Invercargill-based red meat processor and exporter Alliance Group said it would launch a new range of market-ready lamb, beef and venison products for the retail and food service sectors in China after reaching an agreement with the People's Republic's single largest importer of sheep meat, Grand Farm.

The deal means Alliance product will be "co-branded" as Pure South-Grand Farm products in China - New Zealand's biggest market for frozen lamb and mutton - from next year.

The two companies will market lamb packed in New Zealand as well as a new range of lamb products processed and packed by Grand Farm. Beef and venison products are expected to follow in the future, Alliance said.

A letter of understanding was signed during a recent visit to New Zealand by Grand Farm president Xibin Chen.

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Alliance chief executive David Surveyor said the letter of understanding was the culmination of a 16-year partnership between Alliance Group and Grand Farm, and represented a major boost for the co-operative and its 5000 farmer-shareholders.

"There are also several other projects we have agreed to work together on including securing an active place on Grand Farm's online business," Surveyor said.

Murray Brown, general manager of marketing at Alliance Group, said the co-operative had increased the volume of exports to China by 35 per cent over the past five years. Alliance has also recently begun exporting New Zealand venison to China.

"This is a proven relationship and both companies are committed to growing the value of the market, further strengthening our brand presence and targeting end users in key sectors including fast-growing online consumers."

Grand Farm processes 70 per cent of the lamb supplied by Alliance Group into lamb rolls, kebabs and finished retail-ready products.

"We're focused on capturing greater market value in countries such as China by understanding consumer tastes and getting better at matching our products and markets and investing more in new product development and packaging," he said.

"Despite the slowdown in the Chinese market over the last year, the country remained an important long-term market for Alliance Group."

Grand Farm's Chen said the company was focused on building the brand. "We are the leading brand for lamb in China and will continue to expand," he said.

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Grand Farm owns 96 meat shops, operates 260 branded meat counters in selected "hypermarkets" and supplies over 1000 hypermarkets in China.

Alliance has been working in China since the mid-1990s and is now the country's largest exporter of New Zealand lamb to the country.

The co-operative began exporting to traders in Dalian in the mid-1990s and has been working with Grand Farm since 2000.

In October, Alliance's closest competitor, Dunedin-based Silver Fern Farms, strengthened its ties with China - its biggest customer by volume - when it allowed Chinese food group Shanghai Maling to take a 50 per cent stake in the company.

Meaty agreement

• Alliance Group reaches agreement with Grand Farm to "co-brand" product in China.

• Lamb to be packed in New Zealand for sale in China. Beef, venison to follow.

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• Alliance is NZ's biggest sheepmeat processor and exporter.

• Alliance volume of exports to China up by 35 per cent over past five years.