Chef Anna Hansen preparing Richmond products at a demonstration in 2001. Photo / Warren Buckland
Chef Anna Hansen preparing Richmond products at a demonstration in 2001. Photo / Warren Buckland
Challenges faced by a major meat industry player of a previous era in pursuing its branded strategy will sound familiar for those attempting the same today, writes Nigel Stirling.
It is a decade-and-a-half since Hastings-based Richmond rolled out its "freezing company-to-food company" plan. But today the meat industry players are facing similar challenges in pursuing a brand strategy.
Richmond's chairman and Central Hawke's Bay farmer Sam Robinson says the trend downwards in prices for a range commodities since the1970s made the change in direction inevitable for the 100-year old company.
"We knew if we remained in commodities we were going to be going downhill," Robinson says.
As in the meat industry of today, and despite Richmond's annual turnover at the time of more than $1.5 billion, capital for new projects was scarce.
Several million dollars was found for developing a brand, more elaborate packaging and in-market presentations and customer support in shops. Investment in new cutting facilities at its Takapau plant in Central Hawke's Bay also complemented the strategy.
Then Richmond chief executive John Loughlin says one of the immediate -- and unexpected -- pay-offs was an improvement in the quality of the meat cuts produced by the workers in the company's processing plants.
"I saw a lot more pride in boning rooms after that. People took a lot more pride in what they were doing as opposed to just carrying out a repetitive task in a mindless sort of way," he says.
Persuading customers to pay for the value the company felt it was creating was more problematic.
"For most existing customers there was price resistance and that emphasised to me that we were working with middlemen rather than end users," Loughlin says.
"People liked it, saw it as useful, but looking back my sense is that there were other steps that were required if we were to crystallise full value out of it."
British supermarkets -- which tended to bury supplier brands with house labels -- were, in particular, a hard nut to crack. "They have got to have something that underwrites the premium to their consumers. That is the key for anyone trying to participate in those value chains -- giving them something that is reliable and distinct in some way," Loughlin says.
He left Richmond in 2002 shortly before it was taken over following a long and bitter battle with Dunedin-based PPCS (now Silver Fern Farms), and was unable to see the strategy through. Since then Loughlin has taken on directorships with kiwifruit marketer Zespri and niche meat marketer FirstLight among others.
When you have a commodity downturn it is the quality that always sells... anything of lesser quality then you can forget it, mate.
John Loughlin.
With them came further insight into how a branded strategy can be used to extract more value from customers, Loughlin says.
"Typically they are looking for quality which has got to be first-rate and really importantly they are looking for absolute reliability of supply."
Loughlin says farmers' ability to negotiate the vagaries of climate and pestilence to supply livestock on time and to specification is all important.
"Timing becomes really important when you are dealing with chilled meat because you cannot use inventory as a buffer ... you basically have to run a just-in-time supply chain rather than be a receiver of whatever stock whenever.
"In order to really get value you have got to have your supply chain really sorted," he says.
Robinson believes Richmond was on the right track despite the recovery in prices for agricultural commodities during the 2000s and 2010s. "When you have a commodity downturn it is the quality that always sells... anything of lesser quality then you can forget it, mate. It's payback time," he says.
