamic. McDonald’s is forecasting beef growth to 7-8 million tonnes a year by 2020 and McDonald’s China demand alone to surpass 60,000 metric tonnes per annum.

McDonald’s likes to think it’s a great partner for NZ, says Hoyle, “the industry and all suppliers we partner with, we really like New Zealand beef. We don’t manage the supplier, we manage the business together in a partnership with suppliers.”

For the New Zealand beef team, it’s going to be a case of being better at the value chain, to execute against the opportunity, measure effectiveness versus efficiency and being faster than the competition to solutions.

“The data is showing us the opportunity is behind the hill. We need to work together to get there,” he said.

This article appeared in Food NZ magazine (August/September 2012).

Delivered: second Red Meat Sector Conference

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Delivered, as promised: Excellent, inspirational and thought-provoking speakers, all appearing in a packed programme for the 250 delegates attending the second Red Meat Sector conference.

Congratulations must go to the Meat Industry Association (MIA) and Beef + Lamb NZ Ltd (B+LNZ), joint organisers of this year’s well-attended Red Meat Sector Conference at Rydges Lakeland Resort hotel in Queenstown.

Alongside heartening optimism for future demand for red meat, recurrent themes were the massive potential for New Zealand of emerging markets in Asia, especially China, water issues, the need to utilise best practice, the need for all links in the chain to tell the industry’s story to the public, plus the rapid emergence of social media as a tool for communicating with consumers.

In his opening comments, MIA chairman Bill Falconer also noted that, while not as quickly as some would like, encouraging progress is being made on the Red Meat Sector Strategy and that “small starts are being made across the board.” Later in the day Rob Davison, from the B+LNZ Economic Service, outlined a number of matrices that the Economic Service is developing that will help to track progress against the strategy, and these matrices will “focus conversations, thinking and actions to drive the future”.

The Conference also saw the announcement of new Primary Growth Partnership (PGP) funding for the red meat sector, for a project to develop high-value grass-fed marbled beef, using Waygu genetics.

All the presentations were a veritable smorgasbord of information, packed with facts, statistics and views from many facets of the industry, enabling delegates to pick out what was relevant for their part of the value chain. While every single one of the speakers was passionate and eloquent about their topic, from an export food manufacturing perspective the highlights were excellent presentations from McDonald’s Arron Hoyle and vertically integrated meat processor Agri Beef’s Rick Stott from the US.

Besides the serious business, there was entertainment and laughter too. Lunch – finger food featuring B+LNZ Ambassador chef Ben Battersbury’s speciality “alternative cuts, not cheap cuts” like lamb riblets –  was amusingly heralded with witty comments from him. After dinner speaker Davey Hughes of Swazi Apparel gave an hilarious account of hunting expeditions in Africa and shared a few (tongue-in-cheek) items from his latest collection, including a new ‘mankini’.

Also noteworthy, was a significant Australian presence at the conference in the form of representatives from Meat & Livestock Australia and Aus-Meat. This put physical form to MLA’s managing director Scott Hansen’s opening comment in his presentation that “Australia sees a close collaboration with New Zealand.”

There was positive feedback from delegates, who came from all parts of the sector, including farmers, processors, equipment suppliers, researchers and media.

This article appeared in Food NZ magazine (August/September 2012). Copies of most of the conference presentations are available at www.mia.co.nz or redmeatsector.co.nz.

 

Stock numbers holding

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The good pastoral production year has seen New Zealand sheep numbers increase by 2.6 percent and beef cattle numbers increase by one percent for the year to 30 June 2012, according to Beef + Lamb NZ Ltd’s Economic Service.

“This partly makes up for the 4.4 percent decline in sheep and 2.6 percent decline in beef cattle the year before,” says executive director Rob Davison.

B+LNZ’s annual stock number survey, which establishes the productive base of livestock for 2012-2013 shows that while sheep numbers were up 2.6 percent most of this increased will be stock carried over for slaughter in July-September.

Ewe condition is good across the country, he noted. “Scanning results for most regions show in-lamb ewes are carrying more multiple lambs with the general comment that scanning percentages are up five to 10 percent on last year. All we need now is an excellent sprint to ensure high survival of the lambs born.”

The scanning results lead to expectations that the 2012 lamb crop could be up on last Spring by one million lambs (+ four percent). This outcome would lift the ewe flock performance measured by lambing percentage to around the highest achieved, which in 2009-2010 was 123 percent. There is potential to exceed this performance level, Davison says. Each one percentage point change in lambing percentage, equates to about 200,000 lambs.

 

 

 

 

 

Full cup, steady hand

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While New Zealand sheepmeat producers have been enjoying a ‘full cup’ in recent times, with strong farmgate returns, a ‘steady hand’ will be needed to balance future production levels with demand uncertainty across European markets.

A newly released report Sheepmeat – full cup, steady hand from global agribusiness banking specialist, Rabobank, says that the strong farmgate returns in the past two seasons, have been as a result of retail price increases and limited supply availability.

Report co-author Hayley Moynihan says global sheepmeat supplies are forecast to increase from 2013, off a low productive base, although this volume growth is expected to be modest and availability will not recover 2010 levels until 2015.

“While sheepmeat demand has softened in developed markets, we expect retail prices will normalise at new levels – typically 10 percent higher than the three-year average for most regions,” she says.

“For New Zealand producers, a positive outlook will persist in export markets as the economic outlook improves and the market balance remains tipped in their favour.”

As the governments of the EU countries seek to restore balance to their economies, policy changes are expected to place increasing pressure on consumer purchasing powers, says Moynihan. In real terms, the increased cost of living for the average EU consumer is likely to exceed any growth in income, at least for the next 12 to 24 months.

Meat price inflation has led the charge in annual food prices, averaging 4.5 percent year-on-year, with eastern European countries experiencing increases as high as 10 percent in 2011.

“These factors can be expected to weigh heavily on sheepmeat demand and to limit growth prospects.”

Rabobank is picking a slow recovery for developed markets through to the end of 2013. “Emerging markets will continue to grow, albeit slightly below the rate of previous years and offer opportunities for sheepmeat demand growth,” says Moynihan.

The Rabobank report says retail prices will also be influenced by continued strength of competing meat prices; the impact of lower beef production from the US and EU on global supplies; and the rising beef production costs from Brazil, China and Australia..

“These factors are likely to mean that retail price movements for lower-value cuts will continue to rise faster than high-end cuts. This will be particularly evident across emerging economies and consequently only provide limited upward pressure on farmgate returns for exporters,” it says.

Moynihan says that by 2015, sheepmeat production from key exporting regions is expected to lift by an additional 135,000 tonnes a year, which would bring global export supply back to 2010 levels.