Hawke's Bay to the world
Rockit chief executive Mark O'Donnell says consumer awareness for the brand continues to improve each year.
They will pay a premium, but only if they see and understand a difference in our foods, he said during his market update at the northern Beef + Lamb NZ farmer council annual meeting in Whangarei.
When TPP is fully enacted it will be worth in tariff reductions $50m to our beef industry, $2.6 to sheepmeat and at least $100m to dairy. The offal and associated products from both beef and sheep is currently $54.7m of exports and will gain $5m under TPP.
Processed meat exports could grow quickly in US, Japan and Canada as primary targets.
But King says a product such as a piece of meat will have value according to the attributes it is perceived to have. He says the UK expert in food marketing David Hughes, who came to speak to the beef industry recently, said we now have to start describing that piece of meat.
King outlined a number of labels now appearing on products overseas, particularly in the US. This included non-GMO (genetically modified organisms), but even though NZ has no GMO it is difficult to make that claim once you put a label on it, says King. There's a need for a paper trail.
In the US they will also pay a premium for antibiotic free product. NZ farming systems are much more antibiotic-free than the US. "So we need to tell them that. But you need to be able to do it as well and label it accordingly," he says.
The label "raised without hormones and steroids" is not an issue for sheepmeat but it is for beef, he says.
"100% organic is not easy to do but when you get there, there are premiums," he says.
Sustainability is a minefield: you start talking about water, air quality and animal welfare issues.
Grass-fed we take for granted but that and free range – not having been raised indoors – can attract a premium in the US.
King was asked whether these types of labels will just become part of doing business instead of attracting a premium.
Those countries now in TPP – those with better incomes – can afford to pay a premium if they see a difference in our foods, he says.
"People with money ask hard questions such as 'what is your story? and why do I want to buy your product?' "
King says in NZ we think it's great having free trade agreements but it doesn't actually make the job easier. It makes our job as marketers more difficult: we have to think what our story is, while still basing it on truth.
"Our game is difficult from now on... but whether we are part of TPP or not, the game was getting harder."
He says there is huge value in NZ Inc taking up the challenge.
"Individual companies find it difficult to exploit the measures that exist in these marketplaces."
A member of the audience commented that there was therefore an argument for a generic marketing campaign. "But we just had that argument with the companies and they don't want a bar of it," he said.
King answered that he does not think that discussion will go away in the next five-six years. "Companies will find themselves in this boat of 'how do we find these niches?' " King answered.
"It's not only about price, it's about promotions, ethics, sustainability, pack size, performance, providence and the heritage of your story."
King says Hughes said we have to get away from nouns – beef, chicken and steak – and start using adjectival words. We need to tell stories with free-range, grass-fed, non-GMO, environmentally friendly, etc.
"Traditionally adjectives have been seen as a bit girlie – we haven't gone there because they're seen as a bit 'woosy'."
But he says consumers now want to close the loop right back to the producer.
McDonalds, Wendys, KFC and other fast food chains are now finding it tough so they are finding ways to re-invent themselves. They are shifting to suppliers offering free-range eggs or antibiotic-free.
US consumers have also become cynical about pictures of barns on packets, he says. "If we think we will add value with traceability, that is already a given for lots of products overseas," King says.
There should be no complacency in our industry. "Consumers are always, always looking for lower priced options. We can't just sit here in NZ and assume we have a natural product and people are going to buy it without us telling a story.
"We need to be consumer focused, we need to read widely – farmers are some of the best readers of magazines and what is happening globally – we need to start thinking about partners and aligning ourselves in terms of philosophy.
"What you do onfarm – is it aligned with the processor and what they are trying to do in the marketplace as well?"
