Growth In Value-Added NZ Food And Beverages

14 October 2005

Steady Growth In Value-Added New Zealand Food And Beverage Exports

New research shows the proportion of value-added food and beverage exports has continued to rise steadily against commodity products, with the value-add sector enjoying growth of nearly 10 per cent in the past five years.

A study by Massey University for New Zealand Trade and Enterprise (NZTE) has found that earnings from value-added food and beverage exports grew to $8.11 billion, or 54 percent of all food and food ingredient exports, for the year ended June, 2004.

The earnings from value-added exports in 2004 increased from $7.6 billion in 2003, a rise of 6.7 percent over the 12 months.

The study has been carried out annually since 2000, giving researchers the opportunity to directly compare results. Overall there has been a 53.6 percent increase in revenue from value-added products since 2000 and only a 5.3 percent rise in revenue from commodity exports in the same period.

NZTE Group General Manager - Food and Beverage, Rod MacKenzie, says having more than half of New Zealand's food and beverage exports coming from value-added foods is a sign that the industry is clearly focused on change.

"Increasing value-added exports is vital to meet the challenges the food and beverage sector faces from fluctuating commodity prices and foreign exchange movements," he said.

"We welcome the ongoing shift to exporting innovative new products that can command higher, more sustainable prices in world markets."

Mr MacKenzie says the study is not an indication of the level of innovation in the food and beverage sector as unfortunately that cannot be measured through export data.

"There is a high degree of innovation in the sector which is making a significant contribution to increasing value-added exports. The industry should be congratulated on achieving the level of value-added it has, its commitment to change and its focus on continually increasing innovation at all levels." The study uses a mix of export data (over 1500 HS customs codes), industry identification and financial analysis tools to define the dollar and percentage values of added-value and commodity food products in key export categories.

The study breaks down value-added percentages in the main export categories of meat, dairy, fruit and vegetable, beverages, cereals, seafood and miscellaneous and found that the biggest increases in 2004 came from the dairy and meat sectors.

Export revenue earnings in the meat sector rose from $4.30 billion in 2003 to $4.7 billion in 2004, with value-added products accounting for well over half of the increase.

While revenue from dairy products fell overall in the year, the report indicates the sector actually increased exports of value-added products by 20 percent compared with 2003, 'a remarkable response' in a trading climate where commodity revenue continued to decline.

Professor Ray Winger, from the Institute of Food, Nutrition and Human Health at Massey University and project manager for the research, says the results are encouraging.

"During the five years this study has been carried out, different sectors showed a range of value-added from 23 percent to 79 percent, indicating that the New Zealand food industry has a high level of value-added products. There is clearly a growing sophistication in product development and marketing innovation which is essential for long term sustainability and to deliver what markets and customers want."

The full report is available at http://www.nzte.govt.nz

Value Add Case Study - King Salmon Ltd

Having this focus on consumer needs, wishes and wants has been a key factor in the export success of Marlborough company New Zealand King Salmon Ltd, the biggest producer of king salmon in the southern hemisphere.

Adding value through aggressive market development and competing on quality and service, not just price, has seen King Salmon grow its exports to about $45 million last year and increase profitability, despite the negative impact of a high New Zealand dollar.

King Salmon General Manager Sales and Marketing, Don Everitt, says meeting changing consumer lifestyles and current consumer drivers are central to its offshore drive.

"To reduce the impact of the huge increase in the value of the New Zealand dollar over the past five years, we have diversified into new markets and looked for innovative new ways to grow our business within those markets," says Mr Everitt.

"We are focused on creating products to suit changing consumer lifestyles and the current consumer drivers of health, convenience and wellbeing. Some of our newly developed products include salmon caviar, salmon dip and salmon strips and a dried salmon snack."

King Salmon's major export markets now include Japan, Australia, USA, Hong Kong, Taiwan, Singapore and Malaysia.

ENDS

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