N.Z. venison trade gets the facts of U.S. retailing life

Press, 9 August 1985, Page 10

N.Z. venison trade gets the facts of U.S. retailing life

By

HUGH STRINGLEMAN

New Zealand venison exporters should forget about trying to make even a small plop in the United States retail market and concentrate on the hotel and restaurant trade for the time being according to Dr John Morris, a retailing executive at present teaching at Lincoln College. “You must start from the understanding that we don’t care about your product,” Dr Morris told a very well organised and well attended marketing seminar in Invercargill this week. The force with which Dr Morris spoke and the wisdom of what he said came from the experience of many years in United States marketing, including the last five as a senior vicepresident of the giant Safeway supermarket organisation which has a turnover of SUS2I billion annually. When it is appreciated that New Zealand shipped 293 tonnes of venison to the United States in the 11 months to May this year, Dr Morris’s appearance was a bit like Pele turning up at the local primary school for a bit of a kick around. But like primary pupils, ' New Zealand’s team of exporters and deer farmers who turned out for the Southland Deer Farmers Association’s event were desperately keen to learn at the feet of the master. With some finagling it is possible to show that New Zealand may be producing 30,000 tonnes of venison annually by the mid 19905. The Deer Farmers Association has chosen, very commendably, to look far down the track and consider how that sort of production might be sold. It is certainly a valid concern of an industry built at present on very high breeding stock prices and a product, in deer velvet, with more than a hint of quackery about it. Dr Morris gave the industry the bold facts of marketing life — at least the life among the untold miles of neon-lit supermarket shelving in 2500 Safeway stores in 12 countries. He gave the impression of living in fear of yet another New Zealand farmer turned marketer knocking on his office door wanting to make a connection with a compatriot that would put the old homeland back in the black. Those New Zealanders who looked at United States trade prospects “through the bottom of a whisky glass for three days in California” were not his favourite people. He also used “Devco-style operation” as a shorthand way of describing everything that has and could go wrong with New Zealand primary products selling in the United States. Twenty years on and only a few thousand tonnes of sheepmeats sold annually clearly demonstrated that the United States was not a frozen meat market. So Dr Morris, like many in the deer industry here, contemplated a 30,000-tonne venison availability with horror if the United States was going to be expected to pay for it and eat it. “No person sits in the corporate offices of Safeways that can turn a switch and say ‘you will sell New Zealand venison’,” he explained. The 2000 United States stores (still only representing 6 per cent of the total supermarket trade) were organised into 17 operating divisions which made their own purchasing decisions. The market was very complex and required a systematic analysis and attack supported by considerable advertising and promotional material and a willingness to lose money for years before establishing a profitable beachhead. It would be essential for New Zealand venison exporters to have resident brokers committed to doing their best and being rewarded with sales incentives. Using Safeways as an example, Dr Morris posed many questions that United States retail buyers would ask and to which they would demand satisfactory answers before they would list New Zealand venison. ® What product category does it fit and what is already happening in the category? “If sales are static for the products in that category — forget it,” he said. • What unique marketing factors does venison have which will expand sales in its category? Or will it merely cannibalise sales from other products? "Show us your test marketing results. It is very difficult to get your product into our stores without test

marketing results, preferably from our stores,” he said. Catch 22. 0 Is the product form appropriate — fresh or frozen, boneless or bone-in? “Remember most Americans are urban and don’t want to associate the meat with the animal.” • What degree of convenience is built into the product, remembering for example that half of American homes have microwave ovens? 0 What distribution channels and shipping do you have? “We hate products that have to go through our warehouses because it costs us money and we have to move something out of a slot.” 0 Is the product quality adequate to generate repeat sales? 0 How are you going to get people to try your product? Dr Morris explained that the retailer could not be bothered about promoting a new product, insisting instead that the manufacturer or importer did all that work also. The possibilities were numerous — in-store demonstrations, letter-box coupons, newspaper coupons, discounts, etc. “What is important to us is that you have an aggressive programme to get people to try your products.” © What segment of the market are you catering for — geographically, ethnically and in terms of their cuisine? “When you answer this question we will then decide whether that is appropriate for our type of store and fits within our merchandising scheme. We might not want to sell game meat or something like it in our meat cabinets.” 0 What is the reputation of the vendor and the brokers? “New Zealand does not have a good reputation in the United States for quality control,” said Dr Morris. Too many Kiwis had breezed in, made a sale and then started sending junk and the United States wholesale and retail trade had a very long memory, he warned.

Other questions from buyers would seek the delivery lead times, the point-of-sale display material and pricing bracket sought. Should venison answer all these and more successfully then the retailers would be looking for allowances or incentives to stock, terms for paying cash and for a willingness on the part of the supplier to be in for a long haul before profitability. Dr Morris told multimillion dollar cautionary tales about product launches which flopped and quoted statistics that gave venison a snowball’s chance in hell of surviving without all this massive ground and support work. “We list 1300 new products every year and we delist 1300 products. “For every five products we are offered we only take one. “Some 10,000 new supermarket products have been launched in the United States since 1970 and only 100 have been successful,” he said. “But you have some things going for you. “Venison is lean, consistent in quality and the New Zealand image is green, healthy, chemical-free etc.” Venison might have a colour problem, he thought, because Americans would not take dark red (supposedly aged) meat even if it was given to them. “Don’t fall in love with your product,” he pleaded, “just be led by what the market dictates. “I have no simple answers. “For 90 per cent of Americans, venison will be a completely new product and for the others it will be something that usually comes in from the wild covered in twigs and fly dirt. “We just don’t know what the market expectations “Off the top of the head, you might need $2O million or so to find out. “So don’t spend too much time worrying about industry structure; worry about the market strategy instead.”