By Allan Barber*
After many years of relatively low levels of expenditure on market development and promotion, the red meat industry faces a major challenge in deciding how best to create the desired image to appeal to the world’s affluent consumers.
Currently expenditure is divided between generic promotion, funded by farmer levies, and brand advertising by the meat exporters, with a small amount of joint funding in some of the less mature markets.
Delegates at the recent Red Meat Sector Conference heard about the importance of telling a believable and emotionally compelling story built on the heritage and healthy attributes of New Zealand and its farming sector. But they were also challenged to make sure this story is constructed on credible building blocks of environmentally sustainable farming, animal welfare and processing practices.
Beef + Lamb New Zealand has spent several months conducting research among its levy payers to determine what if any role the organisation has in market development. The firm answer from farmers is they want B+LNZ to be more involved in market development than promotion, specifically in ‘exploration of new market opportunities and leveraging the New Zealand story.’ Processors also agree with the need for a unified effort to open new markets, whereas traditional, developed markets tend to be characterised by more intense competition between brands.
However, research among consumers suggests all red meat from a region shares a brand, with consumer demand being positively affected by benefits associated with the country of origin.
If these research findings are reliable, they indicate to me the need for New Zealand’s red meat sector to stop trying to put resources into individual company brands until the hard work, and money, have been applied to developing the story and ensuring the claimed attributes are fully supported by the facts. Both sides of the industry, producers and processors, should surely combine intellectual and financial resources to create a storm-proof umbrella story under which individual brands can sit.
B+LNZ is currently conducting farmer consultation meetings throughout the country at which the local directors present options for future investment in market development and for potential changes to the constitution. The reaction from the meetings will be analysed and incorporated into proposals to be voted on at the AGM in March.
Last year B+LNZ tried unsuccessfully to persuade the processors to agree to the creation of a separate marketing organisation to which each side would commit an equal amount of promotional funding. This year the farmer funded organisation has discussed different options with its farmer members and the processors which essentially boil down to devoting farmer levy funds to new market development activities while processor/exporters will promote their own brands in mature markets.
B+LNZ sees four specific aspects of the programme which it will investigate and fund: market intelligence, development of the story, new markets and market segments, and crisis and issues management. The market development budget of $5.5 million will therefore have to be spread quite thinly across these different areas.
In contrast New Zealand’s red meat competitors, such as Australia, Wales and Ireland, all spend significantly more than B+LNZ’s $6.55 per tonne of production on generic promotion – Meat & Livestock Australia spends nearly three times as much, while Welsh Lamb Promotion spends an eye-watering $52 per tonne, each generating a plus or minus 5:1 return on investment. Obviously B+LNZ’s expenditure generates a much higher ROI, but it must be questioned whether it could do a lot better if more were spent.
Feedback from farmers indicates the lack of a coherent long-term marketing strategy has created confusion and failure to engage with processors.
According to chairman James Parsons, processors broadly agree with the suggested differentiation of responsibility for areas of promotion, although I understand there may not yet be total commitment.
To subscribe to our weekly Rural email, enter your email address here.
*Allan Barber is a commentator on agribusiness, especially the meat industry, and lives in the Matakana Wine Country. He is chairman of the Warkworth A&P Show Committee. You can contact him by email at firstname.lastname@example.org or read his blog here ». This article first appeared in Farmers Weekly and is here with permission.