Joint funding for international meat promotion

The recent referendum on Meat & Wool New Zealand’s (MWNZ) future existence has had some far-reaching effects, way beyond what farmers probably expected. The no vote for continued investment in wool has already caused $6.3 million to be cut from the annual budget with the termination of 23 staff positions, a number of projects and $1.35 million less market development expenditure.

This last item is the one with the most potential to damage New Zealand’s long term brand strength, particularly in its premium European market. You only have to see what happened to the image of New Zealand wool, when expenditure on the Woolmark came to an end – although the funding of the International Wool Secretariat through the Wool Board was prohibitively expensive, a more realistic approach to the whole question of overseas promotion’s value would have preserved some of wool’s brand equity. The final nail in the coffin was the Boston Consulting Group’s report which led to the end of the Woolmark as we know it and the end of all promotion of wool in overseas markets.

New Zealand’s meat, specifically sheep meat industry, is at exactly the same turning point and it is critical the industry as a whole makes the right decision, rather than going down the road to oblivion which the wool industry took. The belated efforts of WPI and Elders to turn the clock back, while commendable, look like too little too late, especially if they insist on taking separate paths. The alternative to generic promotion is for individual companies to spend money on promoting their own brands which would be drowned without the umbrella reinforcement of the overall New Zealand brand.

MWNZ has said it will form a market development entity to be jointly funded and governed with the meat industry. This new body would continue such important market programmes as New Zealand Lamb in the UK, Europe and North America and New Zealand Grass-fed Beef in Japan, Korea and Taiwan, some of which is already funded dollar for dollar. The next important step is to gain agreement from all or a substantial majority of New Zealand meat companies to contribute pro rata to this jointly funded entity and I understand discussions will take place during the lead up to Christmas. The reaction of the processors will be critical – a big concern will be whether AFFCO will be willing to support the programme, because its normal preference is to do its own thing under the Talley’s multi product umbrella.

Mike Petersen, MWNZ ‘s Chairman, tells me this wouldn’t necessarily be a showstopper, unless more large companies also elect not to join, although 100% commitment would be ideal. According to Mike, any company which doesn’t join will be automatically excluded from using any MWNZ promotional collateral such as the Lamb Rosette, a major feature of the New Zealand Lamb brand.

The model for the jointly funded market development entity already exists domestically in the form of Beef and Lamb New Zealand, an incorporated society funded equally by MWNZ, retailers and processors. It is almost certain domestic promotion will be incorporated into a single entity covering both overseas and domestic promotion with funding contributions clearly needing to take into account the requirements of different markets, in addition to the role and contribution of New Zealand retailers.

Mike Petersen’s preference is for the meat industry to make decisions on how much funding they are prepared to allocate to market development and promotion, then to come to MWNZ for matching funding. In this way New Zealand farmers would still have an important role in determining the success of their farming ventures, but would no longer be directly responsible for all marketing expenditure. They may say they end up paying for it all in the end, but under the old model they paid for it directly through their levies which one could argue was the fairest and most logical way of funding generic promotion to the ultimate benefit of the farmer.

Time will tell how successful the new joint funding model proves to be. The critical thing is not to throw the baby out with the bath water, but to maintain New Zealand Lamb’s brand strength.

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