Meat promo rethink

The board will discuss the matter for the first time this Thursday and will need to regroup after the “disappointing” decision by the processing companies, says Parsons. The decision followed two years of focused discussion on setting up a 50:50 funded market development entity.

“It is important that we don’t react to being turned down by the industry,” Parsons told Rural News. “It is important we think this through strategically and in the best interests of farmers.”

BLNZ will need to consider what proposals it will put forward to the commodity levy vote to be held later in the year, including how much it should spend on in-market promotion in the future. One option could be that the BLNZ ceases offshore promotion.

BLNZ currently spends $8.3m in total promotion as part of a $28.9m budget. Some of the promotional budget is funded from reserves, which is “an issue”, says Parsons. About $1.3m of the promotion budget is spent on domestic promotion, at least 50% of which is funded by processors and retailers. The domestic promotion will also be on BLNZ’s board meeting agenda.

“We haven’t had a board meeting since we heard from the industry on their not choosing to work with us on joint promotional entity. We need to regroup as a board.” Until board discussions were held he could not say what they would put to farmers.

He says it is fair to say it has sparked a whole strategy rethink by the organisation. “We’re always asking ourselves the question ‘are we doing the best things with farmers’ money to get best returns?’ ”

“Promotion has been an ongoing discussion with industry for years, and in the last two years it has got a lot more focussed. We told the industry we want them to do it jointly because when they invest their own funds there is more accountability and ownership.

“The meat companies are the ones transacting in the marketplace and selling the products. The value proposition we put up was about country of origin – telling the New Zealand story. That would be an underpinning story which individual companies would springboard off in running their own commercially focused branded programmes.

“So [our contribution] was the underpinning provenance, country of origin components of New Zealand sheep meat and beef.”

Initially discussion was about a $15m entity with 50:50 funding, but a few months ago a smaller $8m programme was on the table. It would have had to prove itself.

“We supported that approach but when that was drilled into more recently there was not enough support, on balance, among processors for them to come up with their $4m share.

“It was disappointing after all the work had gone into it but it has flushed out a lot of good discussions on how we should do promotions. 

“One of the outcomes – certainly [voiced by] processors I have talked to – is they will need to raise their investment and promotions, particularly if, as a consequence, Beef + Lamb reduces its funding for promotion.

“There is recognition that the processors need to do more in promotion and that’s a good outcome. We have never had a definitive answer from the industry before on whether they wanted to participate in a joint entity or not.”

BLNZ gave the idea a “really good push” and there was a lot of support from industry players. “But it is up to processors how they choose to invest their money and if they see a value proposition somewhere else, we respect that.”

Much of BLNZ’s offshore promotion work has been not on growing the pie but just maintaining market share in more mature markets. “Whether that continues will be driven by where B + L goes and we need to have a board discussion about it. It would be quite significant if we were to exit it, but that is an option.”

He says they can’t maintain $8.3m promotion spending because some of that has been funded out of reserves. “But there’s a wide range of views on promotion and whether B + L should be in it or should be leaving it to processors.”