With its distance from most consumers, the New Zealand dairy industry sometimes has difficulty making the connections. By Stu Davison.
An intricacy of the New Zealand dairy industry is the extreme isolation from our consumers – unless you’re selling dairy products at the end of the driveway or in a local shop, you have very little to do with the end consumer of your beautiful white gold.
This intricacy is both a positive and negative result of how our industry took on the world markets; that is, combining resources into a co-operative, and separating the skill set between farmers and processors to optimise the outcome of smaller farms at the time.
It has made the world of difference over the last 100 years. However, at our current scale, and comfortability, I feel as farmers in the day-to-day grind onfarm, we often forget that our product requirements are still determined by the consumer at the end of the day. I think of end consumers as the largest risk outside the farm gate, that will undoubtedly influence any farm business.
These consumers exclusively determine the market outcomes via their wallets. This is hard to argue with. However, where and how deep the wallet is opened and pillaged is determined by the consumer making an informed decision around the product they’re buying.
Using the word “informed” in the last line is often the first point of arguments, but let’s face it, everyone thinks they’re right, it’s called an opinion…
This is the changing face of consumers’ buying habits – tightly held opinions.
The entire primary production system globally is facing the same predicament. Consumers have rapidly shifted their buying decisions over the last two years, both as a result of Covid and digitalisation of our lives increasing.
These changes have led to including key decisions now involving such things as environmental factors, health and wellbeing impacts, immune-building abilities of a product, associated status induced from the purchase and oddly enough, taste is still somewhat important.
The underlying product has not changed – it is still cow’s milk. However, to differentiate in a competitive environment, products must seem better than the competitor’s product next in line on the shelf, which leads to the list of now important factors to consumers. All of this leads me to my favourite saying; treat your farm like a restaurant. If you walk into any establishment for food that doesn’t please your eyes, you will most likely turn and leave. It’s human nature most likely established from not eating food covered in muck.
The old saying “we eat with our eyes” comes in nicely here. Our consumers are the same, but from a massive distance. They want the same assurance of a clean restaurant, but from anywhere in the world while they enjoy their room temperature drinking yoghurt or butter-soaked croissant.
Unfortunately, the array of global consumers and their differing demands have shifted so quickly over the last 10- 15 years, that it is very hard to keep up with what they actually want, and let’s be honest, I don’t actually think they really know what they want, but some very slick marketing is helping to convince them of this thinking. Unfortunately, that is the power of good marketing; it works for and against every producer, an ever-perpetuating problem.
So, as we look forward to what else will impact farm businesses from this ever-changing array of consumers, expect more product differentiation to come down the pipeline, in one form or another.
Unfortunately, the wheels of change are spinning quickly in all parts of the value chain, such as Miraka’s geothermal-powered powder drier, Synlait’s electrode boilers and Fonterra’s woodchip/biomass boiler in Te Awamutu. All the start of ongoing changes to help NZ dairy stand out from our competition, as we try to keep our place in changing world markets. However, making changes to consumers’ buying decisions starts with those at the coal face, ironic statement in this context, I know.
Unfortunately, we have two options: give the consumer what they demand and be rewarded with top dollar or keep the status quo and slide to the bottom of the demand pile.
