Change It Up: Headwaters is reviving an old project with its newly branded Lumina premium lamb. Ben Fahy profiles a transformative project in the latest of our Change It Up series, brought to you by Everybird coffee.
Cast your mind back to 2006: Germany hosted the World Cup, Iggy Pop headlined the Big Day Out and Pluto was demoted as a planet.
It’s also the year that Headwaters was launched as part of a project to breed a more resilient ewe that could cope with the hill and high country of New Zealand. In the process of breeding these sheep, it was discovered that they also had high levels of intramuscular fat (similar to Wagyu beef) and a unique polyunsaturated fatty acid profile with high Omega fatty acids – the kind that are good for you. This led to the Omega Lamb project – a joint venture between the Ministry of Primary Industries, Alliance Group and Headwaters – and the creation of the Te Mana lamb brand.
But then it went quiet. Headwaters innovation lead Aaron Furrer says the group of farms involved in the project had become stagnant and the premiums they were working towards were never going to be realised. The appropriateness of the Te Mana brand was also called into question.
It was time for a transformation.
Lumina branding is slick and inviting, telling the gate to plate story
Rebrand and relaunch
Two years ago, Te Mana was rebranded as Lumina – and Headwaters, with new investment from Lone Star Farms, “set its eye on growth to add more value back to the farmers,” says Furrer.
With just 150,000 lambs to sell each year through the programme, Headwaters is by necessity and design an exclusive product. Scarcity can sometimes be a positive thing for premium brands hoping to create the fear of missing out, but Furrer says it’s certainly not purposeful and it’s trying to meet demand and scale up.
Part of the challenge is finding new farmers to do that, but there is growing interest and in addition to the 50 existing farms in the group, another 16 have joined the programme recently, he says.
Two years ago, the premium back to farmers was $15, last year it was $20 and this year it looks like it will be close to $30. Furrer expects it to peak around $80 extra per lamb.
Headwaters works with farms that might just use their genetics to breed lambs with certain qualities and then commit to maintaining certain animal health standards before sending them off for finishing. They also work with farms that just finish those lambs on pasture (they need to have a minimum of 35 days on chicory grass to be eligible for the programme). Headwaters often facilitated those matches, but more farmers are seeing potential to extend their involvement in the programme, he says.
“What we’ve seen is that farms might get involved as a finisher and don’t know what the breed is, but after they’re introduced to the programme, the next season they might have some rams [and start breeding their own].”
The farmer gets paid the standard Alliance Group schedule price on the day, just like if they were selling a standard lamb. Then at the end of the financial year (September) the premium gained for Lumina lamb is distributed among the group. This is structured so that the first $15 per lamb goes back to the farmer then they get 66% of the remaining premium. This is all done on a per lamb basis, not per kg.
Two years ago, the premium back to farmers was $15, last year it was $20 and this year it looks like it will be close to $30. Furrer expects it to peak around $80 extra per lamb.
“That’s the chicken and egg situation. If the premium was x, we’d send more lambs, but we need more lambs to get the premium to x.”
Lumina is building a reputation with international chefs – but locals can buy it at Pure South too
Connections with chefs
To be eligible for that premium, there are a few additional costs for farmers. ID tags are required for each animal for traceability purposes and there is more labour required because lambs need to be weighed regularly. He says Headwaters is moving in the direction of the dairy sector, which relies heavily on genetics and data to improve production and efficiency. This makes it a higher-touch system for sheep farmers, but that accountability across the value chain creates a more captivating story and has been proven to lead to greater profitability.
“You may produce fewer lambs, but your gross margin per hectare goes up,” he says.
Some 80% of the lamb is exported and is now available in places like Hong Kong, Singapore, Taiwan, Italy and the UK. It’s also making good in-roads in the US, mostly on the East Coast, but also in California and Nevada.
Furrer says it takes a city-by-city approach and focuses on selling Lumina to high-end restaurants.
“It’s chef to chef, so we go in and explain to those restaurants how to cook the lamb because it behaves slightly differently with its higher fat levels. Chefs love fat, so we talk about what temperature it needs to be cooked at to melt it and about all the intricacies. The consistency of the lamb is also huge.”
Those chefs then tend to become ambassadors in those regions, and help with new product development around the types of cuts required.
A lot of the chefs it works with want to break the lamb down and that’s something Headwaters is happy to see because larger cuts means there’s less trimming required. This lowers the processing time and leads to more of a premium going back to the farmers, Furrer says.
