Alliance Group returns to profit after two years with $93m turnaround
After two years, Alliance Group has returned to profit.
It is believed to be one of the shortest supply chain linkages of its kind in the industry.
The cooperative's contract with supermarket giant Mercadona for frozen lamb packed and priced at Alliance Group plants in New Zealand has seen almost 3,000 metric tonnes of product shipped to the country.
Terry O'Connell, marketing manager at Alliance, says the contract fits with the cooperative's strategy to capture greater market value by getting better at matching the company's products and markets.
"It also reflects our commitment to continuing our leadership in exploring new opportunities in existing markets, creating more efficient sales channels and investing more in new product development and packaging.
"We're connecting New Zealand's best farmers to global markets, and in this case, Spanish families."
He added: "The frozen packed and priced at origin is new for the Spanish market so this is great news for Alliance Group and our farmers. We're obviously pleased that we have achieved one of the shortest supply chain linkages in the industry, from processor directly to retailer. Mercadona also has a robust sustainability model and this resonated strongly with Alliance Group."
The shipments mainly include traditional Spanish items of shoulder and cutlets but there is now ongoing product range development, says O'Connell.
"The next phase in the development will be the introduction of chilled lamb once the Pure South brand is firmly established."
Mercadona has 1,400 stores across Spain, employs 70,000 staff and boasts a 26.5% share of the food retail market.
Its turnover last year was NZ$20 billion with Mercadona boasting almost 4.9 million Spanish households as customers.
Manolo Izquierdo, a buyer for Mercadona, says the company is looking to extend the product range it offers customers by introducing other lamb cuts in addition to the more well-known banjo shoulders and cutlets.
"It is important that we know the farmers and processors of the products that we sell. Our aim is to have close links with our suppliers and we committed to long-term stable relationships that are mutually beneficial."
He added: "We are able to offer the highest quality at competitive prices by taking out the parts of the supply chain that add no value, buying directly from the source, without middle-men.
"Our partnership with Alliance Group means we can avoid unnecessary costs and increase profitability throughout the value chain."
Mercadona has supply arrangements with over 3200 livestock farmers and 41 associations representing 4,700 fishermen.
Almost all lamb at the moment is sold fresh and from lambs raised on feedlots. Because NZ lamb is grass-fed free range product, it is different to what is on offer in Spain.
Lamb is typically bought by middle class Spanish people and barbequed. Spain has a population of approximately 47 million people and on average Spaniards eat 2.8kg of lamb per person per year.
