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Deer Industry New ZealandFGM 2011

Innes Moffat

Venison Marketing Services

Manager

Good morning Ladies and Gentlemen. My name is Innes Moffat and for the next

little while we’ll be discussing what’s going on with Venison.

Your marketing companies are going to discuss how their businesses take control

of the things they can control, and how they go about the business of selling your venison.

Sharon Angus from Silver Fern Farms

John Sadler from Mountain River Venison and

Gerard Hickey from Firstlight Foods will be talking about what their companies do to

enhance the reputation of New Zealand venison and supply our customers with the

best red meat in the world.

Following these presentations you have the opportunity to ask questions and I hope

we can have a good discussion about the opportunities that exist for the New

Zealand venison industry.

This morning I’m going to address a few of the activities DINZ has done over the

past year, and how this makes a difference to how people see, use, and enjoy New Zealand venison.

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Stable Venison Prices.

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When I joined DINZ in 2005, with prices at historic lows, the #1 demand from

producers was for stable pricing – the memory of the 2001 crash was still raw and a return to profitability seemed uncertain.

At the time no one doubted the quality of New Zealand venison – it is a premium food. But the supply chain had failed to provide consistent returns to producers,

and the expectation of volatility was driving people from the business.

Our industry is now smaller than it was – but success is not measured by size

alone. We know good things can come in small parcels.

It is a brave call to say that volatility is behind us, and I’m not that brave – factors

beyond our control will affect the amount of money you receive for your deer - but it

just might be that we are doing more to control the things that we can control – and

that the deer industry’s days with the reputation as the roller-coaster industry may

be behind it.

Here’s a chart of the AP Stag schedule over the past decade and adjusted to

remove seasonal and currency affects to give a price of venison. Over the past 3

years it has been stable and historically high.

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Reasons For Stability

• Market structure and partnerships.

• Market diversification and reduced supply.

• Reputation of New Zealand venison for

food safety and integrity.

• Improved commodity prices.

This period of stability has been affected by 4 main factors:

The #1 reason for better stability is improving marketing structures and partnerships. We see more contracted supply, fewer exporters and importers and better communication among New Zealand venison marketers and their importing partners. Transparency and trust within this system provides a mutual sharing of risk which allowed the NZ venison industry to escape the savage effect of the 2008 Global financial crisis and the recession in 2009.

Market diversification by marketing companies has successfully reduced the industry’s dependence on the frozen german game trade. It is still the most important sector for New Zealand, but marketing companies now have more choice – they can walk away from the deal if the terms are not satisfactory and look to alternative customers. Increasing chilled exports are also helping to reduce the amount of frozen venison that must be stored for sale later in the year. Reduced supply has helped, but would never, of it ‘self have provided protection to prices during the recession.

The Reputation of New Zealand venison for food safety and integrity is what helped spark the lift in prices Our food safety record, hygiene and consistent standards make us first choice for many game customers around the world.

And finally the improvement in world commodity prices have definitely helped.

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Prospects remain sound

• Germany leading the global economy out

of recession.

• US food service industry recovering.

• Production to remain constrained.

• Demand for healthy, naturally raised

meat.

And what of the next few years? Well, prospects remain sound

Germany, our main market is leading the global economy out of recession.

The world wants what Germany produces, GDP is up, employment is up and

consumer spending is increasing.

The US Food service industry has bounced back. Those restaurants that survived

the recession are doing brisk business.

NZ Venison production is expected to remain constrained, with a stable herd and

stable production over the next few years. For the first time in history, both the

DINZ and MAF forecasts agree.

And finally, demand continues to improve for healthy, naturally raised meat.

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Shadows on the Horizon?

• Commodity wobbles, esp beef…

• € concerns - PIIGS

• Consumer resistance to higher prices

But it needs to be remembered that there are things we cannot control, there are shadows on the horizon:

Commodity wobbles – like it or not, food prices remain underpinned by changing commodity values and trends can reverse – We hear that chilled beef prices are falling in Europe from some very high levels. Venison has to keep in step with other food products.

Euro concerns – P.I.I.G.S – Despite terrific market and sector diversification over the past few years, 85% of NZ venison is still sold in Euros, so falls in the value reduce prices to New Zealand, this remains an Achilles heel for our industry.