“The story we get from all our chefs is that they can’t get enough of it as it is. In the markets we’re in, they want more and will order as much as they can get.”
It also regularly hosts chefs on New Zealand tours and runs lots of video conferences throughout the year.
While Headwaters hopes to continue growing its presence in the high-end restaurant sector, it has no desire to enter the grocery or retail market.
“It’s all about how we maintain that same margin and pass the premium back to the farmer. At the supermarket it can be a race to the bottom. The ticket gets clipped along the way and very little comes back to the farmer.”
A value chain that rewards farmers for their sustainable farming values
Value in the chain
He points to the UK market where New Zealand lamb, often found in leg form at the bottom of the freezer, is often the cheapest. This commoditisation is something Professor Caroline Saunders of Lincoln University has been lamenting for years.
As she said: “It breaks your heart going across to the UK and you go into Marks & Spencers and you see prime cuts of New Zealand meat at $50 a kilo in the chilled cabinet. And in a freezer, chunks of New Zealand lamb leg are $2 per kilo.”
As part of her work with the Agricultural Economic Research Unit, she has been imploring New Zealand producers to dial up their ‘credence attributes’, “a feature of a product that cannot be perceived, but may have environmental, animal welfare, social welfare or cultural benefits”. Research shows consumers are often willing to pay more for these types of products.
“I’ve been in New Zealand for seven years and every conference and sector event I’ve gone to has always talked about value add,” says Furrer. “We shouldn’t be exporting commodities and we should be focused on niche products and getting premiums. We’ve got the right scale to own some niches.”
This is what Headwaters is focused on and its long-term strategy is about “unlocking opportunities for future generations of farmers so that every farm realises its full potential”. As well as the profit share potential through the growth of Lumina, it is also looking at what it can do with wool, offal and pelts.
As part of this commitment to future generations, it also established the Headwaters Foundation to help farmers under 30 within the programme (and from the wider rural sector) with their personal and professional development.
The foundation is funded by a charity auction at the Headwaters Muster, where farmers from the programme gather each year, and participants also work on a project that can add value to the group as a whole.
“There are a group of farmers who are now taking over from their parents or rising up to stock managers, so it’s about creating a support network for people in that situation and sharing the knowledge.”
Headwaters is also focused on upskilling all its farmers to achieve FAP Plus standard, a voluntary sustainability accreditation scheme, and “that feeds into a larger story about our farms providing ecosystem services”. It’s working on a genetic programme around breeding more methane efficient sheep, looking at the emissions impact of different feed additives and taking into consideration wider biodiversity and water quality issues on its farms.
“The power of the group is that we can start conversations and leverage that scale… Everyone matters and has a role to play because everyone in the group is part of what the company is doing. We’re respecting and valuing those outputs and creating the environment to come together and be open.”
While most farmers have a deep respect for the land they rely on, they’re not just taking these steps towards sustainability out of the goodness of their hearts, Furrer says. As they have been doing for centuries, the farmers are looking to get the most for what they produce. They see economic opportunities in being an early mover and they are looking to add to the premium they’re already getting by enhancing what they do and telling that story to customers, “rather than just burying their head in the sand” and seeing sustainability as additional compliance.
Instead of just planting pine trees, for example, he says there could be financial incentives for creating more biodiversity in the future and some of its farmers are also looking at ‘re-wetlanding’ in an effort to sequester more carbon.
Recently, Furrer met a group of 22 Stanford alumni who were in New Zealand for a geology trip. He gave a presentation about the work he was doing with Headwaters and thought it would be nice to have Lumina lamb on the menu.
Lamb isn’t a hugely popular protein in the US, he says, so some were slightly hesitant at first, but it was a big hit and for those who had tried lamb previously, “it was so much different than what they’d had before”.
“Even when you meet up with farmers and put some Lumina racks on the barbecue, they’re just blown away by the lamb.”
And if Furrer has his way, many more people around the world will be blown away in the future – and will have paid a premium for the privilege. Meanwhile, Kiwis can buy it online at Pure South.
The Change It Up series is proudly sponsored by Everybird. Drink it black, with milk, milk or sugar – Everybird coffee is a versatile drop that’s best enjoyed however you like it. Certified Fairtrade, organic and climate neutral, it feels as good as it tastes, and it’s now available at Supie.
