Brief Bites, 25th September

Alliance Farmer Shareholder News

In this edition:

Customer visits resume
China promotion
Investing in a sustainable future
Handpicked Lamb Programme
Annual Roadshow
Venison marketing changes
Daylight Saving Flash Sale
Global market update

Customer visits resume

Over the past two years, our regular customer visit programme has been disrupted by the COVID-19 pandemic, so we are thrilled to welcome a number of our partners to New Zealand over the coming months. A delegation from our India partner QualityNZ visits our Lorneville plant near Invercargill this week.

Quality NZ is a key strategic partner for the co-operative, providing an important avenue for our Pure South products into the retail and food service sectors in India including more than 350 five-star hotels. These visits help us build strong and enduring partnerships with our customers and also provide us with an opportunity to demonstrate our high standards in areas such as quality and food safety.

China promotion

Alliance Group is partnering with Beef + Lamb New Zealand (B+LNZ) to pilot beef and lamb vending machines in China.

The two Pure Box vending machines in Shanghai will serve convenient and nutritious ready to eat meals featuring New Zealand premium grass-fed beef and lamb for busy Chinese consumers.

The meals, co-developed with well-known Shanghai chef Jamie Pea, fuse traditional Chinese ingredients and flavours with Western food trends. The recipes have been designed to highlight the unrivalled natural flavour and nutritional benefits of Pure South lamb from Alliance.

The vending machines, which are marketed under B+LNZ’s Taste Pure Nature country of origin brand, will be located in Shanghai’s top business districts where time-poor consumers are known to seek out convenient and healthy food options.

The Chinese market is strategically important for Alliance Group and New Zealand’s red meat sector. Research shows a growing number of Chinese consumers are seeking nutritious and healthy food. The unique attributes of Alliance‘s red meat can meet this need.

This pilot is also a great example of disrupting consumer purchasing activity to create both consideration and conversion to high quality beef and lamb.

Investing in a sustainable future

Alliance Group has a goal to reduce our carbon footprint significantly by 2035 and we have a series of decarbonisation projects underway across our plant network to help us get there. A high-temperature heat pump is currently being installed at our Pukeuri plant near Oamaru. It will provide about five megawatts of hot water heating, which is nearly 50 per cent of the plant’s requirement.

Handpicked Lamb

If you haven’t already, we encourage you to consider the new supply contract for our Handpicked Lamb programme. The programme uses an assessment system to measure eating quality, with the qualifying lamb exported to premium retail markets in Asia and North America. Suppliers are paid 15c/kg for all animals that meet the requirements at the time of processing. This is on top of the 15c premium we already pay for lambs raised without antibiotics. For more information on the programme, or to join, please speak to one of our Livestock Representatives.

Annual Roadshow

Our Annual Roadshow kicks off in the North Island this week. Twenty meetings will be held across the country, starting in Feilding on Tuesday (27 September) and finishing in Mossburn on 18 October.

The roadshow is a great opportunity for us to hear what is important to you and for you to hear first-hand from Alliance directors and senior managers. The meetings will include an update on our performance, progress, strategy and plans for the future as well as outlining the challenges, opportunities and market outlook.

To register go to events.alliance.co.nz or speak to your Livestock Representative. We look forward to seeing you soon.

Venison marketing changes

Alliance Group is committed to New Zealand’s deer industry and we have been investing heavily in our own brands in our markets, particularly in the United States. We are seeing increased sales of venison in supermarkets and online, and stronger brand recognition among shoppers. Alliance has decided to capitalise on this investment and brand value and differentiate our venison offer with the Pure South brand.

This will enable us to align both our retail and food service promotions. Deer Industry New Zealand (DINZ) will continue to support Alliance with our marketing and promotional activities into the US. The focus on further development of the US retail market will continue with Alliance, other companies and DINZ seeking additional funding from the Ministry for Primary Industries to help accelerate work started in the last two years.

Daylight Saving Flash Sale

Getting out of bed an hour earlier can be a drag, luckily the Pure South Shop is here to brighten up your Daylight Saving with some great savings!

Enjoy 10% off New Zealand Fresh Pork, Pure South Lamb, Pure South Venison and Pure South Beef (excluding Handpicked)

Use the code DAYLIGHTSAVING10 at the checkout. Promotion ends tomorrow night (Monday 26th September). Free shipping on all orders over $99.

Update from our global markets

Lamb

Inflationary pressure continues to build in all key markets, putting strain on consumer discretionary spend. Some consumers are trading down to cheaper proteins in the retail space and there is a noticeable drop-off in out-of-home dining. Inventories in the critical European Union, United Kingdom and North American markets are at elevated levels, which is creating further uncertainty. Growing volume out of Australia is putting pressure on prices in a number of key markets, namely Taiwan, Malaysia and the United States. Demand in the Middle East remains steady, with some price pressure now evident in Saudi Arabia.

Mutton

Mutton markets remain stable on the back of limited supply, however once production ramps up, we expect some negative price pressure in the key markets of the US, Taiwan and Malaysia. Additional volume out of Australia (similar to lamb) will also cause some negativity. China demand and price points will be pivotal to the mutton markets as we move into 2023.

Venison

All frozen stocks are now shipped with the production focus shifting to supply for the chilled Game Season. Demand for New Zealand chilled venison in Europe is firm but our ability to supply has been impacted by the uncertainty which remains around supply chains. On time delivery is critical for these programmes and importers are reluctant to extend arrival dates. This has resulted in a condensed production window, which ends for most in the third week of October.

Beef

The Chinese market continues to face challenges with supply chain, lockdowns and high inflation. Importers are struggling with ongoing lockdowns as COVID-19 outbreaks continue in Chinese cities. The lockdowns are more surgical and shorter but are still creating challenges as consumers rein in spending due to uncertainty. Prices are easing across wholesale markets.

The US market continues to slowly improve with slight price increases for grinding meat. Some importers have taken a more positive tone in the last few weeks and believe a slow recovery in the US market will eventuate. The grinding business is well positioned to benefit as consumers are trading down with minced beef sales improving as we move into Autumn. Chilled beef remains challenging with the US programme being impacted by food inflation and the slowing of the food service sector.

NZ and Australia continue to supply limited volumes at premiums over the South American suppliers (NZ @ 46% and Australia @ 23% of annual quota).

Asian market demand is showing signs of improvement with prices for fatty grinding meat lifting in the last few days. This has been driven by lower Australian processing volumes.

Co-products/Specialty Ingredients & Materials

Demand for offal from petfood for the coming season is strong with pricing improvements across the board. The tallow market remains strong and shows no sign of waning. Demand for casings remains with market pricing in Australia holding up.