Meat processor takes over value chain

In what will be a litmus test for international meat exports, South Island-based processor Silver Fern Farms is hitting New Zealand supermarkets with branded and portion-controlled packs of lamb.

The move is a bold attempt to control more of the value chain from pasture to plate, essentially cutting out the middleman with a product directed at the higher end of the market.

Most red meat sold in New Zealand contains no brand or origin labelling making Silver Fern Farms’ strategy revolutionary in the marketplace. The company recently launched the concept in France through the Intermache chain of supermarkets.

The market-led, rather than production-led, approach was ratified by the company’s supplier shareholders earlier this year, although the company has been talking to both New Zealand’s supermarket chains, Progressive Enterprises and Foodstuffs, for about a year.

Essentially, the concept means the meat processor is providing consumers with the finished product rather than just slaughtered animals for in-store butchers to prepare.

Silver Fern strategic marketing general manager Duncan McKinnon said the pre-packaged product would be in 160 selected supermarkets from next week.

If successful in New Zealand and France, Mr McKinnon said other international markets would be considered.

He expected the company would have a firm idea of how the branded product was tracking within three months.

New Zealand Beef and Lamb Marketing Bureau chief executive Rod Slater said it was inevitable that other meat producers would follow with similar concepts of their own.

Silver Fern Farms chief executive Keith Cooper admitted that it was likely others would be monitoring the product and would plans if they felt it was successful.

Part of the philosophy behind the idea, according to Mr McKinnon, was growing market share for lamb in the meat category. Lamb sales represented between 8-10% of total meat sales.

“We worked closely with Progressive and Foodstuffs on this in terms of working out how we could grow the category,” he said.

“The end result is that if you want to grow a category, you have to do something to make that happen.”

The package includes the Silver Fern Farms branding along with a window to make the meat visible. In addition, a recipe is printed on the back along with nutritional information.

Mr McKinnon said the concept is partially about education because “surprisingly” New Zealanders struggle with cooking lamb correctly or even choosing the right cut for the right occasion.

“If we can make it work here, we can make it work in other markets.”

Mr Cooper was quiet on the value of both the investment in the product and also how it expected it to perform.

“It’s not going to be 10% of the business overnight,” he said.

“The research indicates this is wanted but that has to be validated by the market.”

Following that, Mr Cooper said the learnings could be used for other “emerging” markets.

“In contrast to the overall business, it’s going to be a relatively small part of it.”

In the year to September, New Zealanders consumed 49,000 tonnes of sheapmeat, mostly lamb, compared with 114,000 tonnes of beef. That’s about 11kg of lamb per person each year against nearly 30kg of beef.

Mr McKinnon said other countries produced similar trends.

Focusing on the high end meat consumer, Mr McKinnon said the company would launch a similar range of products using venison in February.