BY: HUNTER MCGREGOR
China consumes nearly half of the pork produced globally and produces a lot of this within China.
Since African swine fever first arrived in China in mid-2018, the virus has had a major impact on the national pig meat industry with estimates suggesting a up to 30% reduction in the pig herd. The actual number is most likely higher.
The reduced availability has pushed Chinese consumers to look for other protein alternatives driving a high demand for lamb and strong prices since late in 2019. I predict this will continue to have a positive impact for New Zealand farmers in 2020 and beyond.
While China continues to grapple with challenges associated with the Covid-19 pandemic, there is plenty of demand for high quality protein to sustain its large population.
According to Beef + Lamb NZ, from October 2019 to July 2020, China corresponded to 36% ($1.066 Billion) of all lamb exports and 71% ($422.9 Million) of all mutton exports. The Chinese market is extremely important to the New Zealand agriculture industry.
When I first arrived in China in 2007 New Zealand sheep meat was seen as premium product featured on most Chinese restaurant menus.
Fast forward to 2020, everything about the Chinese market has changed. Compared to other NZ industries such as dairy, NZ meat industry suffered from low levels of investment in brand building. Consequently, the ongoing improvements made behind the farm gates across NZ has not translated into stronger Chinese market opportunities, driving the image of the NZ sheep meat in China backwards.
It is easy to be negative about this but there are still plenty of opportunities available to NZ sheep farmers in China. I will also offer some suggestions on how we can start capitalising on some opportunities, as it’s not all bad for NZ lamb.
I started my own Chinese meat distribution business in 2015 selling Mountain River Venison. In every meeting in addition to venison, I always discuss NZ beef and lamb with the top western restaurants and hotel chains all over China.
Unfortunately back then feedback wasn’t positive and many customers could not name the NZ brands they where using. They appeared to have issues with consistent supply and quality of NZ meat.
I found this very surprising at first, and unfortunately, it was a common trend I found in discussions around China. This changed a few years ago when the NZ brand of Coastal Spring Lamb entered the Chinese market.
The market has moved on and to sell something on just being from NZ or a foreign product in China is not enough any more.
They have done a fantastic job at marketing, re-establishing the image of NZ meat, establishing a strong supply chain and selling NZ lamb to the top end food service throughout China. It is great to see what it is possible for NZ lamb, as they have had a very positive impact in the top end of the market.
Taste Pure Nature is also another interesting example. The idea and concept of this branding is good since it builds on the quality of the NZ meat products. However, from a Chinese consumer point of view I don’t really get it. It uses generic NZ branding and feels like something that would have worked in the Chinese market five to 10 years ago when being foreign was enough. The market has moved on and to sell something on just being from NZ or a foreign product in China is not enough any more. It feels like Taste Pure Nature has taken the important first step of a long process, they have a lot of ground to cover and this impact is yet to be quantified.
Ultimately, Taste Pure Nature’s strategy in China will only be classified as a transformational success if it can create demand for NZ lamb and here is what I think they should do.
First, the social media and e-commerce landscape in China is very different to the rest of the world, and China is leading in this space.
Online sales via WeChat, Tmall, Taobao, JD, Hema/supermarkets and live streaming are years ahead of NZ. Yes, Covid-19 has pushed this further ahead again and these sales channels will also continue to evolve.
The Taste Pure Nature marketing campaign should start by focusing only on the Shanghai market. Get it right in this high-profile food trend-setting city first, then build in other large markets over time. A China-wide approach initially is not the way to go, as focus is important.
Offline (restaurants, supermarkets and other meat retail outlets) and online (which has China-wide reach anyway) needs to all work together to lift the profile of NZ Lamb in Shanghai.
Chinese consumers need to be informed that the value of NZ lamb extends beyond “grass-fed”, a term not seen as positive with most Chinese consumers. We need to listen to the consumer and quickly adjust our product mix and marketing messaging on this feedback.
From experience, the product mix will change as what you think will work will most likely not. The best market research in China is by doing (ie: selling lamb) and listening to direct feedback.
Interestingly, the Covid-19 environment has only increased the importance of a packed-in-NZ retail range. Look at what has happened with imported salmon in China to understand the new risks.
The market for salmon in China has crashed because in a Beijing wholesale market, an imported salmon cutting board (not the product but just the board) was found to be infected by the Covid-19 virus.
There will always be a place in retail for NZ lamb packed in China but if we want to demand premium price, you need to offer a premium product. The Chinese companies already selling NZ lamb do not see the packed-in-NZ opportunity. Yet, there are still plenty of opportunities for NZ farmers and entrepreneurs to establish themselves in the premium meat market in Shanghai and other Chinese centres. I am disappointed this is not already the case but optimistic for the future of NZ lamb in China.
- Hunter McGregor is a Chinese-speaking Kiwi based in Shanghai selling NZ meat into China.
