Dairy Board provides ‘well proven formula’

Press, 12 June 1987, Page 10

Dairy Board provides ‘well proven formula’

PA Nelson Meat marketers should look at the New Zealand dairy trade for an example of how they should perform, said the Minister of Overseas Trade, Mr Moore.

The Dairy Board provided an example of. successful international marketing, he told a meat marketing symposium in Nelson.

“The Dairy Board has a well proven formula for successful marketing,” Mr Moore said. - ■

"Its selling role is decentralised through a network of 40 companies which it wholly or partly owns. Its companies overseas are largely staffed and operated by local people.

“There are obvious benefits in having Americans selling dairy products to Americans, but it also makes for greater sensitivity and responsiveness to market demands.” Mr Moore said there was an urgent need for more money to be spent on meat industry research and development In 1985 only 0.4 per cent of export earnings from meat was spent on research and development, compared with 0.8 per cent by the United States food industry, 1.6 per cent by the New Zealand dairy industry and 2 per cent by the New Zealand kiwifruit and apple exporting authorities.

A call to the meat industry to market meat as a consumer product was

made by the deputy general manager of the New Zealand Dairy Board, Mr John Parker.

Few people got rich producing commodities such as meat, but the people who did get rich did so by marketing added-value or consumer products, he said. Mr Parker cited the international success of the Swiss firm, Nestle. Thirty years ago Nestle was a smaller dairy company than the New Zealand Co-operative Dairy Company. But its international sales now were $45 billion a year, he said. “I suggest this is because Nestle stopped being a commodity milk producer and became a consumer product producer and marketer.”

Mr Parker said although coffee was a volatile commodity, Nescafe prices did not drop when coffee prices did. He also cited the example of Nestle’s subsidiary, Maggi Soups.

Making soups was not a complex business, but Maggi made big margins because it marketed a branded consumer product.

Nestle products achieved a better and steadier margin because people recognised and trusted . the brands, he said.

Without a branded product, .New Zealand could not take advantage of others’ misfortunes. In West Germany after the Chernobyl disaster, the Government warned

people not to eat venison, he said. “Unbranded, anonymous New Zealand venison lost just as much market as everyone else, when it should have made enormous gains.” However, he said, in the Philippines, New Zealand milk, which was identified with the Anchor brand, increased its share of the market from 5 per cent to

20 per cent after the Chernobyl disaster. Changing from commodity selling to consumer marketing would involve changes in all

parts of the meat selling organisation. “In consumer marketing you are not making a fast buck by making a fast - foray into a temporarily lucrative market.

“You are investing lots of dollars in advertising and promotion as a capital investment

“And you must stick with it through the many years it takes to amortise that investment"

More than 100 meat industry executives are in Nelson for the gathering — New Zealand’s first international meat marketing symposium. The theme is “dealing with change” and there is emphasis on the freed-up United States market.

The Meat Producers’ Board, the Meat Industry Association and the Market Development Board have sponsored the conference, which features 15 speakers, three of whom are from overseas.