Consumer resistance to higher prices: Supply chain partners of NZ venison need to be very careful that prices are not bid up to levels where, once again, it will be taken off menus. Discipline is required from producers and marketing companies to hold on to the bigger margins from the marketplace. And consumer need to be given reasons to accept higher food prices – convinced that venison is worth the extra money.

While we cannot make people buy venison, we can encourage, educate, and inspire. Nutrition, provenance, and eating quality remain at the heart of the promotional and educational work that we’re doing.

Here are a few examples of how we’ve been telling the New Zealand venison story in Germany and the USA.

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Telling the Story

• Prime Time German Television. 2.3 million viewers.

Here’s our first example - a German television crew visited New Zealand

approached us for some help to do a story about NZ food. We leapt at the opportunity and organised, with the help of farmers, processors and importers, 5

days of days of paddock to plate film opportunities.

The 14 minute piece was broadcast on the tv show Galileo. This show is on at

prime time on weeknights – It’s watched by over 2 million germans every night, and

broadcast in Austria and Switzerland. - We have the full length programme on loop

in the display area.

Doesn’t that make you proud to be part of this industry.

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Telling more stories

Here’s the bit when you can accuse me of saying the same old thing year after year

– because saying the same old thing to our retail customers is very, very important.

We continue to target retail customers in the stores where venison is sold because

consistency and repetition of messages is vitally important to get the message across.

More instore tastings, more point of sale displays, more encouragement to get people to eat venison post game season in the winter and spring, more recipes, and

more positive coverage of New Zealand venison through the food press to reinforce

the message – ‘Impress your guests’ with New Zealand venison.

Understanding German Tastes

Differentiators Heritage

Must-haves

Key

signals

FunctionalBenefits

Personality

EmotionalBenefits

Brand

Identity

At the moment we’re examining in more detail what German consumers mean

when they say ‘I want to eat local/healthy/natural’ – we’re sharing a research project with marketing companies which will be used to make sure we are crafting our

promotional messages, and our promotional methods to target the right people with

the right messages.

We have to do this to make sure the stories we tell are successfully positioning New Zealand venison as a premium meat. I have my ideas about what makes people buy New Zealand venison in a supermarket in Dusseldorf.

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Understanding German Tastes

But I am not a 50 year old German woman with 2.5 children and an attachment to

popular singer Guildo Horn. Lookhim up on google, – yes, he’s popular with the ladies in Germany… - Their view of the world and mine are different – and it’s what

really motivates them that we need to understand and appeal to.

Telling the Story in Food Arts

As well as german house wives, US chefs are our other main target audience.

chefs are abit easier to understand, their requirements are more straightforward. Quality, availability, provenance, service, price:

Here’s example number 2, and more planned method of promotion.

The most respected food magazine in the USA is called Food Arts. As well as

advertising in this magazine, and placing recipes when we could, we had been working on their editors for two years to get a food writer to come to New Zealand to

write about Cervena.

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Telling the Story in Food Arts

We finally managed to co-ordinate a visit with Martin Gillam, a freelance writer who

agreed to come to New Zealand, learn about what we did, and then pitch the story to the magazine, but with no guarantees of the coverage…

We hosted Martin for three days; he visited farms and a processing plant, we got Graham Brown and other kiwi chefs to talk about and cook venison. We also

teamed him up with chefs in the States to get an American chef’s perspective on

using an imported product.

Then, we waited.

His conclusion was that…

In this era of Fast Food Nation we all have justifiable concerns about the journey

our meat has taken from pen to plate… It was refreshing to see first-hand the free-range raising of New Zealand deer, and the priority everyone, from government to

producer places on quality control.”

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What do Americans Think of Us?

Apart from that title…We couldn’t have written a better article and four pages in this

magazine is priceless. We need to continue telling this story to US chefs as they are under more pressure to use local products.

Convincing chefs that using imported venison isn’t bad for the planet is an ongoing

task. Here’s our third example – and abit of a personal highlight for me last year –

we found ourselves embroiled in a very public battle between two extremely high profile food celebrities.

American Chef Rick Moonen and English food critic Jay Rayner squared off over

Moonen’s use of New Zealand venison on the US television show Top Chef Masters.

