By GUENTHER MUELLER-HEUMANN*
Debate on the future of New Zealand food exports is dominated by farming, production and political arguments, when it is really a marketing issue.
The discussion should be about determining the best structure for long-term marketing success.
Four practical principles should guide any restructuring of our food export industry.
First, size means power. Except for specialised exports such as wine, our small food exporters have little or no "muscle" in foreign markets.
Small exporters often cannot afford to buy vital market information, develop their products into differentiated, value-added brands, promote them effectively, hire top international marketing staff, and so on. They frequently rely on importers.
Only a high level of concentration in this industry can ensure greater control over the product beyond entry point in foreign markets - and so guarantee long-term profits.
Second, these larger food marketing organisations should offer a wider range of products. We have traditionally exported very narrow single-product categories, that is, either kiwifruit or dairy goods or honey or fish. Not one organisation currently exports a wide range of foods.
Single-product, "vertical" export organisations are all duplicating overheads and reducing marketing muscle and profit. Only larger export companies are able to create "Food from New Zealand" ranges and establish consumer awareness of, and a positive attitude towards, their brands through good marketing.
Until now, with the exception of the dairy industry's Anchor brand - and maybe Zespri in a few years - we have made very little general impact on the minds of the ultimate consumer overseas through branding efforts. In fact, our food export road is littered with marketing accidents, such as the name "kiwifruit," which was an ill-conceived attempt to brand the New Zealand product.
Kiwifruit is now a generic word in most countries, with no association with New Zealand.
The notable exceptions to food-marketing efforts are those of Trade NZ in market research, intelligence work and organisational help.
Bundling products into branded "Food from New Zealand" ranges should be our strategic aim. But this is the most difficult of the four principles: How to change from the traditional single-product structure to multi-product organisations.
Third, losses from overseas "NZ versus NZ" competition have to be avoided. Cases abound of companies competing against one another on price and ruining their profits.
They are sad and unnecessary stories. The larger, multi-product, food-export companies should have territorial arrangements - perfectly legal "geographic cartels."
We are a tiny country, and even those larger food export firms are very small by international standards. They would, therefore, be more successful against local overseas and international competitors if territorial arrangements were set in place.
Fourth, ownership of these larger food-export companies has to be protected, otherwise the value-added benefits disappear into the pockets of overseas shareholders.
* Guenther Mueller-Heumann is an Otago University emeritus professor of marketing and now an Auckland-based marketing consultant.
<i>Rural delivery:</i> Exporters need brand power
AdvertisementAdvertise with NZME.