Meat Promotion Group not more of the same, says Meat NZMonday, Aug 18, 2003
Since late last year, Meat New Zealand and SheepCo chairmen Jeff Grant and Mike Petersen have been on the road consulting with farmers on the future of the meat and wool levies. It has been a long haul, Grant says, but worth it. Because he believes the final proposal that is before farmers now, reflects what the majority are seeking in a levy-funded industry-good organisation. However the one issue that interested farmers most in the 100 meetings around the country was the funding of market development.
Grant explains that the proposal for market development is a big change from the generic promotion that has been carried out in the past. It is now a more specific, targeted approach involving the MPG (meat promotion group), which is made up of meat companies marketing managers and two board representatives who are required to develop a strategy for future market development work. "I think it is vital that farmers understand the new philosophy, because this is not a case of just more of the same."
The difference is that meat companies coordinate funding - dollar for dollar, and in some cases company funding exceeds the levy funding - and that the Meat Promotion Group selects the strategies. "This avoids the scatter-gun approach of the past, which was criticised by the Standen Report in 2000 for spreading funding too thinly over too many markets, and not being co-ordinated with branded promotional work by meat companies in those markets," Grant said.
The goal of the Meat Promotion Group is to secure better returns from beef and lamb. Grant said that once this has been explained to farmers, most are generally much happier with the proposal. During the meetings, Grant has been describing three main projects selected by the Meat Promotion Group, that he thinks either capitalise on market development opportunities or prevent problems or 'blockages' in the marketplace.
The first is the jointly funded 'Red Meat. Feel Good' domestic campaign, to which Meat New Zealand contributes $1.5 million on behalf of levy payers, processors contribute $0.8 million and retailers $0.4 million. Grant said it is the first time supermarkets have paid into such a scheme, but due to the high profile of the campaign, he doesn't think it will be the last.
The Red Meat Feel Good campaign's target is for New Zealanders to eat one more meal of red meat per week. "This may not sound like much", Grant said. "But just a three percent increase in consumer spending means an extra $33 million for farmers and the industry." Grant said they will know the campaign has been successful by measuring whether consumers have a higher regard for red meat and its health enhancing qualities.
The MPG has also developed strategies for overseas market development. The primary one is a three-year plan to reposition the lamb leg in the UK market, Grant said. "The strategy is not necessarily trying to put more volume through, because there is already a large supply of lamb legs. What we are trying to achieve is a better return for legs by positioning them as more of a luxury item to be enjoyed on special occasions."
Ultimately, the agreed strategy by the MPG is to add $3.50-a-head to the lamb schedule, and early reports are that it has some success. In an eight week period during the peak promotion in April this year, UK consumer spending on the lamb leg increased $2.3 million on a slightly lower volume to the same period last year.
The third MPG strategy aims to reposition manufacturing beef from the US to the Asian market. New Zealand manufacturing beef is sought after in the US because it is very lean, and can be mixed with the US feedlot beef to make into hamburgers. However the North Asian view is that New Zealand beef is too lean in comparison to Australian beef, Grant said.
Meat New Zealand is currently trying to gain an audience with McDonalds in Japan, with the hope that they will agree to at least trial New Zealand beef in its stores there. McDonalds USA are now using New Zealand Beef, so Japan might also switch. "By sending more manufacturing beef to Japan, meat companies will be able to divert some manufacturing beef away from the US market, allowing more valuable prime cuts to go into America," Grant said.
Grant is acutely aware that the future of the MPG is dependent on continued contributions from the meat companies, but he believes that they are currently getting great buy-in to the MPG strategies from the meat companies. "They are currently contributing $6 million to the UK lamb leg programme against farmers' $4 million."
However, if that support does not continue, Grant has signalled that farmers will be consulted again about whether they want to carry on funding market development, or pull out entirely. His long-term aim is to pull out farmer funding entirely, and leave it to the meat companies.