How do you convince customers in the US and China to pay a premium for New Zealand meat?
For Beef and Lamb NZ (B+LNZ), it was about proving there was demand, linking our beautiful landscapes to our high-quality food, doubling down on the concept of grass-fed beef and lamb, and launching a new country of origin brand and marketing campaign called Taste Pure Nature. “It is an exemplar when it comes to running a campaign and creating a value chain,” says Hugh Good, B+LNZ’s Global Market Intelligence and Research Manager. “It was evidence-led, it was refined down to its individual parts, it’s been tracked and it created an accreditation system so that we can deliver to the promises being made in the market.”
- B+LNZ commissioned 6 research projects into overseas consumer preferences
- They uncovered a 20% price premium for credible, environmental claims
- Taste Pure Nature brand was created in the US and China to meet that consumer expectation
- Growers were asked to supply to standards, set out in the NZ Farm Assurance Programme
- 8000 beef, sheep and deer farmers are now certified
- In California, preference for beef is up 5%, lamb is up 4% since March 2020. Awareness of New Zealand beef and lamb is up 19% since March 2020
- More brand expansion is planned
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In 2017, B+LNZ commissioned six research projects from the Our Land and Water-funded Integrating Value Chains programme into target markets in the US and China, where around 60–70% of New Zealand’s total meat exports go. The research looked at consumer preferences and estimated what consumers were willing to pay for attributes such as environmental stewardship associated with New Zealand beef and it found the potential to achieve a 20% price premium in the US market, equating to extra revenue of $238 million p/a in export returns for the sector. As a result of that research, which backed up previous research from B+LNZ, the Taste Pure Nature brand was launched in California in 2019 and China in 2020. “Grass-fed is our everyday but for other people it’s profound,” he says, especially when it is contrasted to other farming systems like feedlots. “Not all beef and lamb is created equal. It’s not the cow, it’s the how.”
Some in the industry needed convincing that grass-fed should be the centrepiece of the campaign, he says, but that is where the research came in.
“We’d been tracking awareness and preference of grass-fed over time and it was trending in the right direction and was becoming known as a premium category. We made sure it was front and centre in how we talked about New Zealand beef and lamb.”
The market segment that was most open to this message and willing to pay more for products that are imbued with ‘credence attributes’ was labelled Conscious Foodies.
When asked what would make US consumers pay more for food products, research shows that ‘local’ is at the top of the list. That is obviously a real challenge for New Zealand exports, so they needed to explain why they should buy a non-American product.
“That means we need to tell a story and make it believable and grass-fed is basically shorthand for ‘raised in beautiful conditions’.”
The existing perception of New Zealand certainly helps reinforce that, and it is not a big leap to connect the landscapes to the quality of the food, he says. “People know very little about New Zealand, let alone our farming systems. So Taste Pure Nature is a simple but powerful platform that is allowing us to chip away at that.”
To pay for the activity, the sheepmeat and beef levy was increased by $4.1 million and $2.7 million was allocated to increase investment in the brand. Processors like Silver Fern Farms, Alliance and others also invested in marketing and retail activations.
To ensure that the best quality beef and lamb was being provided and that farmers all met certain environmental and social standards and got to share in any price premium, B+LNZ had users of the Taste Pure Nature brand agree to be audited under a single standard, the New Zealand Farm Assurance Programme. There are now over 8000 beef, sheep and deer farmers certified under the programme.
“We share what’s been going on with the industry, we have sessions throughout the country and generally they’re very happy with it. We had a stonking referendum in terms of farmers wanting us to still exist. And part of it is because of what we do with things like Taste Pure Nature.”
All the metrics it tracks around awareness and preference are up in both markets. In California, preference for New Zealand grass-fed beef is up 5%, while preference for grass-fed lamb is up 4% since March 2020. Awareness of New Zealand beef and lamb is up 19% since March 2020.
In China, preference for New Zealand Beef and Lamb is up 8% since March 2021. Awareness was only up 1% to 85% but it was already quite high in China. And the positive sentiment has only increased post-Covid.
The campaign has worked so well overseas B+LNZ is going to be rolling out a version of Taste Pure Nature in New Zealand as well, with a different story to appeal to the domestic market.
Based on the success of the grass-fed meats strategy, Good says it has looked at whether there could be a premium attached to regenerative beef and lamb. There is also growing evidence of an opportunity for zero carbon beef. “We think there is an opportunity, but it’s crucial to have evidence to show the potential demand. And then we can support the farmers and processors in their choices.” Good thinks it would be prudent to conduct more consumer research in other markets in case there are “headwinds in our major export markets that are driven by things beyond our control”.
“If we have to shift supply, we should be thinking about where we could go. Can we quickly pivot to sell somewhere else? Would we be able to do anything with the information?”
Overall, he says meat export volumes are still quite good, but there is so much more potential upside we could be getting.
In 2021, 89% of New Zealand’s beef was shipped frozen, mostly as ground beef. That sells for around $8,000 per tonne. 3% was prepared and processed and 8% was chilled premium cuts. They sell for around $40,000 per tonne.
“You can get so much more if you can prepare and process it domestically. That’s about innovating here, developing brands here, and moving up the value chain in terms of how we do things. The other annoying stat I use is that Singapore doesn’t produce much food, yet it exports more processed food than us. Yes, they’re closer to export markets, but it drives me crazy.”
He says the UK has dropped its tariffs on processed meat products, and neither the US or China have them.
“So why we aren’t sending more processed products there is a mystery.”
Good says that of New Zealand’s approximately $3 billion in overall meat exports, only $1 billion of that is labelled as grass-fed, with the bulk of it being sold as ground beef to major fast food operators for burgers.
“And when it’s not labelled, there is no premium. So there’s a lot of headroom to grow.” Good says that when farmers and processors know there are consumers who are willing to pay a higher price for certain products, it gives them confidence to change their approach and their processes.
“Research and insights are really good to have as evidence to convince multiple parties about why we should be doing something or investing in something. Everyone has an opinion. But if you’ve talked to consumers in the market, if you’ve done qualitative and quantitative research, if you’ve talked to suppliers and retailers, it’s hard to argue with. It backs up your decision to go for that premium.”
New Zealand’s primary sector needs to continue to transition from volume to value. And this successful collaboration between academics and the agri-food industry shows how creating a value chain can lead to higher returns for primary producers, while maintaining and improving the quality of the country’s land and water for future generations.
This story was first published by The Value Project – a website dedicated to exploring how NZ growers can be rewarded for sustainable practices.