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Telling the story

Moonen vs Rayner

“I have spent time in New Zealand where I visited and stayed on a farm where deer

were raised. They grazed on beautiful lush pastures; the animals were treated with respect and fed apples, not injected with hormones steroids or antibiotics. Note to

Jay: you can’t serve wild venison in restaurants any more, but this is about as close as it gets!”

vs

“he decided to throw every single one of his self-serving homilies out the window

and use a staggeringly unsustainable ingredient, which had been air freighted thousands of miles. God knows what the carbon footprint of that single dish was.

Mr Sustainability, Rick? I really don’t think so."

Moonen used a NZ venison shortloin, for his signature dish in the grand final. All the judges said it

was one of the best dishes they had experienced on the programme – but Moonen only came second

– and Rayner explained why the next day – he accused Moonen of compromising his ‘sustainable

credentials’ by as he said - using a staggeringly unsustainable ingredient, which had been air

freighted thousands of miles. Mr Sustainable, I don’t think so…

well, it seems that you can call Rick Moonen many things – but never question his sustainability…

Moonen was outraged. We picked Rayners comments up on media alerts the day this was published

and waded in boots n all via the array of social media tools at our disposal – We fired off material to

Rick Moonen and he posted it on his facebook site, his twitter site and used it on his website. We

picked the issue up on 12 different websites including the LA Times and began correcting

misinformation and rebutting any support for Rayner on these sites.

Moonen had over 5,000 fans on his facebook site. 20,000 people follow Rayner on twitter. I don’t

know how many people visited the Top Chef tv website, but they have 1.2 million fans on

facebook…With the ability to post comments we were able to get our facts about the efficiency of

seafreight and the natural methods of raising deer in New Zealand across to an audience of perhaps

several hundred thousand people interested in food (all at no cost).

Rayner’s original blog was removed, and Moonen definitely had the last word in his rebuttal to

Rayner on the Top Chef TV website, he waxed lyrical about New Zealand venison - They grazed on

beautiful lush pastures; the animals were treated with respect and fed apples, not injected with

hormones steroids or antibiotics. Note to Jay: you can’t serve wild venison in restaurants any more,

but this is about as close as it gets!”

Hurrah for us!

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Chef Todd Grey – An American

Perspective

We asked a chef we know to tell us about the trends affecting the US restaurant

scene at the moment, and how Cervena fits into his menu.

Chef Todd Gray is probably the most famous person I know. He is an advisor to

Michelle Obama, The President of the United States dines at his restaurant, and he has worked with Cervena since the mid 1990s.

Here’s what he had to say to you:

<< insert video of T Gray>>

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Todd’s Key Themes

• Nutrition

• Economics and Plate Cost

• Integrity and Security of Supply

Todd ticked off three key themes

People seeking low-fat premium food

The economy, and chefs seeking new products to keep plate costs down; and

Searching for connections with food producers, to provide a higher degree of certainty about where food comes from, how it’s been produced, and a higher

degree of certainty about supply.

It is no coincidence that these three reflect the first three priorities of the VenisonStrategic Intent.

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Inspire the New Zealand Deer Industry to Profitably Grow & Market the World’s Best Red Meat.

1. Premium positioning of New Zealand venison

2. Commitment to product and market development

3. Encourage long-term supply commitments.

4. Improve on farm productivity

5. Freedom to operate

Venison’s nutritional profile as the healthiest red meat is a core component of its

premium positioning.

Marketing companies are developing new products to meet customers changing

requirements.

And finally, the importance of commitment to security of supply. We are seeing a

different attitude among many food buyers in our main markets as they seek supply certainty.

Buyers are wanting to create more secure supply lines as competition for food increases. Buyers are reaching back down the chain to reconnect with producers.

For example retail companies are establishing farmers clubs as a means of creating

loyalty among suppliers to particular companies.

This search for food security creates an argument that New Zealand is well placed

to extract higher value from affluent markets. But New Zealand marketing

companies’ ability to meet this demand can only be satisfied if they can secure

certainty over their supply lines – this places those companies who can obtain more deer on a contract basis at an advantage on this issue.

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New Zealand Venison:

A Stable Profitable Future

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New Zealand can claim a bigger share of the final sales price by providing more

certainty of supply, which will provide both sides with more confidence in the long-term stable future of this business.

Thank you very much

Thank you