Message from the market - respond to modern needs

MEDIA RELEASE

5 December 2008

Respond to modern consumer needs – message from the market

The New Zealand sheep industry must continue to respond to the needs of the modern consumer if it is to maintain and grow its place in key markets, according to Meat & Wool New Zealand Chairman, Mike Petersen.

Mr Petersen, who is just back from meetings in Europe, says New Zealand chilled lamb in particular is well presented and has strong appeal with consumers.

“Many UK sheep farmers talked with envy about how successful New Zealand lamb has been in making inroads at retail and food service throughout the European market.

“But we have to continue to look at how we are presenting the product and the portion size. As an example, in Berlin 50 percent of the population is a one-person household, and Germany is our second largest sheep meat market.

“The modern consumer is looking for a product that is nutritious and easy to prepare and New Zealand lamb is an ideal fit. However portion size is also an important part of the purchase process, and in the case of lamb legs, we are shutting off a growing part of the market.

“We must continue to innovate and improve the range of consumer ready cuts from lamb legs in particular.”

Mr Petersen said his visit had included a range of meetings with farmer organisations in the UK, Ireland, France and Germany and these relationships are continuing to strengthen. He had made a similar trip in June last year in response to concern from UK and European farmers over New Zealand lamb entering the market outside of its usual supply window.

In recent years the chairman of Meat & Wool New Zealand has made an annual visit to the UK and Europe at this time of the year to build key relationships.

“This trip has proved the relationships are much stronger.  While we still might disagree on some issues, there is a realisation that imported product is needed in the domestic market to maintain demand. There is also now a far greater understanding of New Zealand lamb in the context of a very large protein market.

“The reality is that imports and domestic lamb provide year-round supply so we can work together to grow the market. We also reinforced that the steady growth in chilled has been in response to market demand, rather than a push from New Zealand. Farmers in Europe were surprised to hear that chilled lamb is still only 23% of our total exports into their market.”

Mr Petersen said production is still declining in Europe and there are signs of consumption dropping off too.

“That’s something we need to address and we’re looking at working collectively with our counterparts in the UK, Ireland and France to collectively address the decline in demand for sheepmeat.”

Mr Petersen said there was considerable doom and gloom in the market because of the global financial crisis. However it appeared that Europe was in danger of making recession a self-fulfilling prophecy.

“Every newspaper, every television and every radio station is talking about job losses, unemployment and a crisis at retail. However, Europe is still a wealthy market by comparison to others and people will still eat high quality meat.

“The fundamentals of food production haven’t changed. We are still faced with a looming shortage of food to feed a growing world, and New Zealand is well placed to meet that demand.

“To use the UK as an example, sheepmeat has only 8% of retail meat share by volume and New Zealand lamb is one third of that. We are confident that in Europe’s market of 450 million consumers there will continue to be solid demand for lamb even in today’s economic environment.

“The lower lamb numbers available worldwide, and the fact that lamb has not had the dramatic increase in price that dairy commodities have had over the past two years will underpin the better prices being achieved this season.”

In Brussels Mr Petersen met with the European Union Agricultural Commissioner, Marian Fischer Boel and her senior officials, and he was briefed in Geneva on WTO progress by New Zealand’s delegation. There was an expectation that there could be a Minister’s meeting before Christmas, which Mr Petersen said was a positive development.

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